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Facts
The assessee trust filed its return of income declaring total income. Subsequently, the return was processed, and adjustments were made due to the non-filing of the audit report in Form 10-B within the prescribed due date, resulting in disallowance of expenditure claimed under Section 11 and addition of accumulated/set-aside amounts.
Held
The Tribunal noted that the assessee had filed Form 10-B with a delay of 31 days. The issue was primarily about the condonation of this delay. The Tribunal referred to CBDT Circular No. 16/2022, which delegates the power to condone such delays to the Pr. Chief Commissioner/Chief Commissioner or Commissioner of Income-tax. The application for condonation filed by the assessee was still pending.
Key Issues
Whether the delay in filing the audit report in Form 10-B can be condoned, and whether the benefits of Section 11 should be denied solely on this ground.
Sections Cited
11, 11(2), 12A(1)(b), 143(1), 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
This appeal has been preferred by the assessee against order dated 28.03.2024 passed by the Ld. Additional Commissioner of Income-tax (Appeals) tax (Appeals) – Panchkula [in short ‘the Ld. CIT(A)’] for Panchkula [in short ‘the Ld. CIT(A)’] for assessment year 2022 assessment year 2022-23, raising following grounds: 23, raising following grounds:
1. On the facts and On the facts and in the circumstances of the case and in law, the in the circumstances of the case and in law, the Learned Commissioner of Income Learned Commissioner of Income-tax (Appeals) [CIT(Appeals)] tax (Appeals) [CIT(Appeals)] erred in confirming the denial! of benefits of Section 11 to the erred in confirming the denial! of benefits of Section 11 to the erred in confirming the denial! of benefits of Section 11 to the Appellant by the Deputy Director of Income Tax, Centralized Appellant by the Deputy Director of Income Tax, Centralized Appellant by the Deputy Director of Income Tax, Centralized Processing Centre, Ba Processing Centre, Bangalore (herein after referred to as the AO) ngalore (herein after referred to as the AO) on the grounds that the Appellant did not furnish Audit Report in on the grounds that the Appellant did not furnish Audit Report in on the grounds that the Appellant did not furnish Audit Report in Form 10 Form 10-B within the prescribed time. 2.
2. The learned CIT(Appeals) failed to appreciate that mere 2. The learned CIT(Appeals) failed to appreciate that mere 2. The learned CIT(Appeals) failed to appreciate that mere delayed filing of the Audit Report in Form 10 delayed filing of the Audit Report in Form 10-B cannot be fatal in cannot be fatal in as much as the benefits of Section 11 cannot be denied on this as much as the benefits of Section 11 cannot be denied on this as much as the benefits of Section 11 cannot be denied on this solitary ground. The learned CIT(Appeals) failed to appreciate the solitary ground. The learned CIT(Appeals) failed to appreciate the solitary ground. The learned CIT(Appeals) failed to appreciate the ratio of various judicial pronouncements in this behalf. ratio of various judicial pronouncements in this behalf. ratio of various judicial pronouncements in this behalf.
