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Facts
Ujagar Research Foundation, a trust, filed its original and revised returns for AY 2019-20 without Form 10B, leading to disallowance of benefits under sections 11 and 12 by the AO and determination of income at Rs 14,78,650/-. The assessee contended that the audit report and Form 10B were obtained before the filing of the revised return. The CIT(A) dismissed the appeal, stating Form 10B was filed late and neither the AO nor CIT(A) had authority to condone the delay under Section 119(2)(b).
Held
The Tribunal noted that CBDT Circulars 3/2020 and 16/2022 mandate condonation of delay up to 365 days for filing Form 10B for AY 2018-19 and subsequent years. Consequently, the Tribunal directed the Assessing Officer to admit the audit report with Form 10B and decide the issue afresh as per law, providing the assessee a reasonable opportunity of being heard.
Key Issues
Whether benefits under sections 11 and 12 can be denied solely due to late filing of Form 10B, and if CBDT circulars regarding condonation of delay should be applied by the authorities.
Sections Cited
11, 12, 119(2)(b), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘SMC’ BENCH,
Before: SHRI ANUBHAV SHARMA, & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 12.02.2024 pertaining to A.Y 2019-20.
The grievances of the assessee read as under:
“1. On the facts and circumstances of the case learned NFAC, JCIT (A) erred in confirming the LD AO's view of disallowing the application of income on the pretext of non-filing of form 10B before filing of return as it is a provision requiring furnishing of form 10B (Audit Report) is procedural in nature and assessee had filed Audit report before filing the revised return of Income, which was much before initiating the assessment by LD AO.
2 On the facts and circumstances of the case learned NFAC, JCIT (A) erred in upholding AO's version of rejecting the claim of application and treating the same to be the income as application of income declared in the return of income in form 7 is in any case an expenditure.
3 On the facts and circumstances of the case learned NFAC, JCIT (A) has erred in aligning with AO not considering the fact that the assessee was misinformed by a professional without any fault on his part.
4 Learned NFAC, JCIT (A) has erred in law and on facts in not giving proper opportunity to the Assessee to be heard
5 Learned NFAC, JCIT(A) wrongly did not allowed the condonation on delay in filing audit report.
6 On the facts and circumstances of the case and in law, the order of the learned NFAC, JCIT (A) is bad in law and is against the tenets of natural justice liable to be quashed.
7 The appellant craves to add, alter, modify or delete any ground of appeal during the pendency of appeal.”
Briefly stated, the facts of the case are that the assessee is a trust, engaged in the business of social services and filed its original Return of Income for the A.Y 2019-20 under consideration on 30.09.2019 declaring total income at Rs. 50/-. Thereafter, the assessee received notice of infirmity that Form No. 10B which was required to be filed, was not filed.
The assessee filed a revised return of income on 06.01.2020 but did not file Form No. 10B. The return was processed u/s 143(1) determining the income at Rs 14,78,650/- by denying the benefit of section 11 and 12 of the I T Act.
The main reason for disallowing the application of income is that the audit report was not filed alongwith Form No. 10B with the return of income but was filed on 09.06.2020.
The assessee preferred an appeal before the ld. CIT(A) and explained that the audit report and Form 10B was obtained by the assessee much before the filing of return of income and since the audit report has been obtained prior to the filing of the return, the Assessing Officer was not justified in disallowing the application of income.
After considering the facts and submissions, the ld. CIT(A) held that the Form 10B has been filed after five months of its filing the return, which was not filed within the time frame outlined in the Act.
Relying on CBDT Circulars and section 119(2)(b), the ld. CIT(A) dismissed the appeal of the assessee. The CIT(A) held that u/s 119(2)(b) of the Act, the Assessing Officer/ld. CIT(A) do not have authority to grant condonation for the delay in filing Form No. 10B.
We have given thoughtful consideration of the findings of the ld. CIT(A). The undisputed fact is that the assessee has obtained audit report alongwith Form 10B prior to filing of return of income. The CBDT vide Circular 3/2020 dated 03.01.2020 and Circular 16/2022 dated 19.07.2022 have mandated condonation of delay upto 365 days for delay in filing Form 10B for AY 2018-19 or for any subsequent AYs.
In the light of above discussion, we direct the Assessing Officer to admit the audit report with Form 10B and decide the issue afresh as
per provisions of law. In that view of the matter, in the interest of justice and fair play, we restore the issue to the file of the Assessing Officer. The assessee is directed to furnish the original documents for verification and the Assessing Officer is directed to examine the same and decide the issue as per the provisions of law after affording reasonable and sufficient opportunity of being heard to the assessee.
In the result, the appeal of the assessee in is allowed for statistical purposes.
The order is pronounced in the open court on 11.10.2024.