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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI AMARJIT SINGH
Present for: Assessee by : Shri Subodh Ratnaparkhi, A.R. Revenue by : Shri Ajeya Kumar Ojha, D.R. Date of Hearing : 16 . 10 . 2023 Date of Pronouncement : 07 . 11 . 2023 O R D E R
Per : Kuldip Singh, Judicial Member:
The appellant, M/s. Shree Swami Samarth Seva Kendra (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 18.05.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2016-17 on the grounds inter-alia that :- 2 M/s. Shree Swami Samarth Seva Kendra “1. The Hon. CIT(A), National Faceless Appeal Centre (NFAC), Delhi erred in dismissing the appeal exparte, for alleged non-compliance to appeal notices, ignoring the adjournment request of the appellant to the notice issued, thereby denying the appellant any opportunity to furnish the requisite explanation and accordingly breaching the salient principles of equity, fairplay and natural justice for which reason the appeal order be quashed/set aside.
The Hon. CIT (A) erred in dismissing the appeal ex-parte, for alleged non- compliance to hearing notices, without deciding the appeal on the merits and for this reason also the order of the Hon. CIT(A) is bad-in-law and required to be set aside.
The Hon. CIT (A) erred in upholding the addition of Rs.31,84,320/- made by ld AO by disallowing the exemption claimed u/s 11(2) of the I.T. Act 1961, on account of accumulation of income of the appellant trust, for the reason that the prescribed Form no.10 was not furnished before the due date of furnishing of return of income u/s 139(1) of the I. T. Act 1961, which action being unjustified, the benefit of exemption claimed u/s 11(2) may kindly be granted.
4. The appellant craves leave to add, alter, amend, delete and/or vary any of the above grounds of appeal at any time before the decision of the appeal.”
2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : assessee trust being registered under section 12A of the Income Tax Act, 1961 (for short ‘the Act’) and with Charity Commissioner of Bombay filed its return of income with income and expenditure account, balance sheet and audit report in form No.10B declaring total income at Nil, which was subjected to scrutiny. Declining the contentions raised by the assessee the Assessing Officer (AO) proceeded to assess the income at Rs.31,84,320/- on the ground that the assessee is not entitled for benefit of accumulation of income under section 11(2) of the Act to the tune of Rs.31,84,320/- because form No.10 was furnished by the assessee beyond the due date of filing of income tax return as per section 139(1) of the Act. 3 M/s. Shree Swami Samarth Seva Kendra
3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal for want of prosecution. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Undisputedly the assessee is a trust registered under section 12A of the Act as well as Charity Commissioner, Bombay. It is also not in dispute that the assessee has not filed form No.10 along with its income tax return as required under section 139(1) of the Act but filed subsequently on 23.12.2016 along with income tax return under section 139(4) of the Act.
In the backdrop of the aforesaid undisputed facts and circumstances of the case the sole question arises for determination in this case is as to whether: “Audit report in form 10 filed by the assessee during the assessment proceedings is a sufficient compliance under the Act to extend the benefit of accumulation under section 11(2) of the Act?”
This issue has already been decided by the Hon’ble Supreme Court in case of Commissioner of Income Tax vs. Nagpur Hotel Owners’ Association (2001) 114 Taxman 255 (SC) as well as by the Hon’ble High Court of Gujarat in case of Commissioner of Income Tax (Exemptions) vs. Bochasanwasi Shri Akshar 4 M/s. Shree Swami Samarth Seva Kendra Purshottam Public Charitable Trust (2019) 102 taxmann.com 122 (Guj).
So in view of the matter we are of the considered view that filing of audit report in form No.10 by the assessee on 23.12.2016 during the assessment proceedings as the assessment order was passed on 25.10.2018 is a valid compliance under the Act and as such seeking benefit of section 11 by the assessee on the basis of audit report is admissible under the law. The AO as well as the Ld. CIT(A) have erred in not extending the benefit of section 11(2) for want of filing audit report in form 10 along with the return of income. So the AO is directed to extend the benefit claimed by the assessee under section 11(2) on the basis of audit report in form 10 filed on 23.12.2016 during the assessment proceedings subject to verification.
Resultantly, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 07.11.2023.