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Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K.
ORDER
PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the orders of the NFAC dated 18/01/2023 in respect of the A.Y. 2017-18.
The brief facts of the case are that the assessee filed their return of income on 03/07/2017 and claimed the same as exempted income u/s. 11 of the Act. The AO denied the exemption claimed u/s. 11 of the Act on the ground that the assessee had not filed his audit report in 10B along with the return. Challenging the said order, the assessee filed an appeal before the Ld.CIT(A) and contended that the disallowance made by the AO is not correct when the assessee is having a valid registration u/s. 12A of the Act, therefore eligible for exemption u/s. 11 of the Act. The assessee further contended that the audit report in Form 10B was available as on 15/06/2017. But unfortunately, the assessee had by oversight failed to upload the same along with the return. In any event, the said return was later on filed by the assessee on 03/02/2023 vide acknowledgement no. 946782900030223. The Ld.CIT(A) without considering the said submissions had partly allowed the appeal by holding that the application of money has to be considered as expenditure and directed the AO to allow such expenditure while computing the taxable income of the assessee.
As against the said order, the assessee is in appeal before this Tribunal and raised the following grounds of appeal.
1. The Order of the Commissioner of Income tax (Appeals) is against facts and law
2. The Commissioner of Income tax (Appeals) is not correct in denying the exemption under section 11 on the ground that the audit report under section 11 was not uploaded in the portal along with the return of income. The Commissioner of Income tax (Appeals) failed to appreciate that the appellant had obtained the audit report on time and the communication front CPC was not received by the appellant and hence appellant should have been granted an opportunity to furnish the audit report
3. The Commissioner of Income tax (Appeals) failed to appreciate that the appellant had been granted exemption under section 11 in all earlier and later years and denying the exemption on account of technical defect is not justified. It was not shown that, in the relevant assessment year, the delay in filing of the report in Form No. 10B defeated any object of the Act or the assessee's action was in substance not in conformity with the intent and purpose of the Act. We rely on the following decisions: CIT vs RAI BAHADUR BISSESSWARLAL MOTILAL MALWASIE TRUST 195 ITR 825 Calcutta Savitri Foundation vs ITO (ITA 1925/Mum/2021) dated 1.8.2022”
4. At the time of hearing, the Ld.AR filed a paper book comprising the audited statements for the year 31/03/2017, audit report in form 10B, 10B, approval for registration u/s. 12A of the Act, assessment order made for the assessment years 2016-17, 2015-16 and 2014-15 and also filed copies of the Tribunal orders in support of their argument. The Ld.DR on the other hand, submitted that the audited report was admittedly not filed in time and therefore prayed not to consider the appeal of the assessee.
We have heard the arguments of both sides and perused the materials available on record.
The only dispute involved in this appeal is about the non-filing of audit report in 10B along with the return of income filed u/s. 139 of the Act. Since the assessee had not submitted the form 10B, the AO disallowed the exemption claimed u/s. 11 of the Act. We have gone through the audit report filed by the assessee in the paper book in which it was mentioned that the said report was prepared on 15/06/2017 well before the filing of the return of income and passing of the assessment order. Further, we have also seen that the assessing officer had not made any further additions to the books of accounts but only disallowed the claim of exemption. We have also noted that the assessee is also a registered trust u/s. 12AA of the Act and the said fact was not disputed by any of the authorities. The authorities also accepted that in respect of the other years, the assessee was allowed the exemption u/s. 11 of the Act treating the assessee as a charitable institution. In such circumstances, the denial of exemption for the non- filing of 10B will not entitle the assessee for denying the exemption. We have also perused the judgments as well as the orders of the Tribunal in which it was held that exemption cannot be denied merely because of the belated filing of audit report in form 10B. Similar issue was decided in many number of orders by this Tribunal in which the Tribunal had held that the technical ground will not be a reason for denying the exemption u/s. 11 of the Act when the assessee is a registered charitable trust under the provisions of the Act. When the registration is still in existence and also in 2014-15, 2015-16 and 2016-17, the denial of exemption in respect of the A.Y. 2017-18 that too on technical grounds is not correct. Further, the assessee had also uploaded the audit report and also filed the acknowledgement received by the department.
We have also perused the judgment of the Hon’ble Calcutta High Court reported in 195 ITR 825 in the case of Rai Bahadur Bissesswarlal Motilal Malwasie Trust in which the Hon’ble High Court held as follows: “in the instant case, the assessee, for the past several years, was treated as a charitable institution and granted exemption u/s. 11 of the Act. It was not shown that, in the relevant AY, the delay in getting the accounts audited and in filing of the report in form 10B defeated any object of the Act or the assessee’s action was in substance not in conformity with the intent and purpose of the Act. The Tribunal was right in law holding that the assessee could not be denied exemption for the A.Y. 1984-85.”
Respectfully following the above judgment of Hon’ble Calcutta High Court, we are also of the view that the assessee was all along treated as a charitable institution and granted exemption u/s. 11 of the Act and no violation has been pointed out by the authorities, in such circumstances, mere delay in filing the audit report would not be a reason for the denial of exemption claimed u/s. 11 of the Act .
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 28th November, 2024.