JEEVAN KALYANA SADHAN KENDRA,NUAPADA vs. ITO (EXEMPTION), SAMBALPUR
What did the Tribunal hold?
The Tribunal held that filing the audit report along with the return is not mandatory and can be filed at the appellate stage. The delay in filing was considered a venial breach, and the CBDT's instructions allow for condoning such delays.
What were the facts?
The assessee, a trust, failed to file its audit report in Form 10B along with its return of income for AY 2015-16 due to its auditors' oversight. The report was eventually filed much later, but the CIT(A) dismissed the appeal, citing ignorance of law as no excuse.
What were the issues?
Whether the non-filing of the audit report in Form 10B along with the return of income disentitles the trust from claiming exemption under Sections 11 and 12, and if a belatedly filed report can be considered.
Which sections of the Income-tax Act were involved?
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Cases cited in this judgment(2)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. ACE Multitaxes Systems (P.) Ltd.107 citing317 ITR 207 · 2009 · HC
- CIT v. Shahzadanand Charity Trust62 citing228 ITR 292 · 1997 · HC
Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA
O R D E R Per Bench This is an appeal filed by the assessee This is an appeal filed by the assessee against the order of the ld against the order of the ld CIT(A), , NFAC, NFAC, Delhi, Delhi, dated10.3.2022 in Appeal No.ITBA/NFAC/S/250/2021 ITBA/NFAC/S/250/2021-22/1040548106(1) for the assessment year for the assessment year 2015-16.
Shri Natabar Panda, ld AR appeared for the assessee and Shri Shri Natabar Panda, ld AR appeared for the assessee and Shri Shri Natabar Panda, ld AR appeared for the assessee and Shri S.C.Mohanty, ld Sr DR appeared for the revenue. S.C.Mohanty, ld Sr DR appeared for the revenue.
It was submitted by ld AR that the assessee is a trust, which had It was submitted by ld AR that the assessee is a trust, which had It was submitted by ld AR that the assessee is a trust, which had filed its return of income for the relevant assessment year filed its return of income for the relevant assessment year filed its return of income for the relevant assessment year. However, when the return of income was filed, the auditors of the assessee had failed to the return of income was filed, the auditors of the assessee had failed to the return of income was filed, the auditors of the assessee had failed to P a g e 1 | 5 include the Form 10B being the audit report alongwith return of income. It was the submission that the due date for filing the audit report was 30.9.2015 and the mistake in filing of the audit report was noticed and same was rectified on 21.11.2019. It was the submission that on appeal, the ld CIT(A) had dismissed the assessee’s appeal on the ground that ignorance of law is not an excuse. It was the submission that the assessee is dependent on its Chartered Accountant and Auditors for filing the return. The mistake done by the auditors should not put the assessee on a disadvantage position as long as the assessee has not been found to be perse at fault. It was the submission that various Courts have held that the filing of the audit report alongwith return of income is not mandatory. It was the submission that various Hon’ble High Courts have also held that the filing of the audit report even before the appellate authority is sufficient compliance. It was the submission that the audit report has been filed on 21.11.2019 and the ld CIT(A) has adjudicated the appeal only on 10.3.2022. It was the submission that much before the appellate authority had adjudicated the appeal, the audit report had been filed. Ld AR also referred to the instruction No.1/1148 dated 9.2.1978 issued by CBDT, which reads as follows:
“BOARD'S INSTRUCTION NO. 1/1148 [F.NO. 267/482/77-IT(PART) ] Charitable trust—Requirement of filing audit report in Form 10B— Sec. 12A(b)—Instructions regarding 09/02/1978
P a g e 2 | 5 CHARITABLE TRUSTS SECTIONS 12A, The Board have considered whether the requirement under s. 12A(b) of filing audit report ‘along with the return of income' is mandatory so as to disentitle the trust from claiming exemption under ss. 11 and 12 in case of omission to furnish such report in the prescribed form along with the return. Normally, it should be possible for a charitable or religious trust or institution to file the auditor's report along with the return of total income, where such trust or institution claims exemption under ss. 11 and 12. However, in cases where for reasons beyond the control of the assessee some delay has occurred in filing the said report the exemption as available to such trust under ss. 11 and 12 may not be denied merely on account of delay in furnishing the auditor's report and the ITO should record reasons for accepting a belated audit report.”
It was the submission that even the CBDT has held that if the delay in filing the report was for the reasons beyond the control of the assessee, same should be condoned. It was the prayer that the Assessing Officer may be directed to consider the audit report filed in Form No.10B. Ld AR has also relied upon the decision of the Hon’ble Karnataka High Court in the case of CIT vs ACE Multitaxes Systems Pvt Ltd., (2009) 317 ITR 207 (Kar), wherein, the Hon’ble High Court following the decision of the Hon’ble P&H High Court in the case of CIT vs. Shahzedanand Charity Trust, 228 ITR 292 (P&H), wherein, it has been held that the audit report u/s.12A(b) which is the audit report in Form 10B can be furnished at the appellate stage also, has held that the audit report having been filed, the assessee is entitled to deduction 80IB of the Act.
P a g e 3 | 5
In reply, ld Sr DR relied upon the decision of the Co-ordinate Bench of Panaji Bench of this Tribunal in the case of Vice Chancellor, Vishweshwaraiah Technological University (2014) 42 taxmann.com 205 (Panaji) to submit that the provisions of section 12A(1)(b) are mandatory. It was the submission that the order of the Assessing Officer and ld CIT(A) is liable to be upheld.
We have considered the rival submissions. A perusal of the decision of the Hon’ble P&H High Court in the case of Shahzedanand Charity Trust(supra) clearly shows that the Hon’ble P&H High Court has categorically held that the audit report u/s.12A(1)(b) of the Act can be filed even at the appellate stage. Thus, clearly, the Hon’ble P&H High Court has held that the filing of the audit report alongwith the return as per provisions of section 12A(1)(b) of the Act is not mandatory. As we are faced with a decision of the Hon’ble High Court on the issue, the decision of the Co-ordinate Bench of this Tribunal would not hold value of precedence. Thus, clearly, it is noticed that the audit has been done within time in the case of the assessee and it is only the audit report which has not been filed within the time prescribed. This is only a venial breach of the provisions. This being so, as also considering the fact that CBDT in its Instruction No.1/1148(supra) has given the powers to the Assessing Officer to condone the delay in filing of the audit report, we are of the view that the impugned assessee should not be denied the benefit of deduction u/s.11 & 12 of the P a g e 4 | 5 Act on account of the said venial breach in respect of the delay in filing of the audit report. Consequently, the delay in filing of the audit report in Form 10B is condoned and the Assessing Officer is directed to consider the same when computing the income of the assessee.
In the result, appeal of the assessee stands allowed.
Order dictated and pronounced in the open court on 02/03/2023.
Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 02/03/2023 B.K.Parida, SPS (OS) Copy of the Order forwarded to : 1. The Appellant : Jeevan Kalyana Sadhana Kendra, Nuapada 2. The Respondent: ITO (Exemption), Sambalpur 3. The CIT(A)-, NFAC, Delhi 4. Pr.CIT-, Sambalpur 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// By order
Sr.Pvt.secretary ITAT, Cuttack
P a g e 5 | 5
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