R K JAIN FOUNDATION,RAJKOT vs. THE ITO EXEMPTION, WARD (1), RAJKOT, RAJKOT

Therefore, Ld. Counsel for the assessee submitted that Form No.10B, was filed by the assessee before the passing of intimation-order u/s 143(1) of the Act, on 29-11-2021, hence the same should have been considered by the CPC-AO. In any case, the delay is covered by Covid period of grace (15-03-2020 to 30-05- 2022) as per Supreme Court decision dated 10-01-2022. From the tax portal, it appears that there was no intimation to the assessee, as required by first proviso to section 143(1)(a) prior to passing of the adjustment order u/s 143(1) of the Act, hence the adjustment becomes invalid in law. Without prejudice to above ground, ld.Counsel submitted that gross income cannot be taxed. The amount applied is same as current year's income hence total income would be Rs. Nil. Further, even if an issue is debatable, it does not admit of a prima-facie adjustment.

The Ld. Counsel for the assessee further submitted that considering the above facts, the issue under consideration is squarely covered in favour of the assessee by the decision of the ITAT, Rajkot Bench, in the case of Shree Ekta Education Trust, in ITA No. 177/Rjt/2025, for AY 2022-23, vide order dated 29.08.2025. The Ld. Counsel also submitted that the issue is squarely covered by the judgement of the High Court of Gujarat in the case of Sarvoday Charitable Trust (2021) 125 taxmann.com 75. Therefore, Ld. Counsel for the assessee submitted that the matter should be restored back to the file of the jurisdictional assessing officer with the direction to examine the Form 10B and then allow the claim of exemption u/s. 11 of the Act, as per the provisions of the Act.

On the other hand, the Ld. DR for the revenue did not raise any objection if the matter is restored back to the file of the jurisdictional assessing officer for examination of Form 10B (audit report) and then adjudicate the issue in accordance with law.

I have heard, both the parties and perused the material available on record. I find that the issue under consideration is squarely covered in favour of the assessee by the decision of the Co-ordinate Bench of Rajkot in the case of Shree Ekta Education Trust, in ITA No. 177/Rjt/2025, for AY 2022-23, vide order dated 29.08.2025, wherein it was held as follows: “8. We note that assessee has filed Form No.10B (Audit Report) during the appellate proceedings and therefore we find that this Form No.10B was not available before the assessing officer for his examination. In order to claim exemption u/s 11 of the Act, the assesseemay file audit report in Form No.10B, even at a later stage either before assessing officer, or before appellate authority, by showing a sufficient cause. Our above view is fortified by the judgement of Hon’ble jurisdictional High Court of Gujarat in the case of CIT vs. Xavier Kelavani Mandal (P.) Ltd., (2014) 41 taxmann.com 184 (Gujarat), where in it was held as follows: “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/[1998] 96 Taxman 494 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.” 9. We note that Co-ordinate Bench of ITAT, Ahmedabad in the case of Shree Charitable Trust vs. ITO, (2004) 158 taxmann.com 159, held that where assessee-trust filed Audit Report in Form 10B belatedly and assessing officer denied exemption u/s 11 of the Act, on ground that Form 10B was not filed along with return of income, since Audit Report was not considered and verified by assessing officer, and the impugned order was to be set aside and AO was to be directed to verify Form 10B and then allow claim of exemption u/s 11 in accordance with law. Therefore, in the assessee`s case under consideration, before us, Audit Report in Form 10B, though filed belatedly by the assessee, the same was not considered and verified by the Assessing Officer u/s. 143(1) of the Act. We also find that there is no regular assessment order passed u/s. 143(3) of the Act in the assessee`s case, therefore we hereby direct the Jurisdictional Assessing Officer to verify the Form No. 10B and then allow the claim of exemption u/s. 11 of the Act in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes, in above terms.