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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: SRI RAJESH KUMAR & PRADIP KUMAR CHOUBEY
order
: November 22nd, 2024 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2022-23 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as ld. 'CIT(A)'] dated 25.06.2024. 1.1. The brief facts of the case of the appellant are that the assessee is a charitable institution running an educational institute. The assessee filed a rectification petition u/s 144 of the Act requesting for reprocessing of his I.T.A. No.: 1548/KOL/2024 Assessment Year: 2022-23 Gyan Bharti Educational Trust. return. The request of rectification was disposed of by disallowing the entire amount of income and determining income of the appellant as Rs. 1,58,19,677/- though the declared income of the assessee was ‘NIL’. The assessee has preferred an appeal before the ld. CIT(A) wherein his appeal has been dismissed on the ground that assessee filed return of income on 05.11.2022, it was processed on 31.03.2023 denying claim of exemption u/s 11 of the Act due to the delayed filing of Form-10B. Ld. CIT(A) in its order has held that appellant did not file any application for condonation of delay in filing Form-10B and ld. CIT(A) has no power to condone the delay and accordingly, appeal has been dismissed. Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred. 1.2. Ld. Counsel for the assessee challenges the impugned order thereby submitting that the appellant being a charitable institution and a huge demand of Rs. 63,78,930/- has been imposed without giving any reasonable opportunity to the assessee that is arbitrary, unjustified and unwarranted. The submission of the ld. Counsel for the assessee is that the Trust has duly filed Form-10B on 27.10.2022 and it was filed by the assessee along with return of income. The ld. Counsel for the assessee submits that there was a delay of 20 days and it was procedural delay that can be rectified. 1.3. Contrary to that ld. D/R supports the impugned order.
We have gone through the order of the ld. CIT(A) and facts of the case and find that assessee is a registered charitable Trust. It is also in the order that date of filing return of income for AY 2022-23 was on 07.11.2022 and it is a fact that assessee Trust was required to file Form-10B by 07.10.2022 whereas the same was filed on 27.10.2022 and in this way there is a delay of 20 days. Ld. CIT(A) in its order has held that the assessee apparently not made any application for the condonation of delay in filing Form-10B belatedly. We have perused the cited decision in the case of Bangarh Educational Welfare Trust vs. ITO (Exemptions) in order dated 02.01.2022 and find that issue of the present case and the cited
Page 2 of 5 I.T.A. No.: 1548/KOL/2024 Assessment Year: 2022-23 Gyan Bharti Educational Trust. decisions are the same. In the above decision, the Hon'ble Members of the ITAT has discussed the issue of filing of audit report belatedly and held thus:
“12. Now, the second reason for which lower authorities have denied the deduction u/s 11 of the Act is of filing the belated audit report on form 10B of the Act. Now, clause (b) of section 12A(1) of the Act provides for a condition that if the income of a trust exceeds a maximum amount which is not chargeable to tax in the previous year the account have to be audited and the person in receipt of such income furnishes the audit report before the specified date. In the case of the assessee, Form No.10B was to be filed and the relevant rule is rule 17B of the Income Tax Rules which provides that the report of audit of the accounts of a trust or institution which is required to be furnished under Clause (b) of section 12A, shall be in Form No.10B.
Now, on perusal of the Form 10B, we notice that the same is required to be submitted electronically, one month prior to the due date of the filing of return of income. Admittedly, in the case in hand, the audit report on form 10B has been uploaded on 30.03.2019 which is even after the date of filing the return of income on 15.11.2018. Now, before us, it has been contended by the Id. counsel for the assessee that filing of audit report is directory in nature and even if report is submitted in time before the conclusion of the assessment proceedings, the same needs to be considered. Though the assessee referred to the various decisions, we find it pertinent to refer to the judgment of the Hon hie Gujarat High Court in the case of Sarvodaya Charitable Trust vs. ITO(Exemption) (supra) wherein Para 32 of the said judgment reads as follows: “32. We may also refer to the decision of this Court in CIT v. Gujarat OU and Allied Industries Ltd. [1993] 201 ITR 325 (Guj), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income-tax Officer or before the appellate authority by assigning sufficient cause.
In the above judgment, Hon hie Court has held that filing of audit report is directory in nature and its substantial compliance would suffice. The Id. Departmental Representative failed to place before us any other binding precedents of Hon’ble Jurisdictional High Court or the Hon’ble Apex Court. Therefore, considering the ratio laid down in the Hon’ble Gujarat High Court in the case of Sarvodaya Charitable Trust vs. ITO (Exemption) (supra), we find that though the audit report has been uploaded after the filing of return of income but the said report has been signed by the auditor on 28.10.2018
Page 3 of 5 I.T.A. No.: 1548/KOL/2024 Assessment Year: 2022-23 Gyan Bharti Educational Trust. and the copy of this report is placed at 40-41 of paper book and the date of audit report is prior to the filing of the return of income, therefore, it is presumed that conducting of audit for preparation of audit report is before e-filing of the return of income but as claimed by the assessee due to technical glitches, the report was uploaded after filing the return of income.
Though the Hon hie Court holds that the report should be considered even filed in the course of assessment proceedings, or before in appellate authority, however, we notice that in the instant case, the case of the assessee was not selected for scrutiny assessment and it was mere processing of return by the computer with the set program. Had it been the case of scrutiny proceeding u/s 143(3) of the Act, the case could have been different. The Id. A.O may had an opportunity to go through the audit report. But still when the issue came before Id. CIT{A) who also possesses co- terminus power with that of A.O and as per section 251(l)(a) of the Act, the Id. CIT(A) in disposing the appeal against order of assessment has the power to confirm, reduce, enhance or annul the assessment, therefore, though, it was not possible to entertain the audit report while processing the return u/s 143(1 )(a) of the Act, but the Id. CIT(A) was well within its power to have entertained the said report and examined the same as could have been done by the A.O.
We, therefore, in the given facts and circumstances and respectfully following the judgment of Hon hie Gujarat High Court in the case Sarvodaya Charitable Trust vs. ITO (Exemption) (supra) , we are of the considered view that since the case of assessee is for A.Y 2018-19 and CBDT came up with a circular dated 23.04.2019 specially for A.Y 2018-19 providing that return of income to be filed within the time allowed u/s 139 of the Act, the assessee has complied with the conditions provided in sub-clause (b) and (ba) to section 12 and there is no dispute at the end of the revenue authorities that the assessee is carrying on charitable activities, for which it has been granted registration u/s 12A of the Act, the benefit of section 11 and 12 should be given to the assessee and deductions claimed by the assessee are, therefore, allowed. Thus, Ground Nos. 1 to 4 of the assessee are allowed.”
Keeping in view the above decision as well as catena of decision passed by several Benches of ITAT, we are in this view that the record of the assessee is sent back to the ld. CIT(A) to consider the case of the assessee that merely delayed filing of Form10B benefit of exemption should not be denied. The case of the assessee restored in the file of CIT(A) to decide it in accordance with law keeping in view of the observation made by us.