3. The learned CIT(Appeals) failed to appreciate that The learned CIT(Appeals) failed to appreciate that the requirement the requirement prescribed is merely procedural in nature. It is submitted that the prescribed is merely procedural in nature. It is submitted that the prescribed is merely procedural in nature. It is submitted that the Appellant has complied with the relevant provisions by furnishing Appellant has complied with the relevant provisions by furnishing Appellant has complied with the relevant provisions by furnishing the Return of Income and the Audit Report on 07.11.2022 i.e. the Return of Income and the Audit Report on 07.11.2022 i.e. the Return of Income and the Audit Report on 07.11.2022 i.e. within the extended due date. Accordingly, t within the extended due date. Accordingly, the benefits of Section he benefits of Section 11 of the Act cannot be denied for alleged delay in filing the said 11 of the Act cannot be denied for alleged delay in filing the said 11 of the Act cannot be denied for alleged delay in filing the said Audit Report. Alternatively, such small! delay may kindly be Audit Report. Alternatively, such small! delay may kindly be Audit Report. Alternatively, such small! delay may kindly be condoned and the benefits of Section 11 be granted to the condoned and the benefits of Section 11 be granted to the condoned and the benefits of Section 11 be granted to the Appellant. Appellant. 4. 4. Without prejudice to the above, 4. Without prejudice to the above, it is submitted that on the facts it is submitted that on the facts and in the circumstances of the case and in law, the learned and in the circumstances of the case and in law, the learned and in the circumstances of the case and in law, the learned CIT(Appeals) erred in confirming the adjustments resorted to by CIT(Appeals) erred in confirming the adjustments resorted to by CIT(Appeals) erred in confirming the adjustments resorted to by the learned AO while processing the Return of Income under the learned AO while processing the Return of Income under the learned AO while processing the Return of Income under Section 143(1) of the Act. Section 143(1) of the Act. 5. 5. The lear 5. The learned AO erred in making huge adjustments aggregating ned AO erred in making huge adjustments aggregating to Rs.1,50,13,607/ to Rs.1,50,13,607/- under the Intimation issued under Section under the Intimation issued under Section 143(1) of the Act resulting into a huge tax demand of 143(1) of the Act resulting into a huge tax demand of 143(1) of the Act resulting into a huge tax demand of Rs.74,10140/ Rs.74,10140/- without giving any opportunity of being heard to without giving any opportunity of being heard to the Appellant Trust and t the Appellant Trust and thereby violating the principles of Natural hereby violating the principles of Natural Justice. Justice. 2. Briefly stated facts of the case are that the assessee trust e Briefly stated facts of the case are that the assessee trust e Briefly stated facts of the case are that the assessee trust e- filed return of income for the assessment year under consideration filed return of income for the assessment year under consideration filed return of income for the assessment year under consideration on 07.02.2022 declaring total income at Rs.99,67,321/-. The return on 07.02.2022 declaring total income at Rs.99,67,321/ on 07.02.2022 declaring total income at Rs.99,67,321/ of income filed by the assessee was processed by the Ld. Dy. ncome filed by the assessee was processed by the Ld. Dy. ncome filed by the assessee was processed by the Ld. Dy. Director of Income Director of Income-tax Centralized Processing Centre (CPC) tax Centralized Processing Centre (CPC) Bangalore on 08.03.2023 under an intimation u/s 143(1) of the Bangalore on 08.03.2023 under an intimation u/s 143(1) of the Bangalore on 08.03.2023 under an intimation u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) and assessed the total tax Act, 1961 (in short ‘the Act’) and assessed the total tax Act, 1961 (in short ‘the Act’) and assessed the total income at Rs.2,49,80,928/ 2,49,80,928/- by way of disallowing expenditure by way of disallowing expenditure incurred/amount set aside and claimed as deduction u/s 11 of the incurred/amount set aside and claimed as deduction u/s 11 of the incurred/amount set aside and claimed as deduction u/s 11 of the Act Act amounting amounting to to Rs.78,13,607/- Rs.78,13,607/ and and also also by by adding adding Rs.72,00,000/- being amount accumulated/set aside u/s 11(2) of being amount accumulated/set aside u/s 11(2) of being amount accumulated/set aside u/s 11(2) of the Act on the ground that th the Act on the ground that the assessee had not e e assessee had not e-filed form No. 10B being audit report u/s 12A(1)(b) of the Act within the due date 10B being audit report u/s 12A(1)(b) of the Act within the due date 10B being audit report u/s 12A(1)(b) of the Act within the due date as specified. The extended due date of e as specified. The extended due date of e-filing of Form No. 10B filing of Form No. 10B being audit report u/s 12A(1)(b) of the Act for the assessment year being audit report u/s 12A(1)(b) of the Act for the assessment year being audit report u/s 12A(1)(b) of the Act for the assessment year 2022-23 was 07.10.20 23 was 07.10.2022 and the assessee had e 22 and the assessee had e-filed Form No. 10B issued by the Chartered Accountant as on 07.11.2022, which 10B issued by the Chartered Accountant as on 07. 10B issued by the Chartered Accountant as on 07. is delayed by 31 days. is delayed by 31 days.
