SOCIETY FOR COMMUNITY INTERVENTION & RESEARCH,KOLKATA vs. I.T.O., WARD - 1(1), EXEMPTION, KOLKATA

The present appeal has been preferred by the assessee against the order dated 14.08.2024 of the CIT(Appeals), ADDL/JCIT(A)-1, Hyderabad [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

The brief facts of the case are that an intimation order u/s 143(1) of the Act dated 27.03.2019 was passed by the CPC, Bengaluru denying exemption u/s 11 to the assessee on the ground of non-filing Form 10B in time or before the filing of the return of income.

Aggrieved by the above order, the assessee filed an appeal before the ld. CIT(A) after substantial delay of 1301 days along with application for condonation of delay u/s 249(2)(b) of the Act. However, the ld. CIT(A) dismissed the appeal of the assessee holding that the delay was not explained properly with sufficient reasons. The ld. CIT(A) did not Assessment Year: 2017-18 Society For Community Intervention & Research examine the merit of the case but solely focussed on the procedural lapses.

Dissatisfied with the above order, the assessee is in appeal before this Tribunal. At the time of hearing, the ld. AR stated that Form 10B (filing of audit report) was not filed timely due to misunderstanding by an employee of the assessee who erroneously believed that filing details of audit report online would suffice and there was no requirement of filing Form 10B separately. After getting the intimation from the CPC, the assessee sought to rectify the omission by filing a rectification application u/s 154 which was rejected by the CPC. The assessee also filed a condonation petition u/s 119(2)(b); of the Act before the competent authority which was also rejected. The contention of the assessee is that the denial of exemption u/s 11 of the Act on the procedural ground is contrary and relied on the CBDT Circular No.10 of 2009 dated 22.05.2019 that clarifies procedural lapse of filing Form 10B which should not result in denial of substantive exemption provided the conditions of section 11 of the Act, are satisfied. The ld. AR stated that the appeal before the ld. CIT(A) was delayed due to circumstances beyond the control of the assessee including the time taken for rectification and condonation application before the competent authority. He also stated that Form 10B is a procedural requirement and not a mandatory condition for availing exemption u/s 11 of the Act. Therefore, he prayed before the Bench that the claim of the assessee may be allowed by setting aside the order of the ld. CIT(A).

On the other hand, the ld. DR supported the decision rendered by the ld. CIT(A).

We, after hearing the rival submissions and perusing the materials available on record, find that there was a delay 1301 days in filing the Assessment Year: 2017-18 Society For Community Intervention & Research appeal before the ld. CIT(A). We note that the assessee filed rectification application u/s 154 and condonation of delay application u/s 119(2)(b) which attributed the genuine efforts of the assessee to rectify the procedural lapse. It is also evident that the assessee acted in good faith and pursued remedies diligently before the appropriate forum, however, the assessee could not get success. We note that the ld. CIT(A) simply dismissed the appeal of the assessee without considering the Article 265 of the Constitution of India which speaks about correct and lawful taxes should be assessed and collected. We further note that since it is a well settled principle of law that unless authority of law, no tax can be collected, in our considered view, if the appeal filed by the assessee is rejected on technical ground of not filing appeal on or before the due date, then it is as good as the taxes has been collected without an authority of law contrary to Article 265 of the Constitution of India. Considering the peculiarity of facts and in the interest of justice, the delay of 1301 days in filing the appeal before the ld. CIT(A) is condoned. In respect of the issue regarding the denial of exemption u/s 11 of the Act, we note that CBDT Circular No.10 of 2009 dated 22.05.2019 specifically provided that procedural lapse of filing Form 10B should not be the result of denial of substantial claims if the audit report is subsequently filed and other conditions laid down in section 11 are satisfied as the Form 10B is directory and not mandatory in nature as held by various judicial precedents on this issue. Therefore, in view of the above, we deem it fit to remand back this limited issue to the file of the ld. CIT(A) after condoning the delay of 1301 days in filing the appeal before the ld. CIT(A). We direct the ld. CIT(A) to examine the issue on merits of the case in the light of the CBDT Circular No.10 of 2009 and applicable judicial precedents on this issue by providing reasonable opportunities of being heard to the assessee and to decide the issue afresh on merits of the case in accordance with law. The assessee is also Assessment Year: 2017-18 Society For Community Intervention & Research directed to appear before the ld. CIT(A) as and when notice will be served for hearing by producing the relevant documents in support of its claim.

In terms of the above, the appeal of the assessee is allowed for statistical purposes.