SHREE BHAKT SAMAJ VIKAS EDUCATION TRUST,BODELI vs. ASST. COMMISSIONER OF INCOME TAX EXEMPTION, VADODARA
Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), (in short “Ld.
CIT(A)”), ADDL/JCIT(A)-9, Mumbai vide order dated 28.03.2025 passed for A.Y. 2021-22. 2. The Assessee has taken the following grounds of appeal:-
“1. Under the facts and circumstances of the case Ld. CIT Appeal has erred in confirming the adjustments 143(1)(A) and or disallowance of the expenses and not granting exemptions legally available to charitable trust.
Ld. CIT Appeal also erred in not considering ITAT Ahmedabad bench order submitted with appeal. Being the case of Shri Mahudi Madhupuri Jain NSM Bhojanshalal & Prashafi Bhavan V. CPC, Bangalore Present Juri iction – ITO Ward-2, Exemption, Ahmedabad ITA No. 184/Ahd/2024 (Ahd-Trib.) reported in 2024 ITL 2053 order dated 04-06-2024. Shree Bhakt Samaj Vikas Education Trust vs. ACIT(E) Asst.Year –2021-22 - 2–
Appellant reserves its right to add or vary the grounds of appeal before final hearing of this perition.”
The assessee has raised the following revised grounds of appeal:
“1. The CPC, Bengaluru has erred in law and on facts of the case, in denying benefits u/s 11 of the assessee-trust, while processing the return of income u/s 143(1), on account of non-filing/belated filing of audit report in Form 10B despite availability of the said form at the time of such processing.
The ld. CIT(A) has erred in law and on facts of the case, in passing the order ex-parte merely for alleged non-prosecution, without providing proper opportunity of hearing and without adjudicating the matter of the merits.
The appellant reserves its right to add, amend, alter and/or delete any of the grounds stated hereinabove either before or at the time of hearing.”
The brief facts of the case are that the assessee is a trust registered under Section 12A of the Act and a return of income was filed by the assessee / trust on 29.03.2024 for A.Y. 2021-22. The return of income of the assessee trust was processed under Section 143(1) of the Act, disallowing the claim of exemption under Section 11 of the Act amounting to Rs. 2,84,31,074/- on the ground that the assessee had not filed the Audit Report in Form 10B prior to the due date for furnishing return of income under Section 139(1) of the Act.
In appeal, Ld. CIT(A) dismissed the appeal of the assessee on the ground that despite issuance of various notices of hearing, none appeared on behalf of the assessee to present it’s case on merits. Accordingly, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:
“The facts and circumstances of the case, the observations of the AO and material available on record on the above matter have been considered. A perusal of the appellate proceedings shows that appellant have not made any submissions to prove
Asst.Year –2021-22
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that the conclusion reached by the AO was untrue. Further, the fact remained that the appellant failed to furnish any document/evidence in support of the various grounds of appeal raised; and that therefore, the explanation submitted by the assessee in support of the grounds of appeal remained unsubstantiated. It remained inexplicable as to what had prevented the assessee not to produce documents even during the course of appellate proceedings. As mentioned in above paragraph of this appeal order, this office has issued several letters to file written submission. However, neither any adjournment was sought for nor any written submissions were filed. The letters were issued through ITBA System at the e-mail ID provided in ITBA System. From the above conduct of the appellant, it is evident that the appellant is no more interested in pursuing the appeal. The Hon'ble Supreme Court in the case of CIT Vs B.N.
Bhattachariee and others [1979] 10 CTR 354 (SC) observed that preferring an appeal, means effectively pursuing it. The Hon'ble M.P. High Court in the case of Estate of Late Tukojirao Holkar Vs CWT [1979] 223 ITR 480 (M.P.) dismissed the reference filed at the instance of the assessee for default and for not taking necessary steps.
Considering the conduct of the appellant in the present circumstance, I am of the view that the appellant is not interested in pursuing the appeal. This view has been affirmed by Hon'ble ITAT Ahmedabad in case of Amitkumar H. Shah Vs. ACIT in ITA No.