3. On further appeal, the Ld. CIT(A) has mainly upheld the On further appeal, the Ld. CIT(A) has mainly upheld the On further appeal, the Ld. CIT(A) has mainly upheld the disallowance for the reason that neither the Assessing Officer not disallowance for the reason that neither the Assessing Officer not disallowance for the reason that neither the Assessing Officer not the Ld. CIT(A) was having any authority to condone having any authority to condone the delay in having any authority to condone filing the Form No. 10B. The Ld. CIT(A) has referred that under the filing the Form No. 10B. The Ld. CIT(A) has referred that under the filing the Form No. 10B. The Ld. CIT(A) has referred that under the Circular No. 03/2020 dated 03.01.2020 and Circular No. 16/2022 Circular No. 03/2020 dated 03.01.2020 and Circular No. 16/2022 Circular No. 03/2020 dated 03.01.2020 and Circular No. 16/2022 dated 19.07.2022 the power for condoning the delay has been dated 19.07.2022 the power for condoning the delay has been dated 19.07.2022 the power for condoning the delay has been delegated by the Central Board of Direct Taxes (CBDT) to the egated by the Central Board of Direct Taxes (CBDT) to the egated by the Central Board of Direct Taxes (CBDT) to the concerned Pr. Pr. Pr. Chief Chief Chief Commissioner/Chief Commissioner/Chief Commissioner/Chief Commissioner Commissioner Commissioner or or or Commissioner of Income Commissioner of Income-tax only.
4. Aggrieved, the assessee is in appeal before the Tribunal by way the assessee is in appeal before the Tribunal by way the assessee is in appeal before the Tribunal by way of raising grounds as reproduced above. of raising grounds as reproduced above.
The Ld. counsel for the assessee has filed a Paper Book The Ld. counsel for the assessee has filed a Paper Book The Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 43. containing pages 1 to 43. Before us, the Ld. counsel for the Before us, the Ld. counsel for the assessee has relied on the following decisions: assessee has relied on the following decisions:
i. Association of Indian Panelboard Manufacture v. Dy. CIT Association of Indian Panelboard Manufacture v. Dy. CIT Association of Indian Panelboard Manufacture v. Dy. CIT [2023] 157 taxmann.com 550 (Gujarat [2023] 157 taxmann.com 550 (Gujarat) ii. Shree Bhairav Seva Samiti v. ITO (Exemption) [2023] 149 Shree Bhairav Seva Samiti v. ITO (Exemption) [2023] 149 Shree Bhairav Seva Samiti v. ITO (Exemption) [2023] 149 taxmann.com 478 (Mumbai taxmann.com 478 (Mumbai-Trib.) iii. Gyandeep Gyandeep Gyandeep Charitable Charitable Charitable Trust Trust Trust v. v. v. A.D.I.T. A.D.I.T. A.D.I.T. in in in ITA ITA ITA No. No. No. 555/Ahd/2023 for assessment year 2021 555/Ahd/2023 for assessment year 2021-22 iv. A1 Jamia Mohammediyah Education Society Writ Petition A1 Jamia Mohammediyah Education Society Writ Petition A1 Jamia Mohammediyah Education Society Writ Petition No. 1689 of 2024 No. 1689 of 2024 6. We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. We find that the Assessing Officer CPC relevant material on record. We find that the Assessing Officer CPC relevant material on record. We find that the Assessing Officer CPC has made adjustment for the amount of expenditure claimed, has made adjustment for the amount of expenditure has made adjustment for the amount of expenditure amount accumulated and amount accumulated and set apart for exemption u/s 11(2) of the exemption u/s 11(2) of the Act for the sole reason that the Assessing Officer did not file the or the sole reason that the Assessing Officer did not file the or the sole reason that the Assessing Officer did not file the audit report prescribed in Form No. 10B of the Act on or before the audit report prescribed in Form No. 10B of the Act on or before the audit report prescribed in Form No. 10B of the Act on or before the due date. The said due date in the case of the assessee under the due date. The said due date in the case of the assessee under the due date. The said due date in the case of the assessee under the provisions of section 12A(1)(b) of the Act was 07.10.2022 however, provisions of section 12A(1)(b) of the Act was 07.10.2022 provisions of section 12A(1)(b) of the Act was 07.10.2022 the assessee has e-filed the said Form No. 10B on 07.11.2022 and filed the said Form No. 10B on 07.11.2022 and filed the said