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Facts
The assessee, a society registered under section 12AA, filed its return of income declaring NIL income after claiming exemption of Rs. 12,97,442/- for charitable purposes. The CPC disallowed this exemption due to a revised Form 10B being filed after the due date.
Held
The Tribunal held that the filing of Form 10B is directory and not mandatory, and mere delay in filing a revised Form 10B should not disentitle the assessee from claiming the benefit of exemption, especially when the original Form 10B was filed on time.
Key Issues
Whether the belated filing of a revised Form 10B by the assessee disentitles it from claiming exemption under sections 11 and 12 of the Income Tax Act, 1961, despite the original Form 10B being filed within the due date.
Sections Cited
12AA, 139(1), 143(1), 11, 12, 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2020-21 Udaan Seva Samiti v. The CPC 250/4, Juhi Lal Colony Bangalore Kanpur Nagar Uttar Pradesh TAN/PAN:AAAAU7543F (Appellant) (Respondent) Appellant by: Shri Samrat Chandra, C.A. Respondent by: Shri Sanjeev Krishna Sharma, D.R. O R D E R This appeal has been preferred by the Assessee against the order dated 23.11.2023, passed by the Addl/JCIT(A)-2, Mumbai for Assessment Year 2019-20.
3.1 The brief facts of the case are that the assessee is a Society registered under section 12AA of the Income Tax Act, 1961 (hereinafter called “the Act’). The assessee-society filed its return of income for the year under consideration under section 139(1) on 26.01.2021, declaring total income at NIL. The assessee-society had claimed exemption of Rs.12,97,442/- relating to the amount applied for charitable and religious purposes during the previous year. The Central Processing Centre (CPC) processed the return under section 143(1) of the Act and disallowed the exemption claimed by the assessee of Rs.12,97,442/-.
2.0 Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority, who dismissed the appeal of the assessee on the ground that Audit Report in Form 10B had been filed after the due date for filing Return of Income.
2.1 Now, the assessee has approached this Tribunal challenging the impugned order of the Ld. First Appellate Authority by raising the following grounds of appeal:
1. That the L.D CIT(Appeals) erred in Law as well as on Facts in not considering that the amount of Rs.12,97,442/- being revenue expenditure debited to Profit & Loss A/c during the previous year is liable to be deductible from the income of the appellant in the computation of income.
2. That the L.D CIT(Appeals) erred in Law as well as on Facts in not considering the Revised Audit Report filled by the appellant, therefore the adjustment of Rs.12,97,442/-is liable to be deducted from the income of the appellant and the impugned Intimation Order is liable to be quashed previous year Revenue Account, is contravention to the principles of natural justice and equity
3. That the income of assessee is to be determined in accordance with the normal business principles of accountancy. Therefore, Rs.12,97,442/-is deductible from the income of appellant and the impugned Intimation Order is liable to be quashed.
4. That the L.D CIT(Appeals) has erred in Law as well as on Facts in not considering that the adjustment made by the Centralized Processing Center of Rs.12,97,442/- is beyond the scope of section 143(1) of the Income Tax Act, 1961. Thus, the impugned Intimation Order is unsustainable in law and liable to be quashed and the deduction of Rs.12,97,442/-is liable to be allowed.
5. That the L.D CIT(Appeals) failed to appreciate that the error in the Audit Report is a basic human error a mistake apparent from record which ought to be rectified and not penalized.
Your humble appellant craves leave to add, amend or withdraw of any Grounds of Appeal on/or before hearing of appeal, other relief or reliefs as your honour may deem fit in the facts and circumstances of the case.
The appellant craves for leave to add, modify, amend or delete any other and further grounds of appeal with permission.
3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there was a delay of 59 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated Nil for condonation of delay, duly supported by Medical Certificate, Prescription and Discharge Summary sheet, stating therein that the Member of the Samiti, Smt Deepika Trivedi had met with a severe accident on 09.11.2023, leading to her spinal injury. It was further submitted that she was hospitalized and had got operated and it took more than three months for her recovery. It was also submitted that after her recovery from accident, she joined the office and approached the Counsel to file the appeal before the Tribunal. It was submitted that the delay caused in filing the appeal was not deliberate and that it was beyond the control of the assessee, which may please be condoned and the appeal be heard on merits.