2985/Ahd/2010 vide their order dated 31.12.2013, wherein following the order of ITAT
Delhi Bench in the case of CIT Vs Multiplan India Pvt. Ltd., [1991] 38 ITD 320 (Del),
ITAT has dismissed the appeal filed by the assessee for want of persuasion. Under these circumstances, the current appeal of the appellant is liable to be dismissed.
As a result, the appeal stands Dismissed.”
The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) upholding the disallowance made by CPC, Bengaluru. Asst.Year –2021-22 - 4– 9. We observe that admittedly there was a delay on filing Form 10B by the assessee trust. It was on this basis that AO, CPC denied the claim of exemption under Section 11 of the Act. Ld. CIT(A) upheld the denial of exemption under Section 11 of the Act on the ground that despite issuance of multiple notices of hearing, none appeared on behalf of the assessee to present it’s case during the course of appellate proceedings. Asst.Year –2021-22 - 5–
Charitable Trust v. ITO(E) [2021] 125 taxmann.com 75/278 Taxman
148 (Gujarat), the Hon’ble Gujarat High Court held that where assessee, a public charitable trust registered under Section 12A of the Act had substantially satisfied condition for availing benefit of exemption as a trust, it could not be denied exemption merely on bar of limitation in furnishing audit report in Form No. 10B. While passing the order the Hon'ble Gujarat High Court made the following observations:
“31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no. 2 might be justified in denying the exemption under section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past
30 years who substantially satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income-tax Officer or before the appellate authority by assigning sufficient cause.
In view of the above, this writ-application succeeds and is hereby allowed. The impugned order passed by the respondent no. 2 dated 19th August 2019 (Annexure-A to this writ-application) is hereby quashed and set aside. The impugned rectification order at page-13 of the paper-book dated 12th February 2020 is also hereby quashed and set aside. The delay condonation application filed by the writ-applicant before the respondent no. 2 is hereby allowed.”
In the case of Association of Association of Indian Panelboard Manufacturer v. Dy. CIT [2023] 157 taxmann.com 550/482 ITR 54 (Gujarat)/R/Tax Appeal No. 655 of 2022 vide order dated 21.03.2023 Asst.Year –2021-22 - 6–
the Gujarat High Court held that once the audit report in Form 12B is found to be available with the Assessing Officer before conclusion of assessment proceedings, the requirement of law is satisfied. While passing the order the Hon’ble Gujarat High Court made the following observations:
“5.7 The tribunal mi irected itself in yet another way when it observed that The Finance Act, 2015 with effect from 1.4.2016, that is from assessment year 2016-17
changed the legal position. There is no such change which could be said to have altered the legal position. The only change is with regard to compulsory filing of audit report in Form 10B in electronically form which is made mandatory under Rule 12 (2) of the Income Tax Rules, 1962 but there is no change with regard to the substantive law about filing of audit report as stated above.
The moot aspect thus centres around to the requirement of the availability of the audit report when the assessment was undertaken by the Assessing Officer even though the same may not have been filed along with the return of income. Filing of audit report is held to be substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 12B is filed to be available with the Assessing Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income-Tax Tribunal was not justified in dismissing the appeal of the assessee.”
Accordingly, in view of the decision of the Hon’ble Gujarat High Court in this issue, as well as various other judicial precedents which have upheld the principle that delay in filing of Form 10B being a procedural default should not disentitle the assessee / applicant trust the denial of grant of exemption under Section 11 of the Act, we are of the considered view that in the assessee’s set of facts, claim of exemption under Section 11 of the Act should not be denied only on account of delay in filing Audit Asst.Year –2021-22 - 7–
assessee and the same is available with the Department before passing of order / intimation under Section 143(1) of the Act, then in view of the decisions of Juri ictional High Court referred to above, the claim of exemption under Section 11 of the Act cannot be denied only on account of delay in filing of Form 10B before the due stipulated date.
In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 25/06/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 25/06/2025
TANMAY, Sr. PSआदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to :
1. अपीलाथŎ / The Appellant
2. ŮȑथŎ / The Respondent.
3. संबंिधत आयकर आयुƅ / Concerned CIT
4. आयकर आयुƅ(अपील) / The CIT(A)-
5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाडŊ फाईल / Guard file.
आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.