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Facts
The assessee, a registered charitable trust, inadvertently failed to file its audit report in Form 10B before the due date for filing its income tax return for AY 2017-18. The return was filed, but the Form 10B was submitted with a significant delay. The CIT(A) partly allowed the appeal, directing the AO to verify the validity of the 12A certificate and the timely filing of Form 10B.
Held
The Tribunal held that substantial justice should not be denied on mere technicalities, and procedural law is an aid to justice. Citing precedents from Gujarat High Court, it was established that audit reports can be filed at a later stage with sufficient cause, and a charitable trust registered under section 12A should not be denied exemption solely based on the delay in furnishing Form 10B.
Key Issues
Whether the assessee can be denied exemption for delay in filing the audit report in Form 10B, and whether the CIT(A) erred in directing verification instead of condoning the delay.
Sections Cited
12A, 12A(b), 11, 139(1), 143(1), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH
Before: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT & SHRI SUNIL KUMAR SINGH
आदेश / O R D E R PER SUNIL KUMAR SINGH (J.M): 1. This appeal has been preferred against the impugned order dated 17.04.2024 passed in Appeal no. CIT(A) 1, MUMBAI/10162/2019-20 by the Ld. Commissioner of Patel Engineering Company Charity Trust Income–tax(Appeals)/ National Faceless Appeal Centre (NFAC) [hereinafter referred to as the “CIT(A)”] u/s. 250 of the Income- tax Act, 1961 [hereinafter referred to as "Act"] for the Assessment year [A.Y.] 2017-18.
The brief facts related to the appeal state that assessee is a registered charitable trust and is in possession of valid registration certificate u/s. 12A of the Act. Assessee inadvertently could not file audit report u/s. 12A(b) in form 10B before due date of filing of return of income u/s. 139(1) of the Act. Appellant could not file form 10B on or before 21.09.2017 i.e the date on which its original return of income was filed, declaring total income of Rs.2,64,480/. The return was processed u/s. 143(1) of the Act on 06.05.2018. Form 10B could be filed on 12.09.2018 by a delay of 12 months. Being aggrieved, appellant filed an appeal before learned CIT(A), who partly allowed first appeal, directing the assessing officer to verify the validity of certificate u/s. 12A of the Act and on verification of timely filing of audit report in form 10B, appropriate action be intitiated.
Patel Engineering Company Charity Trust 3. Aggrieved by the impugned order, assessee has, in addition to the grounds, touching the merits of the case, filed this second appeal on the ground that the learned CIT(A) erred in directing to verify the timely filing of form 10B and validity of 12A certificate.
In response to the notice issued by the tribunal, learned DR appeared and participated in the proceedings.
We have perused the records and heard learned representatives for both the parties.
Learned DR has supported the impugned order.
Learned representative for the assessee submitted at par with the aforesaid grounds taken in the appeal and referred CIT V Xavier Kalavani Mandal (P) Pvt. Ltd., [2014] 41taxmann.com 184, wherein Hon’ble Gujarat High Court has held that in order to claim exemption u/s. 11, the assessee can file audit report in form 10B even at later stage either before the assessing officer or before appellate authority by showing a sufficient cause. Appellant assessee has further referred Sarvodaya Charitable Trust V ITO (Exemp.), [2021] 125 taxmann.com 75, wherein Hon’ble Gujarat High Court has held that where the assessee is a public charitable trust, Patel Engineering Company Charity Trust registered u/s. 12A of the Act and substantially satisfied condition for availing benefit of exemption as a charitable trust, could not be denied exemption merely on bar of limitation in furnishing audit report in form 10B. Learned AR, thus, prayed to condone the delay in filing form 10B and dismiss the impugned order.
We notice that the assessee failed to file the audit report in form 10B before filing his return of income for the A.Y. 2017- 18. It is well established principle of law that substantial justice cannot be denied on mere technicalities. Procedural law is always subservient to and is in aid to justice, processual law is not to be tyrant but is servant, not an obstruction but an aid to justice. A procedural prescription is a handmaid and not the mistress, lubricant not a resistance in the administration of justice. Learned CIT(A) has failed to appreciate the legal position and seems to have ignored the fact that the exemption to assessee was denied merely for non filing of form 10B. In view of law laid down in Xavier Kalavani Mandal (Supra) and Sarvoday Charitable Trust (Supra), the impugned order is liable to be set aside and the appeal is liable to be allowed.
Patel Engineering Company Charity Trust 9. In the result, the appeal is allowed. Impugned order dated 17.04.2024 is set aside. The case is restored back to the file of the learned assessing officer for deciding the matter afresh, treating the delay in uploading the form 10B as condoned. Needless to say that learned assessing officer shall observe the substantial compliance of the principles of natural justice.
Order pronounced on 29.08.2024.