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Facts
The assessee, a charitable trust, filed its return for AY 2022-23 claiming exemption under Section 11. The audit report in Form 10B was obtained digitally signed on 30/09/2022 but was uploaded on 05/11/2022, after the due date for filing the return.
Held
The Tribunal held that while the assessee might have had a bonafide impression that the report was uploaded, the delay in filing Form 10B was the reason for denial of exemption. However, referencing previous judgments, the Tribunal directed the AO to verify the Form 10B and allow the exemption.
Key Issues
Whether the assessee is eligible for exemption under Section 11 when the audit report in Form 10B was filed belatedly.
Sections Cited
Section 11, Section 12AA, Section 139(1), Section 143(1)
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI S. R. RAGHUNATHA, HON’BLE
आयकर अपीलीय अिधकरण,‘ए’ �यायपीठ,चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी महावीर �सह, उपा�य� एवं �ी एस. आर.रघुनाथा, लेखा सद�य के सम� BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI S. R. RAGHUNATHA, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.: 1433/Chny/2024 िनधा�रणवष� / Assessment Year: 2022-23 Assistant Commissioner of Rajiv College of Excellence v. Income Tax (Exemptions), Educational Trust, Chennai – 600 034. 5/516B, SakthiSai Ram Street, Ganapathy Nagar, Alapakkam, Chennai – 600 116. [PAN:AABTR-0607-B] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ�क�ओरसे/Appellant by : Shri. M. Karunakaran, Advocate ��यथ�क�ओरसे/Respondent by : Smt. M.S. Deeptha, JCIT सुनवाई क� तारीख/Date of Hearing : 07.08.2024 घोषणा क� तारीख/Date of Pronouncement : 04.09.2024 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), Addl/JCIT(A)-3, Bengaluru, for the assessment year 2022-23, vide order dated 15.02.2024.
At the outset, we find that there is a delay of 29 days in appeal filed by the assessee, for which petition for condonation
:-2-: ITA. No:1433/Chny/2024 of delay along with reasons for delay has been filed. After considering the petition filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit appeal filed by the assessee for adjudication.
The only issue raised by the Assessee is the ld.CIT(A) erred in dismissing the appeal by upholding the action of the CPC in denial of exemption claimed u/s. 11 of the Act due to delay in filing the audit report in Form 10B and confirming the determining the total income at Rs.93,96,981/- against Rs. Nil Income declared by the assessee. However, assessee raised various grounds for this issue which are exhaustive and argumentative and hence not reproduced.
The brief facts of the case are that, the assessee is registered charitable and educational trust U/s.12AA of the Act. The assessee filed its original return of Income for the A.Y. 2018-19 on 03/11/2022 by declaring total Income at Rs.NIL, after claiming exemption U/s.11 of the Act of gross receipts of :-3-: ITA. No:1433/Chny/2024 Rs.93,96,981/-. The appellant obtained audit report in Form 10B on 30/09/2022 itself and the same was digitally signed. The assessee was under the bonafide impression that the audit report was already uploaded on 30/09/2022 and therefore it need not again submit the same. But while filing return of Income, it was found that the audit report though obtained on 30/09/2022 was not uploaded in the income tax portal. Therefore, the same was uploaded on 05/11/2022. The return of income was processed under section 143 (1) on 31/03/2023 by CPC, Bengaluru and determined the total income of the assessee trust by disallowing exemption claimed U/s. 11 of the Act and determining the entire gross receipts of the trust for the impugned A.Y. of Rs.93,96,981/- without allowing any expenditure claimed in the return, for the reason that the appellant trust had not filed the audit report in Form 10B before filing the return of income.
