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Facts
The assessee, Shri Swami Vivekanand Trust, filed its return of income for AY 2015-16 claiming deductions under Section 11. However, the Assessing Officer (CPC) denied the exemption, stating that the audit report in Form 10B was not electronically filed as per Section 12A(1)(b). The Ld. CIT(A) confirmed this action, holding that the delay in filing Form 10B could not be condoned. The assessee is in appeal before the Tribunal.
Held
The Tribunal noted that the CBDT instruction and judicial precedents suggest that the filing of the audit report in Form 10B is directory and not mandatory, and failure to file it along with the return should not automatically disentitle the trust from claiming exemption, especially if it has complied with other requirements. The Tribunal also noted that the report can be filed during assessment or appellate proceedings.
Key Issues
Whether the denial of exemption under Section 11 due to the delay in electronically filing the audit report in Form 10B is justified.
Sections Cited
Section 11, Section 12A(1)(b), Section 143(1), Section 250
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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
Assessment Year: 2015-16 Shri Swami Vivekanand Trust The ITO (Exemption) बनाम Plot No.1, DC-2 Ward-1 Rambaug Road Rajkot. Vs. Ward-6A, Adipur. PAN : AABTS 1102 L (अपीलाथ�/Appellant) : (��यथ�/Respondent) �नधा�रती क� ओर से/Assessee by : Shri D.M. Rindani, ld.AR राज�व क� ओर से/Revenue by : Shri Abhimanyu Singh Yadav, Sr-DR सुनवाई क� तार�ख /Date of Hearing : 28/01/2025 घोषणा क� तार�ख /Date of Pronouncement : 28/03/2025 ORDER Per DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2015-16, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Chennai[in short ‘Ld.CIT(A)/NFAC’], under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 02.05.2024, which in turn arises out of an intimation order passed by the Assessing Officer (CPC) u/s 143(1) of the Act, dated 31.10.2015.
1.The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in confirming action of CPC Bangalore in making adjustments to the returned income of the Appellant by way of an Intimation u/s 143(1) of the Act and in denying the benefit of Section 11 to the assessee, failing to appreciate that this was not a case of prima facie adjustment. 2.The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in upholding action of the CPC Bangalore in not giving deduction of Rs.37,93,094/- claimed by the Appellant by way of amount applied for charitable/religious purposes. 3.The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi, erred in upholding action of the CPC Bangalore in not giving deduction of Rs. 6,13,528/- claimed by the Appellant u/s 11(1)(a)of the Act. 4.The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi, erred in upholding action of the CPC Bangalore in not giving deduction of Rs.1,58,959/- claimed by the Appellant u/s 11(1A) of the Act. 5.The Appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal.
The facts of the case which can be stated quite shortly are as follows: After filing Return of Income by the assessee, the return of income was processed by the assessing officer (CPC-Bangalore). The assessing officer (CPC), vide intimation u/s 143(1)(a) of the Act, dated 27.3.2017, has denied exemption under section 11 of the Income Tax Act, as the assessee failed to upload electronically, the audit report in form No. 10B, which is mandatory, as per section 12A (1) (b) of the Act, read with rule 17 B of the Income Tax Rules.
4.Aggrieved by the action of the CPC/assessing officer, the assessee carried the matter in appeal before the ld.CIT(A), who has confirmed the action of the assessing officer (CPC). The ld.CIT(A) noticed that assessee failed to upload electronically the audit report in Form 10B which is mandatory as per Section 12A(1)(b) of the Act, therefore, ld.CIT(A) cannot condone the delay in submitting Form 10B because the CIT (Appeals), lacks the authority to condone (AY : 2015-16) 3 such delays. Additionally, the Jurisdictional Commissioner of Income tax (exemptions) has already rejected the assessee's request for condonation of delay in filing the audit report for the assessment year (AY) 2015-16. The ld CIT(A) noted that the assessee failed to fulfil, the fundamental requirement of timely audit report submission therefore, the adjustment made by the assessing officer(CPC), concerning the denial of exemption under section 11 of the Act, was confirmed by the ld. CIT(A).
Aggrieved by the order of the ld.CIT(A), the assessee is in further appeal before this Tribunal.
Learned Counsel for the assessee, begins by pointing out that denial of exemption under section 11 of the Act, solely due to the delay in filing the audit report is unjustified. The audit report in form No. 10B can be filed during the assessment proceedings or during the appellate proceedings, then it would be a sufficient compliance and assessing officer can examine Form No. 10B and after examination of Form No. 10B, if the assessing officer finds that assessee is eligible to claim exemption under section 11 of the Act, the said exemption should be given to the assessee. The ld. Counsel has cited various judicial decisions in support of his argument, which we have noted.
