COMMISSIONER OF INCOME TAX vs. SANKALP WELFARE SOCIETY

ITA/89/2007HC Punjab & HaryanaPHHC01073386200714 August 2007Author: MR. JUSTICE M.M. KUMAR,MR. JUSTICE AJAY KUMAR MITTAL3 pages
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What did the High Court hold?

The High Court held that the questions raised by the Revenue were answered in favor of the assessee and against the Revenue. The Court relied on the submissions made by the assessee's counsel, who pointed to the Full Bench judgment of the High Court in CIT v. Punjab Financial Corporation (2002) 254 ITR 6. This judgment established that the provisions of Section 32AB(5) of the Act are not mandatory, and the Assessing Officer has the discretion to accept an audit report even if it is not filed along with the return of income, for the purpose of granting the benefit of deduction under Section 32AB(1). The Court also noted that a Division Bench of the Madras High Court in CIT v. Print Systems and Products (2006) 284 ITR 260 had followed and applied the Punjab Financial Corporation decision. Since the Revenue's counsel could not controvert these submissions or provide any distinguishing features, the Court found no reason to deviate from the established precedents. The appeal was disposed of accordingly, with the questions being answered in favor of the assessee.

What were the facts?

The Commissioner of Income Tax, Faridabad (Revenue) appealed against an order dated 9.6.2006 passed by the Income Tax Appellate Tribunal (ITAT), Delhi "D" Bench SMC, New Delhi. The appeal concerned assessment year 2002-03. The ITAT had allowed exemption under Section 11 of the Income Tax Act, 1961, to the assessee, Sankalp Welfare Society, Gurgaon. The Revenue's appeal to the High Court raised questions regarding the fulfillment of statutory requirements for claiming this exemption, specifically the filing of an audit report in Form No. 10B as stipulated by Section 12A(b) of the Act.

What were the issues?

1. Whether the Hon'ble Tribunal was right in allowing the exemption of Section 11 of the assessee even though it had failed to fulfill the statutory requirement of filing an audit report in Form No. 10B as provided by Section 12A(b) of the Income Tax Act, 1961. 2. Without prejudice to the first ground, whether the Hon'ble ITAT was right in relying on the decision in the case of Commissioner of Income Tax v. Punjab Financial Corporation (254 ITR 6 (P&H)), when there is no mandatory requirement in Section 32AB of the Income Tax Act, 1961, to submit the audit report along with the return of income. 3. Without prejudice to the first two grounds, whether the Hon'ble ITAT was right in relying on the decision in the case of Commissioner of Income Tax v. Devradhan Mahavlal Genda Trust (230 ITR 714) although the audit report was not filed during the assessment proceedings, but during the appellate proceedings. Assessee's Contention: The assessee argued that the controversy was settled by a Full Bench judgment of the High Court in CIT v. Punjab Financial Corporation (2002) 254 ITR 6, which held that Section 32AB(5) provisions are not mandatory and the Assessing Officer has discretion to entertain an audit report filed after the due date for granting deductions under Section 32AB(1). The assessee also cited the Madras High Court's decision in CIT v. Print Systems and Products (2006) 284 ITR 260, which followed the Punjab Financial Corporation ruling. Revenue's Contention: The revenue could not controvert the assessee's submissions nor point out any distinguishing features.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A(b),Section 32AB(1),Section 32AB(5)

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ITA 89 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 89 of 2007 Date of decision 14 .8 .2007 The Commissioner of Income Tax, Faridabad ..appellant Versus Sankalp Welfare Society, Gurgaon .. Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE AJAY KUMAR MITTAL PRESENT: Mr. Yogesh Putney, Advocate for the Revenue.

Mr. Rajiv Sharma, Advocate for the assessee. M.M.Kumar, J.

The revenue has approached this Court claiming that the following substantial question of law would emerge from order dated 9.6.2006 passed in ITA No 546/DEL/2006 by the Income Tax Appellate Tribunal Delhi “D” Bench SMC New Delhi in respect of assessment year 2002-03. “ 1. On the facts and in the circumstances of the case, whether the Hon'ble Tribunal was right in allowing the exemption of section 11 of the assessee even though it had failed to fulfill the statutory requirement of filing audit report in Form No.10B as provided by section 12A(b) of the Income Tax Act,1961; 2.Without prejudice to the ground at serial no.1 above, and on the facts and circumstances of the case, whether the Hon'ble ITAT was right in relying on the decision in the case of Commissioner o

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