The Assessee has submitted form 10B on 05/11/2022. Further, aggrieved by the intimation U/s.143(1) issued by the CPC, Bangalore, the assessee preferred an appeal before the Ld.CIT(A). However, the Ld.CIT(A) confirmed the addition by passing an order on 15/02/2024 by holding as under :
:-4-: ITA. No:1433/Chny/2024 “5. Appellant order: On thorough perusal of the grounds of appeal raised and the submissions made by the appellant, in response to intimation u/s 143(1) (a), it is observed the appellant has filed the return of income on 03/11/2022 declaring the income of Rs. 5,36,460/- and claimed the exemption u/s 11 of the IT Act. The AO CPC has passed the intimation order on 31/03/2023 after denying the exemption u/s 11 of the 1T Act and assessed the income to Rs. 93,96,981/- as the appellant failed to file the form 10B one month For Any charitable prior to the filing of return of income. The appellant has filed the form 10B electronically on 05/11/2023.organization registered u/s 12A(1)(b) of the IT Act, 1961, it is mandatory to file form 10B one month prior to the date of filing of return as per rule 17B of the T Rules prescribed 1962. It is the duty of the appellant to follow the rule and procedure that is in the ncome Tax Act and Income Tax Rules. The appellant has requested the appellate authority to condone the filing of belatedly Form 10B. However, the condonation u/s 1 19(2)(b) is to be condoned only by CIT(Exemption), Pr.CIT & CIT etc. The appellate authority relied on the decision of ITAT Ahmedabad in the case of Ambica Sarvajnik Trust Anklay Vs DCIT CPC in & 356/Ahd/2021. Where Hon'ble ITAT has held that "We have given our thoughtful consideration and perused the material available on record. The grounds of appeal raised by the assessee is very general in nature without substantiating its claim how, the Ld. CIT(A) erred in not granting exemption u/s. 11 & 12 of the Act. The ld. CIT(Ahas held that Form No. 10B was filed manually on 03/03/2020 during the appellate proceedings but no evidence of the Form 1OB when was uploaded electronically by the assessee which is mandatory as per Section 12A(1(6) of the Act read with Rule 17B of the Income Tax Rules. However, the ld. CIT(A) has observed that the assessee is free to file the said Form 10B online and/or approach the CIT(Exemption), Ahmedabad after filing Form 10B electronically and to condone the delay in accordance with the delegated powers vested u/s. 119(2) (b) of the Act. Such a power u/s. 119(2)(b) is not vested with ld. CIT(A). Therefore, the ld. CIT(A) dismiss the appeal filed by the assessee. Now before the Tribunal, the assessee has not produced only details of filing Form 10B electronically with condone delay petition. In absence of the same, We do not find any infirmity in the order :-5-: ITA. No:1433/Chny/2024 passed by the ld. CIT(A) and therefore we have no hesitation in confirming the order passed by the ld. CIT(A).
8. For the above reasons, the grounds raised by the assessee are hereby rejected and the additional grounds raised by the assessee is found not relevant to the facts and circumstances of the case, therefore the same is also rejected, " The appellant should pursue the case concerned before the CIT(Exemption) for condonation of delay u/s 119(2)(b). Accordingly, the appellate authority does not have the rights for passing orders as, the competent authority for condoning the delay in filing the appropriate form (10B), lies within the ambit of the respective ClT(Exemption) and accordingly the case cannot be adjudicated within the range of this office. The prerogative to condone the delay u/s 119(2)(b) exclusively lies with the CIT(Exemption). Hence the assessee is directed to approach the competent authority (CIT(Exemption). The appeal filed on all the grounds is dismissed.”
The Ld.AR of the assessee argued that the Ld.Addl. CIT(A) has erred in dismissing the appeal without considering the facts and circumstances of the assessee. Further, the Ld.AR stated that the assessee was under the bonafide impression that the audit report was already uploaded on 30/09/2022 and therefore it need not again submit the same, since the same was obtained from CA duly signed digitally. But while filing return of Income, it was found that the audit report though obtained on 30/09/2022 was not uploaded in the income tax portal. Therefore, the same was uploaded on 05/11/2022. Since, the audit report was ready one month prior to due date of return of income to be filed and inadvertently it was not filed
:-6-: ITA. No:1433/Chny/2024 on 30/09/2022. The Ld.Addl.CIT(A) has dismissed the appeal of the assessee without considering the facts and circumstances of the case, wherein the audit report in form 10B has been filed on 05/11/2022 itself. The Ld.AR also relied on the following decisions in support of the condoning the delay of filing the audit report in Form 10B. 1. Sri Vetri Vinayagar Educational Trust Vs.ITO, in dated 13/12/2023 2. Sri Vidya Vihar educational & Charitable Trust – NFAC Delhi for the A.Y. 2020-21 dated 25/07/2022 3. CIT(E), Ahmedabad Vs. Gujarat Energy Development Agency – R/Tax appeal No.35 of 2024 dated 15/01/2024 (hon’ble Gujarat HC) 4. Trinity Education Trust vs.ITO, ITA No.669/SRT/2018 dated 28/02/2022.
The Ld.AR prayed for allowing the appeal by setting aside the order of the Ld.CIT(A).