Form No. 10B on 07.11.2022 and thus , there was a , there was a delay of 31 days in filing such form delay of 31 days in filing such form on the Income-tax Portal. tax Portal. Therefore, the issue is merely for the issue is merely for the condonation of the delay of the 31 days. We find that the Ld. CIT(A) condonation of the delay of the 31 days. We find that the Ld condonation of the delay of the 31 days. We find that the Ld has referred to Circular No. 16/2022 dated 19.07.2022 issued by has referred to Circular No. 16/2022 dated 19.07.2022 issued by has referred to Circular No. 16/2022 dated 19.07.2022 issued by the CBDT, wherein the CBDT invoking powers u/s 119(2)(b) of the wherein the CBDT invoking powers u/s 119(2)(b) of the wherein the CBDT invoking powers u/s 119(2)(b) of the Act delegated the power for condoning the delay to the Pr. Chief power for condoning the delay to the Pr. Chief power for condoning the delay to the Pr. Chief Commissioner/Chief Commissioner or Commissioner of Income-tax Commissioner/Chief Commissioner or Commissioner of Inc Commissioner/Chief Commissioner or Commissioner of Inc as the case may be. The relevant circular is reproduced as under: as the case may be. The relevant circular is reproduced as under: as the case may be. The relevant circular is reproduced as under:
“7.2 In this context, the Central Board of Direct Taxes (CBDT) issued 7.2 In this context, the Central Board of Direct Taxes (CBDT) issued 7.2 In this context, the Central Board of Direct Taxes (CBDT) issued Circular 3/2020 dated 03 Circular 3/2020 dated 03-01-2020 and Circular No. 16/2022 dated 2020 and Circular No. 16/2022 dated 19th July, 2022. The relevant excerpts from Circ 19th July, 2022. The relevant excerpts from Circular No. 16/2022 dated ular No. 16/2022 dated 19th July, 2022 are as follows: 19th July, 2022 are as follows: "Condonation of delay under Section 119(2)(b) of the Income "Condonation of delay under Section 119(2)(b) of the Income "Condonation of delay under Section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10B for Assessment Year 2018 Act, 1961 in filing of Form No. 10B for Assessment Year 2018 Act, 1961 in filing of Form No. 10B for Assessment Year 2018-19 and subsequent years and subsequent years - Reg. In exercise of the powers conferred under sec In exercise of the powers conferred under section 119(2) of the Income tion 119(2) of the Income- tax Act, 1961 (hereinafter referred to as 'Act'), the Central Board of Act, 1961 (hereinafter referred to as 'Act'), the Central Board of Act, 1961 (hereinafter referred to as 'Act'), the Central Board of Direct Taxes (CBDT) by Circular No.2/2020 [F.No. 197/55/2018 Direct Taxes (CBDT) by Circular No.2/2020 [F.No. 197/55/2018 Direct Taxes (CBDT) by Circular No.2/2020 [F.No. 197/55/2018-ITA-1] dated 03.01.2020 authorized the Commissioners of Income dated 03.01.2020 authorized the Commissioners of Income- -tax to admit applications of condon applications of condonation of delay in filing Form No. 10B for AY 2018 ation of delay in filing Form No. 10B for AY 2018- 19 or for any subsequent Assessment Years where there is delay of 19 or for any subsequent Assessment Years where there is delay of 19 or for any subsequent Assessment Years where there is delay of upto 365 days and decide on merits. upto 365 days and decide on merits.
Further to the powers delegated to Commissioners of Income 2. Further to the powers delegated to Commissioners of Income 2. Further to the powers delegated to Commissioners of Income-tax as discussed above, the CBDT hereby di discussed above, the CBDT hereby directs that where there is delay of rects that where there is delay of beyond 365 days upto three years in filing Form No. 10B for beyond 365 days upto three years in filing Form No. 10B for beyond 365 days upto three years in filing Form No. 10B for Assessment Year 2018 Assessment Year 2018-19 or for any subsequent Assessment Years, 19 or for any subsequent Assessment Years, the Pr. Chief Commissioners of Income the Pr. Chief Commissioners of Income-tax / Chief Commissioners of tax / Chief Commissioners of Income-tax are authorized to a tax are authorized to admit such applications of condonation of dmit such applications of condonation of delay under section 119(2) of the Act and decide on merits. delay under section 119(2) of the Act and decide on merits.
