PRATHIBHA EDUCATIONAL WELFARE SOCIETY,CHITTOR vs. ITO., EXEMPTION WARD, TIRUPATI

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ITA 2/HYD/2025Status: HeardITAT Hyderabad18 March 2025AY 2020-217 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that while there was a delay of 18 days in filing the return of income and audit report (filed on March 3, 2021, instead of the extended due date of February 15, 2021), the audit report in Form-10B was made available to the Assessing Officer before the assessment order was passed on May 12, 2022. Considering the prevailing COVID-19 pandemic situation, which significantly impacted normal life, the Tribunal found that the small delay should have been condoned by the authorities below. The Tribunal concluded that the Assessing Officer and the CIT(A) erred in rejecting the exemption under Section 11 of the Act. Consequently, the order of the CIT(A) was set aside, and the Assessing Officer was directed to allow the benefit of exemption under Section 11 as claimed by the assessee-trust. The ratio decidendi is that in exceptional circumstances like a pandemic, minor delays in filing returns and audit reports, if explained and if the report is available before assessment, should be condoned to allow genuine claims for exemption under Section 11.

What were the facts?

The assessee, Prathibha Educational Welfare Society, filed its return of income for Assessment Year 2020-2021 on March 3, 2021, declaring NIL taxable income and claiming exemption under Sections 11 and 12 of the Income Tax Act, 1961. The audit report in Form-10B was also filed on the same date. The Assessing Officer processed the return under Section 143(1) on May 12, 2022, determining total income at Rs. 39,64,385/- and tax payable at Rs. 8,76,380/- by denying exemption under Section 11. This denial was based on the assessee not filing the return of income and audit report by the due date, which was extended to February 15, 2021. The assessee appealed to the CIT(A), citing the COVID-19 pandemic as the reason for the delay. The CIT(A) upheld the Assessing Officer's order, stating that the return and audit report were filed beyond the prescribed due date.

What were the issues?

1. Whether the assessee is eligible for exemption under Section 11 of the Income Tax Act, 1961, despite filing its return of income and audit report beyond the extended due date of February 15, 2021, due to the COVID-19 pandemic. Assessee's Contention: The assessee argued that the delay in filing the return of income and audit report was attributable to the ongoing COVID-19 pandemic. They contended that all other conditions for exemption under Section 11 were satisfied, and the delay of 18 days should have been condoned, leading to the allowance of the exemption. Revenue's Contention: The Revenue supported the orders of the lower authorities, arguing that the cut-off date fixed by the CBDT must be strictly followed to claim the benefit of exemption under Section 11. Since the assessee failed to file the return of income and audit report by the due date, the denial of exemption was justified.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD “SM-B” BENCH : HYDERABAD

Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD

1 ITA.No.2/Hyd./2025 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “SM-B” BENCH : HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA.No.2/Hyd/2025 Assessment Year 2020-2021 Prathibha Educational The Income Tax Officer, vs. Welfare Society, Chitoor. Exemption Ward, PIN – 517 001 Tirupati PAN AABTP7549N (Appellant) (Respondent) For Assessee : Shri S. Rama Rao, Advocate For Revenue : Shri Suresh Babu KN, Sr. AR Date of Hearing : 13.03.2025 Date of Pronouncement : 18.03.2025 ORDER PER MANJUNATHA G, A.M. :

This appeal has been filed by the Assessee against the Order dated 18.09.2024 of the learned Addl./JCIT(A), Bhubaneswar, relating to the assessment year 2020-2021.

2.

At the very outset, there is a delay of 32 days in filing the appeal before the Tribunal. The assessee filed an affidavit seeking for condonation of delay on medical grounds. We are satisfied with the reasons set-out by the 2 ITA.No.2/Hyd./2025 assessee in it’s affidavit and, therefore, condone the delay of 32 days in filing the appeal before the Tribunal. We, accordingly, admit the appeal for adjudication.

3.

