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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI GAGAN GOYALShri Labdhi Vikram Shashan Trust
This appeal by assessee is directed against the order of National Faceless Appeal Centre (for short ‘NFAC’) dated 07.12.2022 u/s. 250 of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 2017-18. The assessee has raised the following grounds of appeal:
SHRI LABDHI VIKRAM SHASHAN SEVA TRUST “1. The Learned CIT(A)/NFAC erred in confirming order of A.O. denying exemption in terms of Section 11 of the Income Tax Act, 1961 on the ground that Audit Report in Form No 10B is not filed along with the original return of income without appreciating that ITR-7 rectified was filed on 28/11/2019 and the Audit report was also filed on 28/11/2019 and further Audit report u/s. 10B was obtained on 30/9/2017 i.e. before filing original return of income and the delay if any was bonafide and condonable and hence denial of exemption u/s. 11 is bad in law. 2) The Learned CIT (A)/NFAC failed to appreciate that corpus donation i.e. tied up funds of Rs. 58, 13,455/- is not income and hence addition of Rs. 58, 13,455/- may be deleted. 2.1) The Learned CIT (A)/NFAC erred in not adjudicating that corpus donation i.e. tied up funds of Rs. 58, 13,455/- is not income and hence addition of Rs. 58, 13,455/- may be deleted. 3) The Learned CIT(A)/NFAC failed to appreciate that if voluntary contribution of Rs. 21,07,522/- is taxed then the expenses incurred out of said income ought to be allowed and only net income can be taxed. 4) The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal
.”
2. Brief facts of the case are that the assessee trust filed its return of income on 31.03.2018 declaring taxable income at Rs. 5,17,097/-. In this return, assessee claimed exemption of Rs. 21, 07,522/- available u/s. 11(1) (a) of the Act comprising of Rs. 17, 13,829/- being the income applied for religious or charitable purposes and Rs. 3, 93,693/- being the amount accumulated for application to charitable or religious purposes to the extent it does not exceed 15% of income derived from property held in Trust.
3. In addition to above, assessee also received Rs. 58, 13,455/- as corpus donation and claimed the same as exempt u/s. 11(1) (d). Assessee filed its return without uploading audit report in form No. 10B signed vides date 30.09.2017. In response to this return, CPC Bangalore did not consider the SHRI LABDHI VIKRAM SHASHAN SEVA TRUST exemption (vide its intimation dated 21.08.2018) claimed by the assessee u/s. 11(1) (a) amounting to Rs. 21, 07,522/- and further exemption u/s. 11(1) (d) amounting to Rs.58, 13,455/-. Against this intimation, assessee trust filed an application u/s. 154 of the Act before the CPC vide dated 13.03.2019. Thereafter assessee again filed rectification application u/s. 154 of the Act repeatedly on 28.11.2019, 04.02.2020 and 24.05.2020. In response to all the applications CPC Bangalore issued an order dated 10.08.2020 rejecting all the applications. Assessee being aggrieved with this order of CPC Bangalore preferred and appeal before the Ld. CIT (A). This appeal filed by the assessee was also rejected by the Ld. CIT(A) on the ground that tax audit report in form No. 10B has not been filed within the time prescribed by section 12A(1)(b) read with 1st proviso to Rule 12(2) of the Income Tax Rules 1962.
For assessment year 2016-17 and 2017-18, the Board has issued a circular vide F No. 197/55/2018-ITA-I in Circular No. 7/2018 and F. No. 197/55/2018-ITA-I in Circular No. 30/2019 dated 17.12.2019 and delegated the powers to the Ld. CIT (E) to condone such delay in filing form No. 10B in respect of assessment year 2016-17 and 2017-18. It is observed that assessee filed an application for condonation of delay in filing form no. 10B for the relevant assessment year before the Ld. CIT(E) vide dated 03.01.2020.
We have gone through the intimation issued u/s. 143(1) dated 21.08.2018, order u/s. 154 dated 10.08.2020, order of Ld. CIT(E) rejecting application for condonation of delay u/s. 119(2)(b) dated 22.10.2021 and order of Ld. CIT(A) vide dated 07.12.2022. In our observation, original return filed by the assessee on 31.03.2018 was filed u/s. 139(4) i.e. belated return
SHRI LABDHI VIKRAM SHASHAN SEVA TRUST without tax audit report in form no. 10B. Assessee filed another return of income on 28.11.2019 along with copy of audit report in form no. 10B. It is further observed that application for condonation of delay filed by the assessee as mentioned (supra) was rejected by the Ld. CIT (E) on the ground that the figures as contained in form no. 10B before him and return filed by the assessee are not matching. We have examined this issue; this difference was there because the Ld. CIT (E) considered the original return filed on 31.03.2018 instead of considering the return filed by the assessee along with audit report on 28.11.2019. It is a factual error committed by the Ld. CIT (E) meaning thereby assessee was entitled to get condonation of delay in filing of tax audit report in form no. 10B.
As observed by us that appeal of the assessee was rejected solely on the ground of not having condonation of delay in filing of form no. 10B. As observed (supra) Ld. CIT (E) dealt with wrong factual figures and in advertently dismissed the application of the assessee considering the facts of the case and documents before us, we condone this delay of the assessee in filing tax audit report in form no. 10B. Consequent to this, the deficiency in the return of the assessee is also removed and return filed by the assessee is treated to be valid in all respect. As per law, if the tax audit report was available with the assessee at the time of filing of return of income and was not filed due to bonafide reasons, the benefit of exemption u/s. 11 cannot be denied if otherwise assessee is eligible to claim the same. To strengthen our view with relied upon the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. Mumbai Metropolitan Regional Iron and Steel Market Committee 378 ITR 103 (Bom).
SHRI LABDHI VIKRAM SHASHAN SEVA TRUST 7. Based on above discussion and the judicial pronouncements on the matter under consideration by the Hon’ble Jurisdictional High Court in the case of CIT vs. Mumbai Metropolitan Regional Iron and Steel Market Committee (supra), we can safely held that assessee has fully complied with the relevant provisions of the Act along with circular mentioned (supra) for getting delay condoned. In such circumstances, we restore the matter back to Ld. CIT (E) to reconsider the matter in the light of our findings and judicial pronouncements followed by us.