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Facts
The assessee, a public charitable trust, filed its return declaring 'NIL' income after claiming exemption under section 11. However, the return was processed under section 143(1) assessing total income at Rs.34,00,000/- because Form 10B was not e-filed within the prescribed due date.
Held
The Tribunal held that the requirement of filing Form 10B one month prior to the due date of filing the return is a procedural requirement and not mandatory. Since the audit report was available to the AO before the completion of assessment and the facts are similar to cited case laws, the assessee is entitled to exemption under section 11.
Key Issues
Whether the delay in filing Form 10B, a procedural requirement, can be a ground for denying exemption under Section 11 of the Income Tax Act.
Sections Cited
12A, 11, 143(1), 119(2)(b)
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Appearances by: Shri S.K. Tulsian, Advocate, appeared on behalf of the assessee Shri Nicholash Murmu, Addl. CIT, D.R., appeared on behalf of the Revenue Date of concluding the hearing: January 07, 2025 Date of pronouncing the order: March 18, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of ld. Addl./JCT(Appeals), Thane dated 19th September, 2024 passed for Assessment Year 2022-23.
Brief facts of the case are that the assessee is a Public Charitable Trust registered under section 12A of the Income Tax Act and filed its return of income alongwith audit report in Form (A.Y. 2022-2023) Bansal Foundation 10B for the assessment year 2022-23 declaring total income of the assessee as ‘NIL’ after claiming exemption under section 11 of the Act. The return was processed under section 143(1) of the Act and assessed total income at Rs.34,00,000/- saying that Form 10B had not been e-filed within the prescribed due date, i.e. one month prior to the due date of filing of the return of income.
Aggrieved by the intimation issued by the CPC under section 143(1) of the Act, the assessee-appellant filed an appeal before the ld. CIT(Appeals) and the ld. Addl./JCIT(Appeals) after considering the submissions of the assessee dismissed the appeal saying that the ld. CIT(Appeals) does not have any power to condone the delay in filing Form No.10B and the adjustment made by the CPC denying the claim of exemption under section 11 of the Act is found to be in order and dismissed the appeal filed by the assessee.
On being aggrieved, the assessee preferred an appeal before the Tribunal and raised the following grounds:- (1) That, on the facts and in the circumstances of the case, the Ld. CIT(A), Thane erred in having upheld the total income of Rs.34,00,000/- computed in the Intimation u/s 143(1) of the Act dated 02.06.2023 as against declared by the assessee, a public charitable trust registered u/s 12A of the Act, in its ROI for the A.Y. 2022-23 at Nil after claiming exemption u/s 11 of the Act which has resulted into an arbitrary and uncalled for demand of Rs. 10,39,390/- upon the trust. (2) That, the Ld. CIT(A) erred on facts and in law in having denied exemption u/s 11 of the Act on account of application of income of Rs.34,00,000/- which consisted of amount applied during the year of Rs.29,35,506/- and amount accumulated/set apart for application being Rs.4,64,494/- on the sole allegation that Form-10B had been filed beyond the due date as prescribed u/s 12A(b) of the Act and an (A.Y. 2022-2023) Bansal Foundation avenue for relief was available only through a petition u/s 119(2)(b) of the Act. (3) That, the Ld. CIT(A) while denying exemption claimed u/s 11 of the Act further erred in not having considered that the requirement of filing audit report in Form 10B before completion of the assessment is procedural one and that the exemption cannot be denied as long as the report was available to the A.O. before the assessment was completed. (4) That, without any prejudice to the above, the Ld. CIT(A) in view of series of judicial pronouncements ought to have considered and decided as an appellate authority the issue on the condonation of delay of merely 28 days in filing Form 10B and allowing the exemption claimed u/s 11 of the Act instead of dismissing the appeal by stating the avenue for relief by filing petition u/s 119(2)(b) of the Act before the competent authority. (5) That, therefore, the order of the CIT(A) should, accordingly, be quashed/modified and your appellant be given such relief or reliefs as prayed for.