On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
We heard both sides in detail and also perused the records of the case including the paper book filed by the assessee. The necessary facts of the case have already been discussed in paragraphs above. On examination of the facts and circumstances of the case, we find that assessee has asserted that it is (AY : 2015-16) 4 registered under section 12A of the Act, making them eligible to claim exemption under section 11 of the Act. The assessee claimed to have obtained an audit report on 06.05.2015, before filing the Income Tax Return, on 11.09.2015, which was physically submitted on 21.05.2015, to the Jurisdictional Assessing Officer. Although, the assessee acknowledges the oversight of not e- filing the audit report along with the return of income, the assessee eventually e- filed it on 16.04.2019. In this respect, the assessee submitted a chart showing the important dates and events in respect of filing form No. 10B and return of income, etc, which is reproduced below:
Date Proceeding PB Page Ref. 01-02-1996 Registration u/s 12AA of the Income-tax Act 4
06-05-2015 Audit report in Form 10B obtained from Chartered 5-14 Accountant.
09-05-2015 Filing of Audit Report in Form 10B and audited accounts 15 physically before the ITO, Gandhidham
11-09-2015 Return of income filed claiming deduction u/s 11 of 1-3 Rs.45,65,581/- u/s 139(1)
31-10-2015 Due date of filing of return of income for A.Y. 2015-16 -
27-03-2017 Intimation u/s 143(1) of the Act -
12-02-2018 Filing of 1st rectification application u/s 154 before the ITO, 19 Exemption, Ward - 1, Rajkot
16-04-2019 Filing of Form 10B online on e-filing portal 16-18 25-05-2020 Filing of 2nd rectification application u/s 154 before the ITO, 20 Exemption, Ward - 1, Rajkot.
15-06-2020 1st appeal filed against intimation u/s 143(1) of the Act - dated 27-03-2017 (AY : 2015-16) 5 9.We note that the CBDT has issued instruction about the requirement of filing audit report along with return of income, whether it is mandatory or not, which is reproduced as under:
REQUIREMENT OF FILING AUIDT REPORT ALONG WITH RETURN, WHETHER MANDATORY CBDT INSTRUCTION F.NO.267/482/77-IT(PART), DATED 9-2-1978 1. The Board have considered whether the requirement under s. 12A(b) of filing audit report ‘along with the return of income' is mandatory so as to disentitle the trust from claiming exemption under ss. 11 and 12 in case of omission to furnish such report in the prescribed form along with the return.
Normally, it should be possible for a charitable or religious trust or institution to file the auditor's report along with the return of total income, where such trust or institution claims exemption under ss. 11 and 12. However, in cases where for reasons beyond the control of the assessee some delay has occurred in filing the said report the exemption as available to such trust under ss. 11 and 12 may not be denied merely on accoiunt of delay in furnishing the auditor’s report and the Income-tax Officer should record reasons for accepting a belated audit report.
We also note that mere failure to furnish audit report should not result in denial of exemption specifically where the assesee trust had been complying with all the requirements of the Act, since its inception for that reliance can be placed on the decision of Hon`ble jurisdictional High Court of Gujarat, in the case of Social Security Scheme of GICEA v. Commissioner of Income-tax (Exemptions) [2023] 147 taxmann.com 283 (Gujarat).The filing of audit report along with a return of income is directory and not mandatory and if the same is filed at the time of assessment or even at the time of appellate proceedings, which is also an extension of assessment, the exemption to the trust should not be denied - CIT v. Rai Bahadur Bissesswarlal Motilal Malwasie Trust [1992] 195 ITR 825 (Cal).
11.Therefore, we find that it would be sufficient compliance, if audit report in Form No.10B may be filed before the assessing officer during the assessment proceedings or during the appellate proceedings, for that we also rely on the decision of the ITAT, Rajkot Bench, in the assessee’s own case, in for AY 2014-15 order dated 12.07.2023.
(AY : 2015-16) 6 12. Considering the above facts and circumstances of the case, we remit the issue back to the file of the jurisdictional assessing officer to verify the Form No.10B and allow the exemption under section 11 of the Act, as per law. Hence, we set -aside the order of CIT(A) and remand the issue raised by the assessee for fresh consideration by the jurisdictional assessing officer, with a liberty to the assessee to prove his case by producing Form No. 10B-Audit report, to the satisfaction of the assessing officer. For statistical purposes the appeal of the assessee is allowed.