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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi in Appeal No.CIT(A), Chennai-14/10101/2019-20, order dated 06.09.2021. The return was processed and intimation was issued u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the assessment year 2018-19, dated 21.05.2019 by the DCIT, CPC, Bangalore.
2. The only issue in this appeal of assessee is that the CIT(A) erred in not considering the few hours delay in filing Form No.10B after filing the income-tax return due to genuine hardship, unintentional and beyond the control of the assessee.
We have heard ld. Senior DR and gone through the facts and circumstances of the case. Brief facts are that the assessee has filed its return of income for the assessment year 2018-19 on 11.10.2018 and audit report in Form No.10B was filed on 12.10.2018 well before the due date of filing of return of income. The CPC, Bangalore processed the return of assessee u/s.143(1) of the Act and created demand of Rs.2,27,420/- by denying exemption u/s.11 of the Act to the assessee’s trust for non-filing of Form No.10B along with the return of income. The CIT(A) also not considered the plea of the assessee and dismissed the appeal of assessee.
4. We noted the facts from case records that the assessee is a registered trust and filed its return of income for the assessment year 2018-19 on 11.10.2018 at 21.01 hours. i.e., 9.01 p.m. and due to malfunctioning / virus attack as claimed by the assessee, in the computer system, the IT return could not be e-verified on the same day. The assessee claimed that after repairing / servicing the computer system, the assessee could file the Form No.10B the very next day i.e., 12.10.2018 at 1.10 p.m. and also e-verified its return of income on the very same day i.e., 12.10.2018 at 12.02 p.m. The assessee before CIT(A) and even now before us filed acknowledgement depicting the time of filing of ITR as well as Form No.10B. We noted that both the return of income as well as Form No.10B were filed well before due date and there is no intentional delay in filing Form No.10B after filing the return of income. The delay is of few hours in filing Form No.10B and that is due to malfunctioning / virus attack as claimed by the assessee in computer system, which is beyond the control of the assessee. We do not agree with the findings of the CIT(A) that simply delay of few hours cannot be condoned and the entire contribution received by assessee’s trust was accordingly considered as income without taking into account the amount spent towards charity and raise a tax demand of Rs.2,27,420/-. We noted that this issue has been clarified by the Board vide CBDT Circular No.2/2020 [F.No.197/55/2018-ITA-I], dated 03.01.2020, wherein the entire procedure is given and the same reads as under:- Under the provision of section 12A of Income-tax Act, 1961 (hereafter 'Act') where the total income of a trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income tax in any previous year, the accounts of the trust or institution for that year have to be audited by any accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in the prescribed from duly signed and verified by such accountant and setting forth such particulars as may be prescribed.
As per Rule 17B of the Income-tax Rules, 1962 (hereafter 'Rules') the audit report of the accounts of such a trust or institution is to be furnished in Form No. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed from along with the return of income results in disentitlement of the trust or institution from claiming exemption under sections 11 and 12 of the Act.
3. Representations have been received by the Board/field authorities stating that Form No. 10B could not be filed along with the return of income for A.Y. 2016-17 and A.Y. 2017-18. It has been requested that the delay in filing of Form No. 10B may be condoned. Previously, vide instruction in F.No. 267/482/77-IT(part) dated 9-2-1978, the CBDT had authorized the ITO to accept a belated audit report after recording reasons in cases where some delay has occurred for reasons beyond the control of the assessee.
Accordingly, the CBDT issued Circular No. 10/2019 circulated through F.No. 197/55/2018-ITA-I in supersession of earlier circular/Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trust or institution for condoning the delay in filing Form No. 10B and in the exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes vide Circular No. 10/2019 dated 23rd May, 2019 and Circular No. 28/2019 dated 27th September, 2019 both issued vide F.No. 197/55/2018-ITA-I has directed that :— (i) The delay in filing of Form No. 10B for A.Y. 2016-17 and A.Y. 2017- 18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned. (ii) In all other cases of belated applications in filing Form No. 10B for years prior to AY. 2018-19, The commissioner of Income-tax are authorized to admit and dispose off by 31-3-2020 such applications for condonation of delay u/s 119(2)(b) of the Act. The Commissioner will while entertaining such belated applications in filing Form No. 10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time.
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.
6. The Commissioners of Income-tax shall, while entertaining such belated applications in filing Form No. 10B, satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time.
5. The above circular states that CIT(A) has power for condoning belated application in filing Form No.10B wherever the assessee was prevented by reasonable cause for filing of such applications within the stipulated time. In the present case before us, the delay is for few hours which could be condoned as there is a reason that there is malfunctioning / virus attack in the computer system and consequent data loss which is beyond the control of the assessee. Hence, we reverse the orders of lower authorities and direct the AO to accept the audit report in Form No.10B as filed within the time and the delay is condoned.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 15th June, 2022 at Chennai.