The Pr. Chief Commissioner / Chief Commissioner or Commissioners 3. The Pr. Chief Commissioner / Chief Commissioner or Commissioners 3. The Pr. Chief Commissioner / Chief Commissioner or Commissioners of Income-tax, as the case may be, while entertaining such applications tax, as the case may be, while entertaining such applications tax, as the case may be, while entertaining such applications for condonation for condonation of delay in filing Form No. 10B, shall satisfy themselves of delay in filing Form No. 10B, shall satisfy themselves that the applicant was prevented by reasonable cause from filing such that the applicant was prevented by reasonable cause from filing such that the applicant was prevented by reasonable cause from filing such Form within the stipulated time. Form within the stipulated time.
Further, the Pr. Chief Commissioner / Chief Commissioner of Income 4. Further, the Pr. Chief Commissioner / Chief Commissioner of Income 4. Further, the Pr. Chief Commissioner / Chief Commissioner of Income- tax, as the case may be, as the case may be, shall preferably dispose the application within shall preferably dispose the application within three months of receipt of the application." three months of receipt of the application." 6.2 The assessee stated that application for condonation of delay The assessee stated that application for condonation of delay The assessee stated that application for condonation of delay in filing Form No. 10B for the year under consideration was filed in filing Form No. 10B for the year under consideration was filed in filing Form No. 10B for the year under consideration was filed before the Commissioner of Inc before the Commissioner of Income-tax (Exemption), Mumbai on tax (Exemption), Mumbai on 16.03.2023 and said application is still pending for disposal till 16.03.2023 and said application is still pending for disposal till 16.03.2023 and said application is still pending for disposal till date. However, we find that under the CBDT circular (supra) the date. However, we find that under the CBDT circular (supra) the date. However, we find that under the CBDT circular (supra) the concerned Commissioner of Income concerned Commissioner of Income-tax is preferably require tax is preferably required to dispose off the application wit dispose off the application within the three month of receipt of this hin the three month of receipt of this application. Before us, the Ld. counsel for the assessee expressed application. Before us, the Ld. counsel for the assessee expressed application. Before us, the Ld. counsel for the assessee expressed ignorance regarding disposal of the application of the assessee. In regarding disposal of the application of the assessee. In regarding disposal of the application of the assessee. In the facts and circumstances of the case, we feel it appropriate to set the facts and circumstances of the case, we feel it appropriate to the facts and circumstances of the case, we feel it appropriate to aside the order of lower authorities and restore rder of lower authorities and restore the matter back to the matter back to the file of the Assessing Officer the file of the Assessing Officer for deciding afresh with directions to for deciding afresh with directions to him to find out the status of application of the assessee for to find out the status of application of the assessee for to find out the status of application of the assessee for condonation of the delay condonation of the delay filing form no. 10B. If the application filing form no. 10B. If the application of the assessee is not disposed, then, we also the assessee is not disposed, then, we also direct the direct the concerned Commissioner of Income Commissioner of Income-tax (Exemption)/Director of income (Exemption)/Director of income-tax ( Exemption) to dispose of to dispose off such application at earliest so that such application at earliest so that grievance of the assessee can be disposed off. grievance of the assessee can be disposed off.
6.3 The Ld. Assessing Officer Assessing Officer is directed to consider the claim of consider the claim of the assessee for exemption u/s 11 of the Act for exemption u/s 11 of the Act after taking into after taking into consideration decision of the concerned Commissioner of Income- consideration decision of the concerned Commissioner of Income consideration decision of the concerned Commissioner of Income tax (Exemption) on the application of the assessee for condonation tax (Exemption) on the application of the assessee for condonation tax (Exemption) on the application of the assessee for condonation of delay in filing the Form No.
10. It is needless to mention that the y in filing the Form No.
10. It is needless to mention that the y in filing the Form No.
It is needless to mention that the assessee shall provided adequate opportunity of being heard. The assessee shall provided adequate opportunity of being heard. The assessee shall provided adequate opportunity of being heard. The grounds raised by the assessee are accordingly allowed for grounds raised by the assessee are accordingly allowed for grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee In the result, the appeal of the assessee In the result, the appeal of the assessee is allowed for statistical purposes.