Per contra, the Ld.DR stated that the return was processed by the CPC, Bengaluru U/s.143(1) of the Act on 31/03/2023 denying the claim of exemption U/s.11 of the Act for the reason that the assessee has not filed the return of income within the due date as prescribed U/s.139(1) of the Act. The same has been rightly confirmed by the Ld.Addl. CIT(A), as :-7-: ITA. No:1433/Chny/2024 the assessee has claimed the deduction U/s.11 without filing the return of income within the due date U/s.139(1) of the Act. Hence, prayed before us to dismiss the appeal of the assessee.
We have heard the rival contentions and gone through the intimation U/s.143(1) and order of the Ld.Addl. CIT(A). It is noted that, the Ld.CIT(A) has dismissed the appeal without condoning the delay in filing the Audit report in Form 10B and confirmed the determination of total Income at Rs.93,96,981/-. On perusal it is also noted that, the both the intimation from CPC, Bengaluru and the order of the Ld.CIT(A) have not allowed any of the expenditure claimed by the assessee in the return of income and computed the total income considering the entire receipts of the trust as Income i.e. Rs.93,96,981/-. We note that the assessee had obtained audit report in Form 10B on 30/09/2022 itself and the same was digitally signed. The assessee was under the bonafide impression that the audit report was already uploaded on 30/09/2022 and therefore it need not again submit the same. But while filing return of Income, it was found that the audit report though obtained on 30/09/2022 was not uploaded in the income tax portal. And hence the same was uploaded on 05/11/2022, which is much
:-8-: ITA. No:1433/Chny/2024 before the end of the actual due date prescribed i.e. 07/11/2022 for the A.Y. 2022-23. Considering the reliance placed by the assessee on this Tribunal decision in Sri Vetri Vinayagar Educational Trust Vs.ITO(Supra), where the delay in filing the audit report was condoned by holding as under: “5. The undisputed fact that emerges is that the assessee has filed Audit Report much before the processing of return of income by CPC u/s 143(1). The Audit Report was very much available at the time of processing of return of income. The CPC have not taken the same into account while processing return of income u/s 143(1) as well as while dealing with 154 rectification application filed by the assessee. The Ld. CIT(A) merely upheld the rectification intimation on the ground the rectification application filed by the assessee would not fall within the ambit of Sec.154 of the Act overlooking the fact that the grievance of the assessee was not even looked into by CPC in the rectification application. Apparently, the applicable exemption has been denied due to the fact that the assessee did not furnish details of audit in the return of income and Form No.10B was uploaded after filing of return of income. The facts of the present case are covered by the decision of Ahmadabad Tribunal in the case of Shree Charitable Trusts vs. ITO (ITA No.172/Ahd/2022 dated 05.07.2023). The co-ordinate bench, considering the decision of Hon’ble High Court of Gujarat in the case of Indian Panel Board Manufacturer vs. DCIT (ITA No.655 of 2022 dated 21.03.2022), held that filing of Form No.10B would be directory in nature, as such the Assessing Officer are not powerless to allow an assessee to file Audit Report, it not filed along with return, at any time before completion of assessment. Similar is the decision of Jaipur Tribunal in the case of DCIT vs. State Institute of Health & Family Welfare (153 Taxmann.com 740). The ratio of case law of Hon’ble High Court of Madras in the case of Chandraprabhuji Maharaj Jain vs DCIT (110 Taxmann.com 11) also supports the above conclusion. In this decision, Hon’ble Court has held that filing of Form No.10 for accumulation of income u/s 11(2) which was filed beyond due date could not disentitle the trust from exemption claimed u/s 11. The Hon’ble Court directed Ld. AO to examine the admissibility of benefit rather than to foreclose Assessee on technicalities. This principle was followed by the Hon'ble Jurisdictional HC in CIT Vs Spic Educational Foundation (TCA No.1593 of 2008 dated 12.12.2018). Respectfully following the same, we direct jurisdictional AO to verify the Form 10B filed by the assessee and allow the claim of exemption uls.11 of the Act.”
:-9-: ITA. No:1433/Chny/2024 9. Considering the facts and circumstances of the case and respectfully following the decision of the Tribunal (Supra), we are inclined to set aside the impugned order of the Ld.Addl. CIT(A) and we direct jurisdictional AO to verify the Form 10B filed by the assessee and allow the claim of exemption uls.11 of the Act.