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Facts
The assessee trust filed its return and subsequently uploaded Form 10B online. The Assessing Officer passed an intimation denying deduction under Section 11 of the Income Tax Act due to the belated filing of Form 10B. The CIT(A) upheld this decision.
Held
The Tribunal held that the belated filing of Form 10B, while mandatory, is procedural in nature, especially after amendments to the Finance Act. The Tribunal followed a Gujarat High Court decision which stated that if the audit report is available before assessment proceedings, the requirement of law is satisfied.
Key Issues
Whether the denial of exemption under Section 11 due to belated filing of the audit report (Form 10B) is justified when substantive requirements are met.
Sections Cited
11, 11(1)(a), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: DR. BRR KUMAR & Shri T.R. SENTHIL KUMAR
Bhagwatilal D. Rao Income Tax Officer, Charitable Trust Ward-1, B.D. Rao Hall, Vs Ahmedabad Bhuyangdev Char Rasta Memnagar Road, Memnagar, Ahmedabad-380052, (Respondent) Gujarat PAN: AAATB4272F (Appellant) Assessee Represented: Shri P.B. Parmar, A.R. Revenue Represented: Shri Rignesh Das, Sr.D.R. Date of hearing : 23-01-2025 Date of pronouncement : 26-02-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Assessee as against the exparte appellate order dated 26.07.2024 passed by the Additional Commissioner of Income Tax (Appeals)-4, Kolkata, National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the intimation passed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2018-19.
A.Y. 2018-19 Page No 2 Bhagwatilal D. Rao Charitable Trust vs. ITO
The short issue in the present appeal is whether deduction u/s. 11 of the Act can be denied to the assessee Trust on account of belated filing of Audit Report in Form 10B. The relevant Dates and Events are as follows: Dates Events 17.10.2018 Income Tax Return was filed 13.04.2019 Form 10B was uploaded online 26.09.2019 Intimation u/s. 143(1) was passed denying deduction u/s. 11 of the Act since Form 10B is filed belatedly
The Grounds of appeal
raised by the Assessee are as follows:
1. The Ld. CIT(A) has erred in law and on fact of the case in not granting exemption u/s. 11 of the Act by disallowing Rs.93,22,528/- accumulated or set apart for application to charitable or religious purposes.
2. The Ld. CIT(A) has erred in law and on facts of the case in not granting exemption u/s. 11(l)(a) of the Act by disallowing Rs.15,46,002/- accumulated or set apart for application to charitable or religious purposes to the extent of 15%.
3. Both the lower authorities have erred in disallowing the claim of exemption u/s. 11 of the Act merely on account of belated filing of audit report when the substantive requirements of the statute for claiming the exemption are fulfilled.
4. Both the authorities have erred in not appreciating that filing the audit report is not mandatory and is only procedural. Hence, belated compliance should be taken into consideration.
5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
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6. The Appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal
at the time of or before the hearing of the appeal.
4. The solitary issue before us pertains to delayed submission of Form No.10B which Ld. Senior Counsel for the assessee stated to be a technical default. He further submitted that ld. Bench of the ITAT, Ahmedabad rejected similar claim in the case of Association of Indian Panelboard Manufacturer Vs. DCIT, of 2022. However, the said decision of the ITAT was reversed by the Hon'ble Jurisdictional Gujarat High Court vide judgment dated 21.3.2023 reported in (2023) 157 taxmann.com 550 (Guj) holding that w.e.f. Astt.Year 2016-17 filing of Form 10B though mandatory in nature but procedural in nature, owing to the amendment made in Finance Act, 2015. In the present case, however, the ld.counsel for the assessee submitted that the same has been filed subsequently, and therefore, the above decision of the Hon'ble Jurisdictional High Court is squarely applicable. The relevant portion of the judgment of the Hon’ble High Court at para 6.1 is held as under:
“…..
6. 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 alongwith (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. 6.1 The appellant assessee has to be held to be eligible and entitled to exemptions under section 11(1) and 11(2) of the Act and the alleged ground of non-filing of audit report alongwith return of income which was at the best procedural omission, could never to an impediment in law in claiming the exemption.”
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On the other hand, the ld. DR relied on the orders passed by the lower authorities.
Heard rival submissions and gone through the record and the orders of the Revenue authorities. Keeping in view the judgment of the Hon’ble Jurisdictional High Court in the case of Association of Indian Panel Board Manufacturers (cited supra), and the assessee having satisfied the requirement of the law, we hereby set aside the orders passed by the lower authorities. However content of Form 10B was not verified by the lower authorities. The matter is hereby set aside to the file of Jurisdictional Assessing Officer to verify the same and allow the exemption in accordance with law for giving proper opportunity of hearing to the assessee.
In the result, the appeal filed by the Assessee is allowed for statistical purpose.
Order pronounced in the open court on 26 -02-2025 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad: Dated 26/02/2025 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad A.Y. 2018-19 Page No 5 Bhagwatilal D. Rao Charitable Trust vs. ITO