Loading judgment…
Facts
The assessee, a charitable trust, failed to file Form 10B within the due date due to a change in chartered accountant and an inadvertent error. Consequently, the exemption claimed under Section 11 of the Income Tax Act was disallowed.
Held
The Tribunal noted that the delay in filing Form 10B was less than 365 days and referred to CBDT circulars allowing condonation of such delays for charitable institutions. The Tribunal remitted the issue back to the Ld. CIT(A) to condone the delay and verify the deduction claimed.
Key Issues
Whether the delay in filing Form 10B can be condoned under Section 119(2)(b) of the Income Tax Act, and consequently, whether the assessee is eligible for exemption under Section 11.
Sections Cited
11, 119(2)(b), 271C, 234, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 07/08/2024 passed by NFAC, Delhi, for assessment year 2022-23 on following grounds of appeal :
“(1) The Learned assessing office has erred inlaw Income Tax estimating of income at Rs 3382110/- Which most unjustified (2) The captioned Trust is under your jurisdiction in the charge of Income Tax Officer (Exemption), Ward 2(3), Mumbai. The Trust is a regular income tax assessee which has also been filing its returns regularly.Form 108 for AY 2022-23. The facts are stated as under (3) Our Trust is a charitable organization working for the benefits of the public. The accounts for the FY 2021-22 were finalized on 24.09.2022. Thereafter our Trust had handed over the financial statements to their ARITABLE a tutory auditor, M/s Javid Patel & Co. based out for preparing the report in Form 10B along with computation of income and income-tax turn in ITR-7. In relation thereto, M/s Javid Patel & Co. hadrequired the Trust to provide further details/clarifications and also be present with his Digital Signature Certificate for e-filing of the return of income. Mr. Zakir Husain Mohd Husain who is the Trustee of this Trust and is in- charge of day-to-day affairs. Earlier, the assignment was handled by M/s Mash & Associates. Up to March 21 all the returns & Audit report was done by previous auditor. However, in the month of June 2022 the assignment was given to Javid Patel & Co. for the Accounts finalization for March 2022 Due to Communication gap, new auditor was in impression that old firm has filed the audit report and skipped the filing of 108 on time. When outstanding demand received then the new auditor has filed the same after 194 days delay. (4) In view of the foregoing, it is submitted that the Trust has been robbed of the exemption that was otherwise available to it u/s 11 of the Act for want of timely compliance to the requirement of furnishing the audit report in Form 108 (which was itself brought about by certain unfortunate and unavoidable circumstances). In this background, the trust is preferring the present application u/s 119(2)(b) of the Act, before your Honor, seeking condo nation of the purported delay of 194 days in the filing of Audit Report in the prescribed Form 108 for the reasons stated hereinabove. From the above narrated facts, it shall be appreciated that the inadvertent omission in the form of the non-filing of Form 108 within the due date, was not a deliberate act on the Trust's part. Thus, depriving the trust of the benefit/s 11 of the Act, which is conferred upon it under the statute, merely due to an inadvertent error, would be wholly unjust and disproportionately harsh. Hence, it is prayed that the delay in filing of Form 10B be condoned and necessary direction be issued to accept the Form 10B filed on 13.04.2023, in exercise of the powers conferred u/s 119(2)(b) of the Act, upon your Honor.
A.Y. 2022-23 Shelter Charitable Trust (5) Further, reference is made to the CBDT Circular No. 2/2020 [F. NO. 197/55/2018-ITA-I], dated 03.01.2020 (Annexure-5) wherein the Board has instructed the Hon'ble CIT's to expeditiously admit the belated applications for Form 10B and condone the delay for AYs 2018-19 and onwards, if the same is not beyond 365 days. The relevant extract of the Circular is as follows: (6) 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 admit such belated applications of condonation of delay under section 119(2) of the IT Act and decide on merits." (7) In view of the above-Board Circular, which is squarely applicable to the present case, the procedural defect caused due to the purported delay in the filing of Form 108, may kindly be excused as it is less than 365 days, and accordingly the exemption claimed u/s 11 of the Act ought to be allowed to the trust. For the aforesaid reasons, the Trust therefore requests your Honor to kindly exercise the powers vested in your goodself u/s 119 of the Act, and condone the delay of 194 days in the furnishing of the Audit Report in the prescribed Form 108. (8) The Assessing officer has erred in Law Initiating Penalty Proceeding Under Section of The 2710) C) of The Income Tax Act 1961 (9) The Assessing officer has erred in Law in charging the Interest under Section 234, 2343 234c. - Unjustified. (10) The appt appilant craves to Add amend, Leave any of the grounds of appeal before or at the time of Appeal.” Brief facts of the case are as under:
2. The assessee is charitable trust and has been availing exception u/s. 11 of the Act for the year under consideration due to change in Charted Accountant. The assessee did not file Form 10B along with the return of income within the due date. The CPC disallowed the exemption claimed by the assessee for the year under consideration.
A.Y. 2022-23 Shelter Charitable Trust Aggrieved by the order of the CPC, assessee preferred appeal before the Ld.CIT(A)/NFAC.
The assessee in the meanwhile also preferred application u/s. 119(2)(b) of the Act, seeking condonation of delay in filing Form 10B by submitting that, due to the change of Charted Accountant, the new incumbent was of the impression that, the previous Charted Accountant filled audit report and therefore, did not find Form 10B. It was submitted that, the assessee realised the mistake only when it received demand for non furnishing of form 10B. The assessee also relied on CBDT Circular no.
The assessee also filed a condonation petition before the Ld.CIT(A), which was also not considered. Aggrieved by the order of Ld. CIT(A) the assessee is in appeal before this Tribunal.
The Ld. AR submitted that, in the present facts of the case, there was delay of one month in filing Form 10B due to which the benefit claimed by the assessee u/s. 11 was denied. He placed reliance on the CBDT Circulars No.: • Circular No. 6/2023 dated 24/05/2023, • Circular 7 dated 25/04/2024, The Ld.AR thus prayed for the issue to be considered on merits. 4.1 On the contrary, the Ld.DR relied on the orders passed by Ld.CIT(A). 4.2 On the contrary, the Ld.DR submitted that, it is only u/s. 119 of the act, wherein the CBDT could consider the condonation of delay in filing Form 10B belatedly. He thus relied on the orders passed by authorities below.
A.Y. 2022-23 Shelter Charitable Trust I have perused the submissions advanced by both sides in the light of records placed before this Tribunal.
The only issue in this appeal is against the order of Ld.CIT(A) rejecting the appeal filed by the assessee for non-filing of Form 10B within the due date. It is noted that, the timeline prescribed for filing Form No. 10B for registration under section 12AB in the case of assessee has been extended vide various CBDT circulars, vide Circular No. 6/2023 dated 24/05/2023 and Circular 7 dated 25/04/2024, after considering the genuine hardship faced by charitable institutions. 5.1 I therefore remit this issue to the file of Ld.CIT(A) to condone the delay in filing Form 10B as per the CBDT circular in accordance with law. I also direct the Ld. CIT(A) to verify the deduction claimed by the assessee in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee in accordance with law. Accordingly, the grounds raised by the assessee stands partly allowed for statistical purposes. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.