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Facts
The assessee, a section 8 company registered under section 12A, filed its return of income claiming exemptions under sections 11 and 12. The assessee filed the audit report in Form 10B belatedly after the due date. Consequently, the CPC disallowed the exemptions and donations.
Held
The Tribunal noted that the assessee had filed an application for condonation of delay for Form 10B with the competent authority, which was pending. Considering the interest of justice, the matter was remitted back to the Assessing Officer for fresh consideration after the order on condonation of delay is received from the CIT(E).
Key Issues
Whether the assessee is eligible for exemption under sections 11 and 12 of the Income Tax Act when the audit report in Form 10B was filed belatedly and the application for condonation of delay was pending.
Sections Cited
11, 12, 10B, 119(2)(b), 139, 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE KSHRI LAXMI PRASAD SAHU
PER SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order passed by the CIT(A) on 10/10/2023 in DIN No.ITBA/APL/S/250/2023-24/1056946605(1) for the assessment year 2022-23 on the following grounds:
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“I. The order of the learned Commissioner of Income-tax (Appeals) is opposed to the law, facts and circumstances of the case.
II. The order is passed against the principle of natural justice and thus, liable to be quashed.
III. The order is passed in haste, without providing sufficient and reasonable opportunity of being heard. IV. The learned CIT(A) erred in upholding the intimation order under section 143(1) of the Act which disallowed the exemption under section 11 without examining the fact that whether such adjustments can be made while processing the ITR under section 143(1) of the Act. – Rs.7,00,259
V. The learned CIT(A) has erred in denying the exemption under section 11 of the Act, while there is no change in the objectives of the Appellant and further there are no findings that the Appellant had carried on any activity not in accordance with its objectives.
VI. The learned CIT(A) has failed to consider that the filing of an audit report is a directory provision only and the learned CIT(A) has a right to allow any delay in filing Form 10B if Form 10B was filed before the "due date" of filing of return of income under section 139 of the Act.
VII. The learned CIT(A) has failed to consider that the benefit of exemption should not be denied merely on account of delay in furnishing the audit report in Form 10B and condonation can be accepted if the Appellant produces the audit report at a later stage either before the Income-tax Officer or before the appellate authority by providing sufficient cause.
VIII. The learned CIT(A) has erred in considering that the CBDT has authorized the Commissioners to condone delay in filing Form 10B up to 365 days from Assessment year 2018-19 or any subsequent year and the Appellant's petition for condonation of delay is pending before the learned CIT(Exemptions).
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IX The learned CIT(A) has erred in considering the fact that the appellate order can't be passed while the delay condonation application is pending before CBDT or before the person authorized by CBDT. X Without prejudice to the above, even if the exemption under section 11 is denied the learned assessing officer ought to have arrived at the taxable income after deducting all the expenditure incurred to earn the income and further should not have included the corpus donation in the total income. The Appellant craves leave to add, alter, substitute, and delete any or all the grounds of appeal urged above.
The brief facts of the case are that the assessee is section 8 company registered under the Companies Act, 2013 and it is also registered u/s 12A of the Income Tax Act 1961. The assessee filed return of income on 26/10/2022 declaring Nil income and claimed exemption u/s 11 and 12 of the I. T. Act. The assessee filed audit report u/s 10B of the Act on 26/10/2022 although the due date for filing of Form 10B was on 30/09/2022, therefore, the CPC did not grant the benefit of exemption u/s 11 and 12 of the Act and disallowed the corpus donations received of Rs.13,62,703/- and non-corpus donation received of Rs.1,44,009/.
Against the order of CPC, the assessee went in appeal before the CIT(A) and filed detailed written submissions. The assessee also submitted application for condonation of
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delay for filling Form 10B, u/s 119(2)(b) of the Act before the competent authority i.e Pr.CIT. However, it has not been disposed-off till the passing of order by the CIT (A) . The assessee also relied on the judgments in its submissions before the CIT(A). The CIT(A) noted that for getting exemption u/s 11 and 12 of the Act, the assessee has to file Form No.10B within the specified date and noted that the application filed u/s 119(2)(b) before the authority (Pr.CIT(A), which is pending. The CIT(A) also relied upon the judgment of CC Vs. Dilip Kumar and Company reported in (2018) 95 taxmann.com 327/69 GST 239 and dismissed the appeal of the assessee.
Aggrieved from the above order, the assessee filed appeal before the ITAT.
The ld.AR reiterated the submission made before the CIT(A) and submitted that the competent authority has transferred the application u/s 119(2)(b) to the CIT (E) for condonation of delay for filling Form 10B , which has not been disposed off till date and requested that the matter may be sent back to the file of the AO for fresh consideration on the basis of output of the order of the CIT(E) in respect of the condonation of delay in filing of Form No.10B.
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The ld.DR relied on the order of the lower authorities and submitted that deduction and exemption provision should be strictly interpreted as held by the CIT(A) for non complying the provisions for getting exemption u/s 11 and 12 of the Act. The assessee has to file Form No.10B within the specified time, which has been filed belatedly.
Considering the rival contentions, we note that the assessee filed return of income on 26/10/2022, whereas for getting exemption u/s 11 and 12 of the Act, the assessee was required to file Form No.10B up to 30/09/2022, since the assessee is registered u/s 12A of the Act. However, we note from the order of the CIT(A) that the assessee has filed an application u/s 119(2)(b) for condonation for delay in filing Form NO.10B before the competent authority. The ld.AR of the assessee submitted that it has been transferred to the CIT(E) exemption for adjudication and till date no order has been passed by the CIT(E), therefore, considering the matter and in the interest of justice, we are remitting the issue back to the file of the AO for fresh consideration. The AO is directed to give reasonable opportunity of being heard and decide the issue as per law after receipt the order of condonation for delay from the CIT(E). The assessee is directed to produce the necessary documents for
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substantiating its case and to avoid unnecessary adjournments for early disposal of the case.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in court on 5th day of January, 2024 Sd/- Sd/- (GEORGE GEORGE K) (LAXMI PRASAD SAHU) Vice President Accountant Member
Bangalore, Dated : 05.01.2024.
Vms Copyto:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order
Asst. Registrar, ITAT, Bangalore.