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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI KULDIP SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.1214/M/2022 Assessment Year: 2018-19
M/s. Savitri Phule Dattak CPC, Bangalore, Palak Sudharit Yojana Income Tax Officer 2(3), Nidhi Brihanmumbai, Piramal Chamber, C/o Office of Dy. Director Lalbaug, of Education, Mumbai- 400012 Vs. Ground Floor, Jawahar Balbhawan, Netaji Subhash Marg, Charni Road, Mumbai – 400 004 PAN: AAGTS2445F (Appellant) (Respondent)
Present for: Assessee by : Shri Rajesh Athavale, A.R. Revenue by : Shri Azhar Zain Vayal Parambath, D.R. Date of Hearing : 15 . 09 . 2022 Date of Pronouncement : 29 . 09 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: The appellant, M/s. Savitri Phule Dattak Palak Sudharit Yojana Nidhi Brihanmumbai (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 23.03.2022 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] [hereinafter referred to as the CIT(A)] qua the assessment year 2018-19 on the grounds inter alia that :-
ITA No.1214/M/2022 2 M/s. Savitri Phule Dattak Palak Sudharit Yojana Nidhi Brihanmumbai “1. The learned CIT(A) erred in confirming the action of the learned CPC/AO in disallowing the amount applied for achieving the object of the Trust.
The learned CIT(A) erred in not directing the CPC/AO to accept the income declared by the appellant in the return of income by claiming exemption under section 11 of the Income tax Act. 3. The learned CIT(A) erred in not appreciating the fact that although the income tax return was filed by the appellant without Form 10B, the appellant had filed Form 10B before the due date of filing the income tax return. Therefore, the income determined by applying the provisions of Section 11 ought to have been accepted. 4. Without prejudice to the above, the learned CIT(A) erred in not directing the learned CPC/AO to delete the additional tax demand raised as the adjustments made by the CPC/AO is not permissible u/s 143(1) of the Income tax Act and such adjustment cannot be made without issuing intimation to the appellant. 5. The learned CIT(A) erred in confirming the interest levied under Sections 234B and 234C of the Income tax Act.”
Briefly stated facts necessary for adjudication of the controversy at hand are : the assessee is a trust registered under section 12A of the Income Tax Act, 1961 (for short ‘the Act’) and sponsored by State of Maharashtra for financial aid to the poor girls to avoid dropouts from the school. For the year under consideration assessee trust claimed income from the interest on corpus to the tune of Rs.18,52,320/- plus income of Rs.22,84,000/- of earlier years i.e. A.Y. 2017-18 total comes to Rs.41,36,320/- out of which expenditure of Rs.36,88,050/- was made in order to cover up the income of A.Y. 2017-18. When DCIT(CPC) has not considered the income of Rs.18,52,320/- without considering accumulation of earlier years and expenditure of both the years merely on the ground that form 10B was filed on 18.10.2018 i.e.
ITA No.1214/M/2022 3 M/s. Savitri Phule Dattak Palak Sudharit Yojana Nidhi Brihanmumbai after filing the return of income for the year under consideration on 21.09.2018. DCIT(CPC) thereby framed the assessment by creating a tax liability of the assessee trust at Rs.4,51,479/-.
Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has dismissed the appeal. Feeling aggrieved the assessee trust has come up before the Tribunal by way of filing present appeal.