Brief facts of the case are that, the assessee Prathibha Educational Welfare Society is an institution engaged in activities of Education and imparting primary skills. The assessee has filed it's return of income for the assessment year 2020-21 on 03.03.2021 declaring taxable income at Rs.NIL after claiming exemption u/secs.11 and 12 of the Income Tax Act, 1961 [in short “the Act”]. The assessee had filed it’s audit report in Form-10B on 03.03.2021. The return of the income filed by the assessee has been processed u/sec.143(1) of the Act on 12.05.2022 and the Assessing Officer determined the total income of the assessee at Rs.39,64,385/- and tax payable at Rs.8,76,380/- by denying exemption u/sec.11 of the Act for not filing the return of income and audit report on or before the due date for filing the return of income on 15.02.2021.

3 ITA.No.2/Hyd./2025 4. Being aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the CIT(A) the assessee submitted that due to on-going Covid 2019 pandemic outbreak, the assessee could not file return of income on or before the extended “due date” i.e., on 15.02.2021. However, the assessee has satisfied all the conditions, except filing the return of income on or before the due date and, therefore, the Assessing Officer ought to have allow the benefit of exemption u/sec.11 of the Act. The CIT(A) after hearing the submissions of the assessee and also taking note of provisions of TOLA observed that, although, the CBDT has extended the due date for filing the return of income up-to 15.02.2021, but the assessee has filed the return of income along with audit report beyond the due date prescribed under the Act and, therefore, the Assessing Officer has rightly denied the benefit of exemption u/sec.11 of the Act.

5.

Now the assessee is in appeal before the Tribunal challenging the order of the learned CIT(A) in confirming the order of the Assessing Officer.

4 ITA.No.2/Hyd./2025 6. Learner Counsel for the Assessee referring to the dates submitted that due to on-going Covid-2019 pandemic outbreak, the assessee could not file it’s return of income along with audit report in Form No.10B on or before the extended due date i.e., on 15.02.2021. However, the return of income has been filed by the assessee on 03.03.2021 with a delay of 18 days. Although, the assessee has explained the reasons for delay in filing the return of income and audit report in the prescribed Form No.10B, the Assessing Officer and the learned CIT(A) has rejected the exemption u/sec.11 of the Act. Therefore, he submitted that exemption claimed by the assessee should be allowed.

7.

The Learned DR, on the other hand, supporting the order of the learned CIT(A) submitted that the cut-off date fixed by the CBDT as per law has to be strictly followed by assessee to claim benefit of exemption u/sec.11 of the Act. Since the assessee has not filed the return of income and audit report in prescribed Form No.10B, on or before the due date, the Assessing Officer and the learned CIT(A)

5 ITA.No.2/Hyd./2025 has rightly denied benefit of exemption u/sec.11 of the Act and thus, the order of the learned CIT(A) should be upheld.

8.

We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the “due date” for filing the return of income was by 15.02.2021 and that the return of income filed by the assessee belatedly along with Form No.10B audit report was on 03.03.2021. Admittedly there is a delay of 18 days in filing the return of income and audit report. However, the fact remains that, audit report in Form-10B has been filed before the Assessing Officer passed the assessment order i.e., on 12.05.2022. The assessee has explained reasons for not filing the return of income and audit report on or before the extended due date i.e., on 15.02.2021. We find that the period is under peak Covid-2019 pandemic outbreak and during the Covid pandemic period, the normal life of all the citizens was effected very badly be that an individual or trust. Therefore, going by the Covid pandemic situation, in our considered view, the small delay of 18 days in filing the 6 ITA.No.2/Hyd./2025 return of income and audit report in prescribed Form No.10B should have been condoned by the authorities below when the relevant audit report in Form-10B was made available to the Assessing Officer before the Assessing Officer passed his assessment order dated 12.05.2022. Therefore, in our considered view, the Assessing Officer and the learned CIT(A) was erred in rejecting exemption u/sec. 11 of the Act. Thus, we set-aside the order of the learned CIT(A) and direct to the Assessing Officer to allow the benefit of exemption u/sec.11 of the Act as claimed by the assessee-trust.

9.

In the result appeal of the assessee is allowed.

Order pronounced in the open Court on 18.03.2025.

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