4.0 The Ld. Sr. D.R. had no objection to the delay being condoned.
5.0 In view of the prayer made by the Assessee, duly supported by an Affidavit and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
6.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the assessee-society is registered under section 12A of the Act and in this case, Form 10B was filed belatedly by the assessee although the original Audit Report in Form 10B had been filed by the assessee before the due date, but Form 10B was subsequently revised and submitted after the due date. It was submitted that the return of income was filed on 26.10.2021 declaring the income at Nil after claiming the benefit of exemption under sections 11 and 12 of the Act. The original Tax Audit Report in Form 10B was filed on 26.02.2021 whereas the revised Audit Report in Form 10B was filed on 03.06.2022 wherein the amount of income of the previous year applied to charitable or religious purposes in India during the year was shown at Rs.10,22,642/-. The Ld. A.R. submitted that the CPC, Bangalore, while processing the return of income of the assessee, denied the benefit of exemption under sections 11 and 12 of the Act under intimation passed under section 143(1) of the Act for the reason that the original Tax Audit Report in Form 10B showed the amount of income of the previous year applied to charitable or religious purposes in India as Nil and the revised Form 10B filed by the assessee on 03.06.2022 was ignored, as the due date for filing of Form 10B was 15.02.2021. The Ld. A.R. submitted that it was the prayer of the assessee that the revised Form 10B be directed to be accepted or in the alternative expenditure incurred by the assessee be allowed as deducible after due verification by the AO.
7.0 In response, the Ld. Sr. D.R. submitted that the revised Form 10B had not been filed within the specified date and, therefore, the CPC, Bangalore could not have validly accepted the revised Form 10B as per the provisions of the Act. It was submitted that the ld. CIT(A) has extensively dealt with the issue before him and has after due consideration of the facts before him held that the assessee was not entitled to get the benefit of sections 11 and 12 of the Act if the revised Form 10B was not filed within time. The Ld. Sr. D.R. supported the order of the Ld. First Appellate Authority and prayed that as per the legal provisions, assessee’s appeal should be dismissed.
8.0 I have heard the rival submissions and have also perused the material on record. The only issue under dispute before me is that whether Form 10B filed belatedly (after being revised) can be considered as fulfillment of the statutory requirement for filing Form 10B prior to filing of the return of income. It is seen that the CPC, Bangalore did not allow the benefit of sections 11 and 12 of the Act to the assessee while processing the return of income under section 143(1) of the Act, because at the time of processing, the relevant details were not before the CPC because as per the original Form 10B, the amount applied for religious or charitable purposes in India had been stated at Nil. The Ld. First Appellate Authority has given a finding that since the revised Form 10B was filed belatedly, only CBDT had the power to condone the delay on application being made by the assessee in terms of the provisions of section 119(2)(b) of the Act and, therefore, he, as the Ld. First Appellate Authority, was not entrusted with the power for condoning the delay. The Ld. First Appellate Authority has also placed reliance on the order of the ITAT Ahmedabad Bench in the case of Association of Indian Panel Board Manufacturer [2022] 143 taxmann.com 418 (Ahmedabad ITAT), wherein, vide order dated 22.07.2022, the ITAT Ahmedabad Bench had held that the Commissioner (Appeals) did not have any power under section 119(2)(b) of the Act to condone the delay in filing Form 10B and, therefore, dismissal of assessee’s appeal, for failure to have filed Audit Report in Form 10B, by the Ld. First Appellate Authority was in order.
8.1 However, it is seen that much water has flown since this order of ITAT Ahmedabad Bench and the ITAT, Delhi Bench very recently in vide order dated 22.01.2025 in the case of Puran Chand Arora Charitable Trust vs. ITO, Exp.2(4), Delhi, while relying on another order of ITAT Delhi Bench, on somewhat identical facts, in the case of ACIT vs. Green Dot Health Foods Pvt. Ltd. in 2019, vide order dated 06.02.2023, held that filing of Form 10B is directory to facilitate the assessment and is not mandatory. It further went on to hold that mere non-filing of Form 10B, which is directory in nature, cannot be the ground for denying the benefit extended by the statute.
8.2 Therefore, in view of the above cited orders of the ITAT Delhi Bench and respectfully differing from the view taken by the Ahmedabad Bench in Association of India Panel Board Manufacturer (supra), I am inclined to agree with the submissions of the Ld. A.R. and I hold that the assessee will be entitled to the benefits accruing to it even after filing of Form 10B belatedly, especially because it is not in dispute that the original Form 10B had been filed prior to the date of filing of return of income and the revised Form 10B (although filed belatedly) has only substituted the original Form 10B which was filed very much in time. Accordingly, while allowing the grounds of appeal raised by the assessee, I direct the AO to allow the benefit of expenditure of Rs.12,97,442/- incurred as revenue expenditure incurred towards charitable and religious purposes in India and compute the income of the assessee accordingly. Accordingly, the appeal of the assessee is restored to the file of the AO for the limited purpose of verifying the nature and character of expenditure being claimed as having been applied for charitable and religious purposes in India during the year under consideration.
9.0 In the final result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 03/07/2025.