I have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Bare perusal of the impugned order passed by the Ld. CIT(A) goes to prove that the appeal filed by the assessee trust has been dismissed merely on the technical grounds without looking into the facts as to the late filing of form 10B along with return of income by the assessee trust, by returning following findings: “Having considered the submissions of the appellant, the provisions of section 12A(b) of the Income Tax Act, 1961 has given certain conditions which are to be fulfilled for claiming deduction u/s 11 and 12 of the Act. The relevant provisions of the section, as applicable for the assessment year, are reproduced as below – Conditions for applicability of sections 11 and 12. 12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:— …… (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11
ITA No.1214/M/2022 4 M/s. Savitri Phule Dattak Palak Sudharit Yojana Nidhi Brihanmumbai and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year. The provisions of section 12A(1)(b) clearly state that the assessee should furnish the 'audited account along the return of income for .the relevant assessment year. And as per the provisions of Rule 17B, the report of audit of the accounts of a trust or institution which is required to be furnished under clause (b) of section 12A, shall be in Form No.10B. Therefore, as per the provisions of law, for claiming deduction u/s 11 and 12, audit report in Form No 10B has to be furnished along with the return of the income. 7. It is seen that the appellant has filed return of income on 21-09- 2018 without the mandatory audit report in Form 10B. The audit report in Form 10B was reportedly filed on 18-10-2018. There is nothing on record to show that the appellant has applied for condonation of delay of filing Form No 10B. It may be seen that the Central Board of Direct Taxes (CBDT) issued Circulars from time to time with regard to condonation of delay for filing Form No 10B from time to time to those who have applied for condonation of delay u/s 119(2)(b). However, these circulars are meant for assessees who have applied for condonation of delay u/s 119(2)(b) and where the delay has occurred for reasons beyond the control of the assessees. It may be noted that these circulars in no way dilute the provisions of section 12A(1 )(b) of the Income Tax Act.”
Undisputedly, return of income for the year under consideration was e-filed on 21.09.2018 without annexing therewith form 10B, which was actually filed on 18.10.2018, but well before the last date of filing return of income i.e. 31.10.2018. No doubt in order to claim the deduction under section 11 & 12 of the Act conditions laid down in the provisions contained under section 12A(b) of the Act need to be complied with by the assessee trust but at the same time when filing of audit report in form No.10B has not been filed along with return due to some technical reasons, DCIT(CPC) was not empowered to make any adjustment/create a demand without issuing notice to the assessee.
ITA No.1214/M/2022 5 M/s. Savitri Phule Dattak Palak Sudharit Yojana Nidhi Brihanmumbai 7. Undisputedly no notice has been given to the assessee by the CPC before disallowing the expenditure claimed by the assessee as a trust that too without considering audit report filed in form No.10B.
This issue has already been decided by the Hon’ble High Court of Madhya Pradesh, Hon’ble High Court Calcutta & Hon’ble Gujarat High Court in case of CIT vs. Devradhan Madhavlal Genda Trust (1998) 230 ITR 714 (MP), CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 65 Taxman 273 (Cal) & CIT vs. Gujarat Oil & Allied Industries (1993) 201 ITR 325 respectively wherein it is held that filing of audit report in form 10B during the course of assessment proceedings is sufficient compliance of section 12A(b) which has to be considered. So the exemption otherwise available to the assessee trust under section 11 cannot be denied merely on account of delay in furnishing of audit report in form 10B as required under section12A(b) of the Act. So in the present case audit report having been filed by the assessee trust well prior to the last date of filing of return is a sufficient compliance of section 12A(b) of the Act.
Moreover, the proviso to section 143(1)(a) of the Act specifically provides that no adjustment shall be made unless (as specified in clause (a) to section 143(1) of the Act) intimation is given to the assessee trust of such adjustment either in writing or in electronic mode and in case response is not received within 30 days the adjustment can be made. So in this case no notice whatsoever has been given to the assessee.
ITA No.1214/M/2022 6 M/s. Savitri Phule Dattak Palak Sudharit Yojana Nidhi Brihanmumbai 10. In view of what has been discussed above, I am of the considered view that the order passed by the Ld. CIT(A) is not sustainable in the eyes of law, hence set aside. The AO is directed to grant the deduction claimed by the assessee trust under section 11 of the Act, by considering audit report in form 10B after due verification. Resultantly, appeal filed by the assessee is allowed.
Order pronounced in the open court on 29.09.2022.
Sd/- (KULDIP SINGH) JUDICIAL MEMBER
Mumbai, Dated: 29.09.2022.
* Kishore, Sr. P.S.
Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench
//True Copy//
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.