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Facts
The appellant trust filed its Return of Income for AY 2022-23 within the due date but filed Form 10B (required for claiming exemption under Section 11) with a delay of 27 days. This delay was attributed to an oversight by the Chartered Accountant.
Held
The Tribunal held that the power to condone the delay in filing Form 10B vests with the CIT(E) and not with the appellate authorities. Since the assessee's plea for condonation of delay was already pending before the CIT(E), the appeal was kept alive pending adjudication.
Key Issues
Whether the claim for exemption under Section 11 can be denied solely due to the belated filing of Form 10B, and whether appellate authorities have the power to condone such delay.
Sections Cited
Section 11, Section 12A, Section 139(1), Section 119(2)(b), Section 143(1), Section 44AB, Section 246, Section 246A, Section 253
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Income Tax Appellate Tribunal, Mumbai “G” Bench, Mumbai.
Before: Shri Satbeer Singh Godara (JM) & Shri Omkareshwar Chidara (AM)
The aforesaid appeal has been filed by the appellant against the appeal order of Additional Commissioner of Income Tax (Appeals)- (the Ld. Addl.CIT(A) for short)-2, dated 30.3.2024.
The appellant filed the appeal before the ITAT with the following grounds of appeal.
1a). The Hon'ble Additional/Joint Commissioner of Income Tax-2, Ludhiana [hereinafter referred as "the Hon'ble Addl/JCIT(A)"] erred in not allowing the claim made u/s 11 of the Income Tax Act, 1961 ("Act") and including Rs. 1,18,65,201/- as income of the Appellant for the reason that the Appellant has filed Form 10B belatedly as required u/s 12A of the Act. The Appellant submits that delay in filing the Form 10B is procedural in nature. Hence, the action of the AO and confirmed by the Hon'ble Addl./JCIT (A) shall be quashed.
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(b). The Hon'ble Addl./JCIT(A) erred in dismissing the appeal without providing an opportunity of being heard to the Appellant which is in gross violation of principle of natural justice.
The Appellant submits that that the Hon'ble Addl./JCIT(A) ought to have provided an opportunity of being heard to the Appellant before passing the order, thus; order passed by Hon'ble Addl./JCIT(A) needs deserve to be quashed.”
The brief facts in this case are that the appellant trust was granted registration under section 12AB to carry out charitable activities. For the A.Y. 2022-23, the appellant filed a Return of Income on 10.11.2022 under section 139(1) of the Income Tax Act. The extended due date for filing Return of Income is 7.11.2022 (extended by CBDT vide Circular dated 26.10.2022 vide circular No. 20/2022). But, the Form 10B was filed with a delay of 27 days and the appellant pleads that the delay is due to oversight by its Chartered Accountant and the affidavit of CA was enclosed during the appeal proceedings before the ITAT. The appellant filed Return of Income alongwith Form 10B on 4.11.2022. As mentioned earlier, the Return of Income was filed within the stipulated time under section 139(1) of the IT Act, whereas the Form No. 10B was filed with a delay of 27 days. The grievance of the appellant is that the Return of Income was processed by CPC vide Intimation dated 19.7.2023 issued u/s. 143(1) of the I.T. Act wherein the deduction claimed under section 11 of the I.T. Act was denied for the only reason that the Form 10 was not filed within the time stated in 12A(b) of the I.T. Act i.e. 7.10.2022.
So, an appeal was filed before Addl.CIT(A) and the Additional CIT(A) disposed off the appeal of the appellant vide its order dated 30.5.2024 confirming the action of the learned Assessing Officer (Ld.AO for short).
Simultaneously, the appellant filed a petition before the Ld. CIT(Exemption) to condone the delay in filing Form No. 10B and allow the exemption/grant u/s. 11 of the I.T. Act. The appellant has also stated that the same is pending before the Ld. CIT(E) for adjudication.
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As the appellant did not get relief before the Ld. Addl.CIT(A), further appeal was filed before the ITAT with the grounds of Appeal mentioned in page 1 & 2 of this order. During the hearing before the Bench, the Ld. AR of the appellant filed a paper book containing his arguments and also relied on some cases-law. The Ld. AR of the appellant relied on the decisions of Savitri Foundation Vs. ITO (ITA No. 1925/Mum/2021) and Shree Bhairav Seva Samithi Vs. ITO (ITA No. 2225/Mum/2024) for the proposition that Form 10B can be filed subsequently also and on the ground of delay in filing of Form 10B, appellant’s claim under section 11, cannot be denied. It was argued that filing of Form 10B is only procedural and not mandatory.
7. Per contra, the Ld. DR supported the order of CPC and the order of the Ld. Additional CIT(E). It is argued that the decisions relied on by the appellant are for the period prior to the amended provisions and hence not applicable for the present appeal. And that the statute has given a time limit for filing of the audit report which is one month prior to the date of filing of return prescribed u/s.139(1). The power to condone such kind of delay has been provided u/s.119 (2)(b). The CBDT vide Circular dated 03/01/2020 has directed that, where there is a delay up to 365 days in filing Form 10B for A.Y.2018-19 or for any subsequent years, the Commissioner of Income Tax is obliged to admit such application for condonation of delay u/s.119(2) of the Act and decide on merits. Again CBDT vide Circular No.16 of 2022 dated 19/07/2022 has extended the period of delay to condone beyond 365 days upto three years in filing of Form 10B for A.Y.2018-19 after subsequent years, and the powers were given to the Pr. Chief Commissioner and Chief Commissioner to condone the delay and decide on merits. Thus, the statute has given this power for condonation of delay in filing of Form 10B or any audit report u/s. 119(2)(b) to the CITS/CCITs/PCCITs. It is further submitted that the power to condone the delay has not been given to Appellate Authorities, or enshrined in section 246 or 246 A or 253. Other than Section 119(2)(b), there is no other provision given to any other
4 Sheetal Lodha Foundation appellate authority to entertain such appeal or condone the delay and that once Section 119 of the Act has conferred power upon the CBDT to issue instructions and directions were given to the Income Tax Authorities as it may deem fit for proper administration of the Act which are required to be observed and followed by the Income Tax authorities and CBDT under Sub- section 2 of (b) Section 119 to avoid genuine hardship in the matter of filing of audit report in Form 10B has issued various circulars empowering the authorities at the level of CITs and above to condone the delay in filing of Form 10B for A.Y.2018-19 and subsequent years, then such authorities should condone the delay following the judicial precedents laid down by the various Courts. The Revenue’s case accordingly is that this provision was amended under section 44AB read with Explanation (ii) by the Finance Act 2020, w.e.f. 1.4.2020. Thus, the audit report and Form No. 10B is to be filed on or before 7.10.2022 for the A.Y. 2022-23 i.e., one month before filing of Return of Income. But, the appellant filed the same on 4.11.2022, i.e. with a delay of 27 days. As mentioned above, the power to condone delay vests with the Ld. CIT(E) and not with any appellate authorities.
We have given our thoughtful consideration to the foregoing vehement rival submissions. Without expressing any opinion on merits at this stage, we are of the considered view that once the learned CIT(E) is already considering the assessee’s very plea of condonation of admitted delay in filing the Form 10B audit report explaining all mitigating reasons, larger interest of justice would be met in case the taxpayer’s instant appeal is directed to be kept alive before the learned CIT(A) till the necessary adjudication is finalised in foregoing terms. Ordered accordingly.
This assessee’s appeal is allowed for statistical purposes in above terms.
5 Sheetal Lodha Foundation Order pronounced in the open court on 18th October, 2024.