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Facts
The assessee, a Charitable Trust, filed its return of income with Form 10B after the due date. The CPC/AO denied the exemption claimed under sections 11 and 12 of the Act due to the delay in filing Form 10B. The CIT(A) upheld this order.
Held
The Tribunal held that furnishing of the audit report along with the return of income is a procedural formality and not a mandatory condition for claiming exemption. Delay in filing the audit report should not lead to denial of exemption if other conditions are met.
Key Issues
Whether the delay in filing Form 10B can be condoned and whether the assessee is entitled to claim exemption under sections 11 and 12 of the Act despite the delay.
Sections Cited
11, 12, 139(1), 139(4A), 250, 44AB
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
O R D E R Per Kavitha Rajagopal, J M:
The captioned appeal has been filed by the assessee Trust, as against the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2022-23.
As there was a delay in filing the appeal, for which the assessee has filed an Affidavit for condoning the said delay, which on perusal of the same, we deem it fit to condone the delay as there being a ‘sufficient cause’ for the said delay. Delay condoned.
The assessee has challenged the order of the ld. CIT(A) in failing to condone the delay in filing audit report for claiming exemption u/s. 11 of the Act. had filed its return of income on 06.11.2022, declaring total income at Nil, which was before the extended due date specified u/s. 139(1) r.w.s. 139(4A) of the Act along with Form No. 10B. The same was processed u/s. 143(1) of the Act where the CPC/ld. A.O. vide intimation dated 31.03.2023, denied the benefit claimed u/s. 11 and 12 of the Act for the reason that the assessee Trust had filed Form 10B, after the specified date as per section 44AB of the Act, thereby making a proposed adjustment of Rs.1,17,07,541/-.
Aggrieved the assessee was in appeal before the first appellate authority, which upheld the order of the CPC/ld. A.O. on the ground that the appellate authority does not have the power to relax the provisions of the Act, whereby the return of income has to be filed before the due date and the audit report in Form No. 10B/10BB should also be filed before the specified date referred in section 44AB of the Act.
Further, the ld. CIT(A) has also directed the ld. CIT(Exemption) to condone the delay in Form 10B after considering the condonation petition filed by the assessee before the ld. A.O. on 05.05.2023 and to grant exemption u/s. 11 of the Act if the delay is condoned.
The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).
We have heard the rival submissions and perused the materials available on record. The only moot question to be decided in the present appeal is whether the delay in filing Form 10B could be condoned and whether or not the assessee is entitled to claim filing of the return of income for a Charitable Trust was 31.10.2022 for the impugned assessment year and the same was extended till 07.11.2022 vide Circular No. 20/2022 in F. No. 225/49/2021/ITA-II dated 26.10.2022. The assessee contends that the due date for filing Form 10B also gets extended for one month prior to the date of filing the returns, here in this case 06.10.2022 and the assessee had filed Form 10B with a delay of one month citing the reason to be due to heavy workload of finalization of the group companies of the assessee where the office bearers were said to be pre-occupied with other work. The assessee further contended that it had filed the return of income along with Form 10B within the extended due date of filing of return of income which was on 07.11.2022.
The learned Authorised Representative (ld. AR for short) for the assessee brought our attention to Circular No.2/2022 (FN 197/55 /2018-ITA-1 dated 03.01.2022) where CBDT has authorized the Commissioner’s of Income Tax to admit admission of condonation of delay in filing Form 10B for A.Y. 2018-19 or for any subsequent assessment year for a delay of upto 365 days and to decide the issues on the merits. The ld. AR contended that there was a delay of only 32 days, which was beyond the control of the assessee, but nevertheless the same was filed within the due date of filing of the return of income u/s. 139(1) of the Act. The ld. AR further stated that the assessee had filed an application for condoning the said application before the ld. CIT(E), which application was pending for disposal. The ld. AR relied on the following decisions in support of the assessee’s contention:
(A.Y. 2022-23) Smollan India CSR Foundation • CIT vs. Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.) • Sarvodaya Charitable Trust vs. ITO(E) [2021] 125 taxmann.com 75 (Gujarat) • Swajan Pariwar Trust v. ADIT (E) [1997] 57 TTJ 77 (Mumbai-Tribunal) • Trinity Education Trust vs. ITO (IT Appeal No. 669(Srt.) of 2018 dated 28.02.2022) 10. The learned Departmental Representative (ld. DR for short), on the other hand, controverted the said facts and stated that exemption u/s. 11 of the Act can be granted only when the return of income is filed in the manner prescribed u/s. 139(4A) of the Act.
On perusal of the submissions of both the sides, it is pertinent to point out that the Tribunal in Trinity Education Trust (supra) has held that if the assessee has complied with the procedural requirement for claiming exemption, then even if Form 10B was filed at a later stage either before the ld. A.O. or before the appellate authority, the same has to be verified and accepted. The said decision has relied on the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Xavier Kalavani Mandal (P.) Ltd. and also the decision in the case of Sarovodaya Charitable Trust vs. ITO (Exemption). It is also to be noted that various decisions of the Tribunal has also considered the said view and has decided the issue in favour of the assessee. The decision in the case of Hon’ble Gujarat High Court in the case of CIT vs. Gujarat Oil and Allied Industries Ltd. (supra) has held that furnishing of audit report along with the return of income is a mere procedural formality which is directory in nature and denial of the benefit of exemption ought not to be done merely for the delay in furnishing the audit report when the assessee has complied with all other conditions. Here in the present case, the Revenue has not disputed the fact that the assessee has complied with the procedural requirement for settled by various decisions relied upon by the assessee, we do not find any justification in taking any other contrary view. We, therefore, direct the ld. A.O. to duly condone the delay in filing Form 10B and to grant exemption to the assessee on the merits and in accordance with law. Hence, ground nos. 2 & 3 raised by the assessee are allowed.
As we have decided the issue on the merits of the case, the other grounds of appeal becomes academic in nature and requires no separate adjudication.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 28.10.2024.