TRILOK SINGH BHANDARI CHARITABLE TRUST,NEW DELHI vs. ITO,WARD EXEMPTION 2(3), DELHI

At the time of hearing, ld. AR for the assessee reiterated the submissions made before the ld. CIT (A). He submitted that the delay in filing the appeal before the ld. CIT (A) may be condoned and the matter may be remitted back to the ld. & 3211/DEL/2024 CIT(A) to decide afresh on merits with the prayer to give an opportunity of being heard to the assessee.

On the other hand, ld. DR for the Revenue objected to the submissions of the ld. counsel for the assessee and relied on the findings of the ld. CIT (A).

Since the issues are common and the appeals are connected, hence the same are heard together and are being disposed off by this common order. I take AY 2017-18 as lead case. The assessee has taken the following grounds of appeal :-

That even otherwise the adjustments so made in the intimation u/s 143(1) of the Act or debatable and contentious issues and thus untenable.

At the outset of the hearing, ld. AR of the assessee that the basis adopted to deny the claim of exemption of Rs.14,31,437/- u/s 11 & 12 of the Act in intimation u/s 143(1) of the Act is as under :- "As per Section - 12A(1)(b) of Income tax Act read with 151 Proviso to Rule 12(2) of the Income Tax Rules, where the total income of the trust or institution without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income tax, the audit report in Form - 10B has to be E-filed along with the return of income. Since assessee has not E-filed the Audit Report in Form 10B along with or before filing of the Return of Income, the exemption u/s 11 i.e. sr. no. 1 & SI. No. 4i to 4viii in Schedule Part B- TI is not allowed."

Further ld. AR of the assessee prayed that the adjustment made may kindly be held to be not in accordance with law and beyond the scope of powers contained in section 143(1)of the Act and therefore, may kindly be deleted. Furthermore, he submitted that intimation so made be also held to be without jurisdiction and be quashed as such and appeal of the & 3211/DEL/2024 assessee may be allowed. He prayed that claim of exemption u/s 11 and 12 of the Act may be allowed and demand raised alongwith interest levied may be held to be not tenable and not in accordance with law and appeal of the assessee be allowed.

Considered the rival submissions and material placed on record. I observed that the assessee was claiming the benefit u/s 10B(8) of the Act as per the provisions of section 10B and the assessee has to comply certain conditions failing which the assessee will loose the benefit. In the present case, the assessee has to file the audit report in Form 10B before the due date as per Rule 12A(1)(b) of the Rules. I observed that the above conditions of filing the Form 10B was relaxed by the CBDT in the earlier assessment years, therefore, it clearly shows that it is only directory in nature and not mandatory, since, it is in compliance with Rules framed for availing the benefit under the provisions of Section 11 and it is held that to be directory in nature. I noticed that assessee relied on the decision of Hon’ble Madras High Court in the case of Shri Chandraprabhuji Maharaj Jain Juna Mandir Trust (supra), wherein it is held as under: “8. As noted by us earlier, the assessee filed the return of income for the assessment year under consideration on 02.04.2009, which was processed and intimation under Section 143(1) of the Act was issued on 21.01.2011. Thus, & 3211/DEL/2024 there was no assessment under Section 143(3) of the Act. The assessee, while filing the petition under Section 154 of the Act, on 22.03.2011, pointed out that the assessee filed the Form No.10 along with the Board Resolution along with the covering letter dated 01.04.2019. However, the mistake done by the assessee was to file hard copies before the Assessing Officer, and not filing the same along with the return of income, which they filed on 02.04.2019. Thus, on the date when the return was taken up for assessment, there was record to show that the assessee had intimated the department about the resolution passed by the Board of the assessee Trust and the statutory Form No.

Admittedly, the assessment was not completed under Section 143(3) of the Act and therefore, there would have been no error had the assessing officer taken up the copy of the Board Resolution and Form No.10. Thus, on the date when the return was filed, the assessee had separately filed Form No. 10 along with the Board Resolution along with a covering letter dated 01.04.2009. Thus, in our considered opinion, when the assessee was entitled to a statutory benefit, it would be incumbent upon the concerned authority to examine the admissibility of the benefit than to foreclose the assessee on technicalities.”

Further ld. AR relied on the decision of the Hon’ble Gujrat High Court in the case of CIT-IV vs. Xavier Kelavani Mandal (P.) Ltd. (supra), wherein it is held as under: “4. The question whether it is permissible to the assessee to produce the audit report at the appellate stage, has already been answered by this court in CIT v. Gujarat Oil & Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report along with the return has to be treated as a procedural provision, It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income, but produced before completion of the assessment. The Punjab and Haryana High Court in CIT v. Shahzadanand Charity Trust [1997] 228 ITR 292 has reiterated the same principle holding that the benefit of exemption should not be denied merely on account of delay in furnishing the same, and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by showing a sufficient cause. This decision of Punjab & Haryana High Court has been relied on by the Tribunal.

In the above view, the Tribunal is eminently justified both in law and on facts in observing and holding as under.- "In this case, it is not in dispute that the audit report in prescribed form was obtained prior to filling of the return on 20/12/2006; therefore, there was no reason for the assessee to keep the audit report with it in order to loose the exemption. The assessee in the earlier as well as in the subsequent assessment years filed the audit report and got the exemption. The conduct of the assessee in & 3211/DEL/2024 earlier year and subsequent years would prove that due to the facts stated above there was delay in filing the audit report and the contention of the assessee was supported by the affidavit of Mohmad Iqbal Vohra (PB-4). The learned CIT(A) on proper appreciation of the facts and material on record in the light of the decisions of the Hon'ble Punjab & Haryana High Court and the Hon'ble Calcutta High Court rightly directed the AO to accept the audit report of the assessee and grant exemption u/s. 11 of the IT Act."

Respectfully following the aforesaid decisions, I am inclined to allow the claim made by the assessee and, accordingly, I direct the Assessing Officer to allow the claim of the assessee u/s 11 and 12 of the Act.

In the result, the appeal filed by the assessee being AY 2017-18 is allowed.

With regard to appeal for AY 2017-18 is concerned, since the facts are exactly similar to AY 2019-20 my above findings in AY 2017-18 are applicable mutatis mutandis in AY 2016-17. Accordingly, the appeal being for AY 2019-20 filed by the assessee is also allowed. 16. To sum up : both the appeals filed by the assessee are allowed. Order pronounced in the open court on this 14th day of May, 2025.