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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & SHRI S. RIFAUR RAHMAN, AM
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI S. RIFAUR RAHMAN, AM आयकरअपीलसं./ I.T.A. No. 1924/Mum/2022 (निर्धारणवर्ा / Assessment Year: 2020-21) ACIT, Trust Circle/CPC, Awaaz Foundation, MTNL building, Peddar C/o- Sumaira Abdulali, 3, बिधम/ Road, Mumbai-400 026 Reshma Apartment, 13 pali Vs. Hill Road, Near Petit School, Bandra (W) Mumbai-400 050 स्थायीलेखासं./जीआइआरसं./ PAN No. AABTA8994Q (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant by : Shri N. R. Agarwal, Ld. AR प्रत्यथीकीओरसे/Respondent by : Shri Manoj Sinha, Ld. DR सुनवाईकीतारीख/ : 03.10.2022 Date of Hearing घोषणाकीतारीख / : 30.11.2022 Date of Pronouncement आदेश / O R D E R Per Amit Shukla, Judicial Member: The aforesaid appeal has been filed by the assessee against the impugned order dated 26.07.2022, passed by National Faceless Appeal Centre (NFAC), Delhi in relation to intimation u/s 143(1) for AY 2020-21. The assessee has raised the following grounds of appeal:-
2 I.T.A. No. 1924/Mum/2022 Awaaz Foundation 1. The learned CIT (Appeals) erred in not giving exemption u/s 10(23C)(v). 2. The learned CIT (Appeals) erred in Taxing gross income at Rs. 10,74,322/- instead of Rs. 50,117/- without allowing any expenses as per profit & loss account & not deciding ground no 2 of the assessee 2. The facts in brief are that, assessee is a charitable trust registered u/s 12A. The assessee had received donation of Rs. 10,74,322/- and claimed exemption u/s 10(23C)(v) and u/s 11 of the Act. In the intimation issued u/s 143(1), exemption was denied on the ground that audit report in Form 10BB was not filed alongwith return of income filed on 31st December 2020. However, as per the computation of total income, the net profit of income and expenditure account was Rs. 50,117/- on which assessee had claimed exemption u/s 10(23C)(v) and u/s 11 of the Act. The CPC issued show cause notice of proposed adjustment u/s 143(1)(a) in the following manner:- As per the details furnished in the return of income, the assessee is approved u/s 10(23C)(iv) OR 10(23C)(v) OR 10(23C)(vi) OR 10(23C)(via) and has not e-filed the Audit Report in Form 10BB within the specified date. Hence the exemption claimed in Sr.no. 4i
3 I.T.A. No. 1924/Mum/2022 Awaaz Foundation to 4viii of Part B-TI is disallowed in accordance with the provisions of the Income tax Act. 3. The assessee filed declaration in Form 10B on 25.11.2020 which was beyond the due date and after the extended due date of filing the return of income. The AO /CPC has taxed the total gross receipts of Rs. 10,74,322/- without even allowing the expenses of Rs. 10,24,205/- when the net income of the Trust was only Rs. 50,117/- and claim was on this amount only. Assessee applied for rectification which was also rejected by CPC vide order dated 20.04.2022.
Further, assessee filed the appeal before Ld. First Appellate Authority requesting to condone the filing in Form 10B. Ld. CIT(A) referred to the CBDT circular No. 2 of 2020 dated 30.01.2020 wherein it has been stated that, the authority to condone the delay vests with Ld. CIT(Exemp.). The relevant circular as well as the order of Ld. CIT(A) reads as under:- Under the provision of section 12A of Income-tax Act, 1961 (hereafter 'Act') where the total income of a trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is
4 I.T.A. No. 1924/Mum/2022 Awaaz Foundation not chargeable to income tax in any previous year, the accounts of the trust or institution for that year have to be audited by any accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in the prescribed from duly signed and verified by such accountant and setting forth such particulars as may be prescribed. 2. As per Rule 17B of the Income-tax Rules, 1962 (hereafter 'Rules') the audit report of the accounts of such a trust or institution is to be furnished in Form No. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed from along with the return of income results in disentitlement of the trust or institution from claiming exemption under sections 11 and 12 of the Act. 3. Representations have been received by the Board/field authorities stating that Form No. 10B could not be filed along with the return of income for A. Y. 2016-17 and A. Y. 2017-18. It has been requested that the delay in filing of Form No. 10B may be condoned. Previously, vide instruction in F.No. 267/482/77-IT(part) dated 9-2-1978, the CBDT had authorized the ITO to accept a belated audit report after recording reasons in cases where some delay has occurred for reasons beyond the control of the assessee. 4. Accordingly, the CBDT issued Circular No. 10/2019 circulated through No.97/55/2018-ITA-I in supersession of earlier
