Loading judgment…
Facts
The assessee Trust filed its ROI for AY 2021-22 declaring income of Rs.950/- claiming exemption u/s.11 & 12 of the Act. The CPC processed the return u/s.143(1) and denied the exemption because the Audit Report in Form 10B was not filed within the due date.
Held
The Tribunal held that filing of Form 10B is directory and not mandatory. The denial of exemption solely on the ground of belated filing of Form 10B is not sustainable, as the benefit of exemption should not be denied on technicalities.
Key Issues
Whether denial of exemption u/s.11 & 12 of the Act for belatedly filing Form 10B is justifiable, when the same was filed before the appellate stage?
Sections Cited
11, 12, 139(1), 143(1)
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee Trust against the order of the Learned Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-2, (hereinafter referred to as “the Ld.CIT(A)”), Ludhiana, dated 26.11.2024 for the Assessment Year (hereinafter referred to as "AY”) 2021-22.
The only ground raised by the assessee is against the action of the Ld.CIT(A) upholding the denial of exemption u/s.11 of the Income Tax Act, 1961 (hereinafter referred to as "the Act”) while processing the return u/s.143(1) of the Act for the reason that Audit Report in Form No.10B was not filed within the due date prescribed under the Act.
The brief facts are that the assessee Trust has filed its return of income (RoI) for AY 2021-22 on 22.10.2021 declaring a total income of Rs.950/- which return was processed u/s.143(1) of the Act by intimation dated 14.09.2022 wherein the total income of assessee was determined at Rs.19,37,671/- denying exemption claimed u/s.11 & 12 of the Act on the ground that the assessee didn’t file the Audit Report in Form No.10B at least one month prior to the due date for furnishing return u/s.139(1)
of the Act. According to the assessee, the Audit Report was prepared well in advance and was uploaded before the RoI was filed but e-verified on 04.10.2022. Therefore, the assessee filed an appeal before the Ld.CIT(A) who was pleased to confirm the action of the CPC on the same reason that the assessee didn’t e-file the Audit Report in Form No.10B at least one month prior to the due date for furnishing the RoI u/s.139(1) of the Act.
Aggrieved, the assessee is in appeal before this Tribunal.
We have heard both the parties and perused the material available on record. We note that the assessee Trust had filed its RoI for AY 2021- 22 on 22.10.2021 declaring total income of Rs.950/- by claiming exemption u/s.11 & 12 of the Act which was denied by the intimation dated 14.09.2022. According to the assessee, though the Audit Report was prepared well before the RoI was uploaded, but, since the CPC by intimation dated 14.09.2022 denied the exemption u/s.11 of the Act on the reason that the assessee didn’t file the Audit Report in Form No.10B, the assessee immediately e-filed the same after verifying it on 04.10.2022 and thereafter, filed an appeal before the Ld.CIT(A) which was dismissed on the ground that the filing of Form No.10B was mandatory.
The Ld.AR drawing our attention to the date of events given in the Chart below submitted that assessee had substantially complied with the requirement of law by uploading the Audit Report in Form 10B (TAR) through Chartered Accountant (CA) log-in by 23.10.2021 which was well before the extended due date furnishing Audit Report in Form 10B which was on 15.02.2022. [Meaning assessee had uploaded Form 10B through CA log-in almost three (3) months before the extended due date].
According to the Ld.AR, realizing that the assessee omitted to e-verify Form 10B, it resulted in the CPC not allowing exemption, the assessee has e-verified Form 10B on 04.10.2022 [within ‘30’ days of passing of the intimation order u/s.143(1) of the Act], which facts can be seen from the Chart below:
PARTICULARS DATE Extended due date of furnishing ITR 15.03.2022 Extended due date of furnishing audit report in Form 10B 15.02.2022 Return of Income filed for the impugned year 22.10.2021 Audit report in Form 10B uploaded through CA Login 23.10.2021 Audit report in Form 10B verified by the appellant 04.10.2022
Thus, according to the Ld.AR, even though filing of Audit Report in Form 10B is mandatory but it being procedural in nature it can be filed even at the appellate stage and then the exemption can’t be denied and cited few judicial precedents/decisions which we will consider infra and therefore, assessee pleaded that action of the Ld.CIT(A) not considering Form 10B filed before the appeal was filed was erroneous and therefore, he want us to interfere with the impugned action of the Ld.CIT(A).
Per contra, the Ld.DR doesn’t want us to interfere with the action of the Ld.CIT(A) since assessee failed to e-verify the Audit Report within the due date.
We note that the assessee in fact had filed the RoI for AY 2021-22 on 22.10.2021 and filed the Audit Report in Form 10B [uploaded through CA log-in] on 23.10.2021 well before the extended due date of furnishing of ITR on 15.03.2022 and the extended due date of furnishing of Audit Report in Form 10B i.e. on 15.02.2022. But merely because the assessee didn’t e-verify the Form 10B, the exemption claimed has been denied by the CPC u/s.143(1) of the Act by order dated 14.09.2022. The assessee realizing the same had e-verified the Audit Report on 14.10.2022 and thereafter, has filed the appeal before the Ld.CIT(A), who ignored the assessee’s assertion of e-verifying the Audit Report, was pleased to dismiss the appeal on the ground that filing of Form 10B within the due date was mandatory.
We don’t countenance this action of Ld.CIT(A) for the reason that in a plethora of decisions, the Hon’ble Constitutional Courts have held that filing of Audit Report in Form No.10B before the due date couldn’t disentitle the assessee-Trust from exemption claimed u/s.11 of the Act because the filing of Form 10B is directory to facilitate the assessment and not mandatory. In this regard, we note the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Xavier Kelavani Mandal (P.) Ltd., reported in [2014] 41 taxmann.com 184 (Guj. HC), wherein the Hon’ble Gujarat High Court followed the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT v. Shahzedanand Charity Trust reported in [1997] 228 ITR 292, wherein, it has been held that benefit of exemption should not be denied merely on account of delay in furnishing the Audit Report and it is permissible for the assessee to produce the Audit Report at a later stage either before the ITO or before the Appellate Authority by showing sufficient cause. In this context, we also note the decision of the Hon’ble jurisdictional Madras High Court in the case of CIT v. SPIC Educational Foundation [TCA No.1593 of 2008 dated 12.12.2018], wherein, the Hon’ble High Court has held that Filing of Form 10 [for accumulation of income u/s.11(2) of the Act] which was filed beyond due date couldn’t disentitle the Trust from exemption claimed u/s.11 of the Act. The Hon’ble Court directed the AO to examine the benefit of admissibility rather than to foreclose the claim of assessee on technicalities. We also take note of the decision of the Delhi Tribunal in for AY 2022-23 dated 21.11.2024 wherein the Tribunal has held that the Ld.CIT(A) erred in disallowing the exemption claimed u/s.11 of the Act on similar ground i.e. assessee belatedly filed Form No.10B. In the light of the aforesaid discussion, we set aside the impugned order of the Ld.CIT(A) and direct the AO/CPC to examine the Form 10B filed by the assessee and decide the claim of exemption u/s.11 of the Act and pass order in accordance to law.
In the result, appeal filed by the assessee is allowed.