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Facts
The Revenue appealed against the order of the CIT(A) who allowed exemption under Section 11 to the assessee, a charitable trust. The CPC had disallowed the exemption because the audit report in Form 10B was filed belatedly.
Held
The Tribunal held that the CIT(A) was justified in allowing the exemption. The assessee filed the ITR and Form 10B within the time allowed, and due to the COVID-19 pandemic, the period for limitation was excluded.
Key Issues
Whether the assessee is eligible for exemption under Section 11 when the audit report in Form 10B was filed belatedly, considering the ITAT's stance on condonation of delays and the Supreme Court's directions regarding the COVID-19 pandemic.
Sections Cited
11, 12, 12A(1)(b)(ii), 143(1), 139, 139(4)
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Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the Revenue is directed against the order dated 23.12.2024 passed by the Addl./JCIT (A)-7, Kolkata for the assessment year 2020-21.
The Appellant – Revenue raised 2 grounds of appeal amongst which, the only issue emanates for our consideration is as to whether the ld. CIT(A) is justified in allowing benefit of exemption under section 11 of the Income Tax Act, 1961 [“Act” in short] without considering the belated filing of audit report in Form 10B.
3. At the outset, we note that the assessee filed its return of income for AY 2020-21 on 31.03.2021 declaring total income of Nil. The CPC, Bangalore passed the intimation order under section 143(1) of the Act dated 23.12.2021 by disallowing the exemption claimed under section 11 of the Act. On appeal, the ld. CIT(A), reversed the adjustment made by CPC in his intimation under section 143(1) of the Act, allowed the benefit of exemption under section 11 of the Act. Aggrieved by the order of the ld. CIT(A), the appellant-revenue is in appeal before the Tribunal.
The ld. DR Ms. Deeptha, Addl. CIT submits that the ld. CIT(A) omitted to note that the audit report in Form 10B was not filed within the due date i.e., one month from the due date for filing of return of income. She argued that the PCIT/CIT is authorized to condone the delay in filing audit report and moreover, in the present case no condonation was granted for belated filing of audit report in Form 10B. She also argued that the assessee is not eligible for the benefit of exemption since one of the conditions prescribed under 12A(1)(b)(ii) of the Act for applicability of sections 11 and 12 of the Act was to furnish the audit report one month prior to the due date for furnishing the return of income and prayed to reverse the order of the ld. CIT(A).
The ld. AR Shri B. Gowthaman, CA strongly supported the order passed by the ld. CIT(A).
Heard both the parties and perused the material available on record. The assessee is a public charitable trust registered under section 12A of the Act and filed return of income along with audit report in Form 10B claiming exemption under section 11 of the Act. While processing the return under section 143(1) of the Act, the CPC denied exemption claimed under section 11 and 12 of the Act and determined the total income at ₹.2,37,28,287/-on the ground that audit report in Form 10B was filed belatedly on 31.03.2021 as against the due date of 15.01.2021. Before the ld. CIT(A), the assessee contended that the CPC is not authorized to make adjustment as it had not given any prior intimation as required ad per 1st proviso below section 143(1)(a) of the Act. By considering the CBDT’s circular dated 23.04.2019, the ld. CIT(A) held that the assessee is eligible for the exemption under section 11 of the Act. Accordingly, the ld. CIT(A) reversed the adjustment made by the CPC and allowed the benefit of exemption under section 11 of the Act.
Before the Tribunal, the ld. DR could not bring on record any evidence of prior intimation as required as per 1st proviso to section 143(1) of the Act is issued on the assessee, being statutory requirement before considering adjustment of determining returned income of the assessee. Moreover, the ld. CIT(A), by considering CBDT’s circular that an assessee who claims exemption under section 11 of the Act, if files ITR within the dates as mentioned in section 139 of the Act, it shall be eligible for the said exemption and since the assessee filed ITR and Form 10B within the time allowed as per section 139(4) of the Act, granted the benefit of exemption under section 11 of the Act. In this case, there is no dispute for claiming exemption under section 11 of the Act since the assessee filed Form 10B along with return of income. Since the Hon’ble Supreme Court taking suo motu cognizance of the prevailing situation due to Covid Pandemic, excluded the period from 15.03.2020 to 28.02.2022 for the purpose of limitation, there is no delay in filing the return of income and Form 10B in the present case. Thus, we find no infirmity in the order passed by the ld. CIT(A), which is justified. Thus, the grounds raised by the appellant-revenue are dismissed.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced on 29th May, 2025 at Chennai.