INDIRANAGAR PREPARATION SCHOOL,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE 1, BANGALORE

This is an appeal by the assessee against the order dated 31.08.2020 of CIT(A)-14, Bengaluru, relating to Assessment Year 2018-19.

The Assessee is a charitable trust run and under the control of Karnataka Education Trust (a charitable trust) registration under section 12A of the Act with registration no.718/10ANo1B1/K-211 dated 26.11.1991. The Assessee runs a preparatory school. For the year under consideration, the return of income of the Assessee was electronically filed on 31.08.2018 under its PAN AAATI0704P. The audit report Form 10B has been filed manually on 24.10.2018 within the due date i.e 31.10.2018. During the year. the gross receipts of the Assessee was Rs.3,66,468/- and the application towards the objects was Rs.57.60,894. In the income tax return

The return was processed and intimation u/s 143(1) dated 30.09.2019 was passed in which the AO denied exemption under section 11 for the reason that Form No.10B had not been filed along with filing the return of income that was filed electronically on 31.8.2018. Consequently, the entire gross receipts of Rs.3,66,468 was considered as total income. Amount of tax payable (including interest under section 234B and 234C) was determined at Rs.1 39,331/-.

Aggrieved by the order, the Assessee filed appeal before CIT(A) contending that the , CPC erred in denying exemption under section 11 for the reason that the audit report in Form 10B [efiled on 24.10.2018] was not efiled along with or before efiling the return of income on 31.08.2018. The Assessee contended that CPC erred in alternatively not granting exemption under section 10(23C)(iiiad) as the appellant being an education institution satisfies the requirements laid down under Rule 2BC of having annual receipts less than Rs. 1 crore, institution exists solely for educational purposes and not for the purposes of profit. In the course of proceedings before the CIT(A), the Assessee also made an adjournment request 27.08.2020 on the ground that a petition has been filed by the Assessee before CIT (Exemptions) for condonation of delay in filing of audit report in Form No 10B and the same was pending and hence the hearing of appeal may kindly be taken up after disposal of the said petition by CIT (Exemptions).

The CIT(A) issued a notice dated 21.08.2020 to the assessee to make its submissions by 28.08.2020 through e-filing portal or email. According to the CIT(A), no submissions were filed by the assessee and he therefore proceeded to decide the appeal on merits on the basis of material on record. The CIT(A) ultimately dismissed the appeal confirming the order of the AO.

The Learned Counsel for the assessee submitted that in response to the notice of the CIT(A) dated 21.08.2020, a request for adjournment was made on 27.08.2020, copy of which is at page 104 of the assessee’s Paper Book. In the said submission, the assessee has pleaded as follows:

Learned Counsel for the assessee also drew our attention to page 113 of the assessee’s Paper Book wherein the CIT(E), Bengaluru, has condoned the delay in filing Form 10B for Assessment Year 2018-19 by order dated 08.09.2020.

We are of the view that in the light of the fact that the delay in filing Form 10B has been condoned and in view of the fact that the assessee did not have proper opportunity of being heard before the CIT(A), we deem it fit and proper to restore the issue with regard to grant of exemption to the assessee under section 11 of the Page 4 of 4 Income Tax Act, 1961, for fresh consideration by the AO/CPC after affording opportunity of being heard to the assessee.

In the result, appeal of the assessee is treated as allowed for statistical purposes.