5. I have heard both the sides. It was the submission of the ld. Counsel for the assessee that the auditor has audited the accounts of the assessee-firm on 02.09.2022 but Form 10B was uploaded alongwith the return of income on 05.11.2022. The main reason for denial of section 11 was that requirement of filing return in Form 10B should be made one month prior to the date of filing of the return of income. He further submitted that it is merely a procedural requirement and on that reason, the exemption under section 11 not be denied so long as the audit report is available with the ld. Assessing Officer before completion of the assessment. He further submitted that Form 10B was filed on 05.11.2022 and the return was processed on 02.06.2023, which evidently suggests that the Form 10B was very much available with the CPC at the time of processing the return of income. Therefore, exemption under section 11 of the Act cannot be denied due to delay in filing (A.Y. 2022-2023) Bansal Foundation of Form 10B. The ld. Counsel for the assessee heavily relied on the decision of the Hon’ble Jurisdictional High Court in the case of CIT -vs.- Rai Bahadur Bissesswarlal Motilal Malwasie Trust reported in (1992) 195 ITR 825, wherein the Hon’ble Jurisdictional High Court has held that the requirement of filing the audit report with the return is merely a procedural requirement, on that ground exemption cannot be denied so long as the report is available to the ld. Assessing Officer before the completion of assessment. He also relied on the decision of the Hon’ble High Court of Gujarat in the case of Sarvodaya Charitable Trust -vs.- ITO (Exemption) reported in (2021) 125 taxmann.com 75, wherein it was held that benefit of exemption should not be denied merely on account of delay in filing the audit report. The assessee produced the same before completion of the assessment, therefore, he pleaded to set aside the orders passed by the CPC and ld. Addl. JCIT(Appeals).
6. On the other hand, it was the submission of the ld. Departmental Representative that in case of delay in filing Form No. 9A and Form No. 10 for the assessment year 2016-17 may be condoned under section 119(2)(b) of the Act in view of the CBDT Circular vide No. 7/2018 dated 20th December, 2018. The assessee has a remedy to approach the authorities under section 119(2) of the Act to condone the delay in filing Form. Therefore, the ld. Addl./JCIT(Appeals) has rightly dismissed the appeal filed by the assessee. Ld. D.R., therefore, pleaded to uphold the orders passed by the revenue authorities.
(A.Y. 2022-2023) Bansal Foundation 7. I have perused the material available on record as well as the written submission filed by the assessee. It is an undisputed fact that the assessee-Trust was registered under section 12A of the Act and the registration is still in existence. It is also an admitted fact that the accounts of the assessee-Trust have audited by a Chartered Accountant and the audit report in Form 10B was obtained by the assessee. However, the only lacunae in the present case is that Form 10B was not filed one month prior to the date of filing of the return of income for the relevant assessment year. It is also an admitted fact that at the time of filing of the return of income, the audit report under Form 10B was uploaded along with the return of income. It is also an admitted fact that at the time of processing the return of income under section 143(1) of the Act, the audit report by way of Form 10 was very much available before the CPC/AO. The ld. Counsel for the assessee has heavily relied on the decisions of the Hon’ble Gujarat High Court in the case Sarvodaya Charitable Trust -vs.- ITO (Exemption) reported in (2021) 125 taxmann.com 75 and Hon’ble Jurisdictional High Court in the case of CIT -vs.- Rai Bahadur Bissesswarlal Motilal Malwasie Trust reported in (1992) 195 ITR 825, wherein it was categorically held that filing of Form 10B before one month from the due date of filing of the return of income is not mandatory requirement for the purpose of claiming exemption under sections 11 & 12 of the Act and even if filed at later stage, the assessee is entitled to claim exemption under sections 11 & 12. The facts of the present case on hand are similar to facts of the above cited case laws, therefore, I am of the view that the assessee-Trust is entitled to claim exemption under section 11 of the Act. Therefore, I direct the (A.Y. 2022-2023) Bansal Foundation CPC/Assessing Officer to delete the adjustment made by the CPC. Hence, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 18/03/2025.