5 I.T.A. No. 1924/Mum/2022 Awaaz Foundation circular/Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trust or institution for condoning the delay in filing Form No. 10B and in the exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes vide Circular No. 10/2019 dated 23rd May, 2019 and Circular No. 28/2019 dated 27th September, 2019 both issued vide F.No. 197/55/2018-ITA-l has directed that:- (i) The delay in filing of Form No. 10B for A. Y. 2016-17 and A.Y. 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified .under section 139 of the Act is condoned. (ii) In all other cases of belated applications in filing Form No. 10B. for years prior to AY. 2018-19, The commissioner of Income-tax are authorized to admit and dispose off by 31.03.2020 such applications for condonation of delay u/s 119(2)(b) of the Act. The Commissioner will while entertaining such belated applications in filing Form No. 10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. 5. In addition to the above, it has also been decided by the CBDT that where there is delay of upto 365 days in filing Form No. 10B for Assessment Year 2018-19 or for any subsequent "Assessment Years, the Commissioners of Income-tax are hereby authorized to
6 I.T.A. No. 1924/Mum/2022 Awaaz Foundation admit such belated applications of condonation of delay under section 119(2) of the IT Act and decide on merits. 6. The Commissioners of Income-tax shall, while entertaining such belated applications in filing Form No. 10B, satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. As seen from the above for AY 2018-19 and subsequent years, if Form 10B is delayed upto 365 days, can condone the delay Commissioner of Income Tax (Exemptions) (CIT -t) can condone the delay. Further, as per decision of the Bombay High Court in the case Little Angels Education Society [2021] 127 taxmann.com 473 [Bombay] the condonation for delay in filing of Form No.106 the Hon'ble High Court has discussed the circular No.2 of 2020 of CBDT dated 03.01.2020 which authorizes Commissioners to condone the delay in filing of Form No.10B upto 365 days in filing of Form No. 10B and has upheld the same. As in that case, delay in filing Form No.10B for A.Y.:2018-19 was beyond 365 days, the assessee was advised to approach CBDT u/s.119(2)(b) to authorize Commissioner (Exemptions) to condone delay in filing Form No. 10B for A.Y.:2018-19. However, in the present case the appellant has not given details if the condonation of delay in filing of form no.10B has been filed before the Commissioner (Exemptions) or not. The condonation of
7 I.T.A. No. 1924/Mum/2022 Awaaz Foundation delay can be done by CIT (Exemption) only according to circular No.2 of 2020 of CBDT dated 03.01.2020 & is advised accordingly. Therefore, the appeal is dismissed. 5. After hearing both the parties and on perusal of the impugned order as well as material preferred before us, we find that there is no dispute that assessee had not filed audit report in Form 10B, which is one of the condition precedent for claiming benefit or exemption u/s 10(23C)(v) and u/s 11 of the Act. The CBDT circular as noted above, prescribes that, for AY 2018-19 or for any subsequent assessment years, the Commissioner of Income Tax were authorized to admit such belated application of condonation of delay u/s 119(2) of the Act and decide on merits. Further, the Hon’ble Bombay High Court in the case of Little Angels Education Society (2021) 127 taxmann.com 473 (Bom) has further upheld the CBDT circular which authorizes Commissioner to condone the delay for filing Form 10B up to 365 days. Here as noted by Ld. CIT(A), the assessee has not given the details if any such condonation of delay in filing Form 10B was filed before Ld. CIT(Exemp.) who alone had the authority to condone the delay. Now once the CBDT circular which has been issued to clarify statutory
8 I.T.A. No. 1924/Mum/2022 Awaaz Foundation provisions given in rule 17B and such clarification of guidelines has also been upheld by the Hon’ble High Court, then we do not find any infirmity in the order of Ld. CIT(A) and accordingly we uphold the order of Ld. CIT(A) that the late filing of Form 10B can only be condoned by the prescribed authority within the time limit given, which here in this case has not been complied with. Accordingly, this issue raised by the assessee is dismissed.
However, the taxing of entire receipts of Rs. 10,74,322/- is unjustified, because once the benefit of exemption u/s 10(23C)(v) or 11 is denied, then the income has to be computed as per the income and expenditure account and only the net profit alone can be taxed. Here the net income of Rs. 50,117/-, therefore that alone should have been taxed. However, the expenses of Rs. 10,24,205/- needs to be verified by the AO, therefore, this matter is remanded back to the file of AO to verify the expenses and if expenses claimed in the expenditure account are found to be verifiable, the same should be allowed and only the net income should be taxed.
In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.
9 I.T.A. No. 1924/Mum/2022 Awaaz Foundation Orders pronounced in the open court on 30thNovember, 2022. Sd/- Sd/- (S. Rifaur Rahman) (Amit Shukla) Accountant Member Judicial Member मुंबई Mumbai;ददनांक Dated : 30.11.2022 Sr.PS. Dhananjay आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned 5. दवभागीयप्रदतदनदध, आयकरअपीलीयअदधकरण, मुंबई/ DR, ITAT, Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER,
.उि/सहधयकिंजीकधर (Dy./Asstt.Registrar) आयकरअिीिीयअनर्करण, मुंबई/ ITAT, Mumbai