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Facts
The assessee, a charitable trust registered under Section 12AA, filed its return for AY 2017-2018. The CPC made an adjustment under Section 143(1) disallowing exemption under Section 11 because the audit report in Form 10B was not filed within the due date or before the return was processed.
Held
The Tribunal ruled that non-filing of Form 10B is a procedural lapse and does not amount to an 'incorrect claim' for adjustment under Section 143(1). Citing precedent, it held the CPC's adjustment was invalid in law and directed the intimation to be amended.
Key Issues
Whether an adjustment under Section 143(1) for disallowing exemption under Section 11 is valid merely due to the non-filing of an audit report in Form 10B within the prescribed due date.
Sections Cited
11, 12AA, 139(1), 143(1), Rule 12(2) of Income-tax Rules, 1962
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Income Tax Appellate Tribunal, “SMC” BENCH, COCHIN
Before: Shri Inturi Rama Rao
Asst.Year 2017-2018 Isa Viswa Prajnana Trust The Deputy Commissioner of Anayara P.O. v. Income-tax (Exemption) Trivandrum – 695 029. Thiruvananthapuram. PAN : AAATI3065P. (Appellant) (Respondent) Appellant by : Sri.V.P.Narayanan, Advocate Respondent by : Smt.Leena Lal, Senior AR Date of Date of Hearing : 13.03.2025 Pronouncement : 29.04.2025 O R D E R This appeal filed by the assessee-trust is directed against the order of the Addl./Joint Commissioner of Income-tax (Appeals)-9 dated 27.12.2024 passed u/s.143(1) of the Income-tax Act, 1961 (“the Act”) for the assessment year 2017-2018.
Briefly the facts of the case are that the appellant is a charitable trust, duly registered under the Trust Act. It is formed with the object of running a society in the field of social and economic development, education, environment and other avenues, etc. The appellant trust also duly registered u/s.12AA of the Income-tax Act, 1961 (“the Act”) on 26th March, 2001. The return of income for the assessment year 2017- 2018 was filed on 31st July, 2017. The said return of income was processed by the CPC u/s.143(1) of the Act vide intimation dated 25.11.2019 after making adjustment by disallowing income applied for
Being aggrieved by the said intimation, an appeal was filed before the CIT(A), who vide the impugned order held that since audit report was filed after processing of the return of income u/s.143(1) of the Act and the audit report in Form 10B was filed only in the year 2023, the CPC was justified in making the adjustment to the income claimed exemption u/s.11 of the Act.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. It is submitted that the audit report in Form 10B could not be submitted within the prescribed due date for filing the return of income u/s.139(1) of the Act, as the concerned Chartered Accountant was passed away and its audit report was furnished during the course of proceedings before the CIT(A). It is further submitted that making an adjustment u/s.143(1) of the Act for non-furnishing of audit report in Form 10B is beyond the scope of the power u/s.143(1) as filing of the audit report is only procedural in nature and mere failure to file the audit report does not constitute incorrect claim. In support of this, the learned Counsel placed reliance on the decision of the Co- ordinate Bench of the ITAT in the case of M/s.Ammini Foundation v. DCIT in (order dated 28.10.2022) and the judgment of the Hon’ble Gujarat High Court in the case of Association of Indian Panel Board Manufacturer v. DCIT in Tax Appeal No.655 of 2022 (dated 21.03.2023), etc.
. Isa Viswa Prajnana Trust.
On the other hand, the learned Senior DR submits that filing of audit report in Form 10B is mandatory as per Rule 12(2) of the Income- tax Rules, 1962 from assessment year 2016-2017.
I heard rival submissions and perused the material available on record. The only issue that arises for my consideration is whether the CPC was justified in making adjustment of income claimed to be exempt u/s.11 of the Act for the reason that the appellant-trust had not filed audit report in Form 10B within the due date prescribed u/s.139(1) of the Act nor filed before the processing of the return by the CPC. The scope of adjustment u/s.143(1) of the Act was defined there under. On a mere reading of the provisions of sec.143(1) of the Act, adjustment can be made where incorrect claim is made in the return of income based on the information contained in the return of income. The said provision nowhere stipulates that the mere non-filing of audit report would amount to incorrect claim. Therefore, respectfully following the decision of the Co-ordinate Bench of the ITAT in the case of M/s.Ammini Foundation v. DCIT in (order dated 28.10.2022), I am of the considered view that the adjustment made by the CPC is not valid in law and accordingly I direct the CPC to amend the intimation.
In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 29th day of April, 2025.