ITO(EXEMPTION),WARD-1(3), KOLKATA, KOLKATA vs. SURESH AMIYA MEMORIAL TRUST, KOLKATA

The grounds of appeal raised by Revenue are reproduced as under:

In view of the above, the appellant is entitled to get exemption u/s 11/12 of the Act. Hence, the AO is directed to delete the addition of Rs. 3,50,17,265/- if still exists. Hence, these grounds raised

The appellant is a charitable trust and filed its return of income for year under consideration i.e. for A.Y. 2020-21 on 15/02/2021 declaring total income nil. The extended due date for filing appeal was 15/02/2021. Further, the appellant has also filed form 10B within due date. As there was no reason for the above said disallowance made by the CPC, the appellant has raised the grievance to the CPC by mail. In response to that mail the CPC had replied that the demand has been rectified and reduced to nil. The relevant part of mail is reproduced as under- Resolution of Grievance 3582974 ….. Dear SURESH AMIYA MEMORIAL TRUST, Greetings from Income Tax Department Helpdesk. Issue Description: Your assessee had received the intimation u/sec. 143(1) of the Act and observed that the application of income as per filed ITR as well as Form 10B were totally ignored in page 14 of the intimation although in the subsequent pages of the Intimation the same were accepted i.e. the returned figure of application of income of Rs. 3,03,61,526 as per Annexure Schedule ER (Revenue Expenditure) (page 23) and in page 24 of the intimation Rs. 11,86,082 as per Annexure Schedule EC) Capital Expenditure) were accepted in the intimation under the heading "As Computed u/s 143(1). DETAILED STATEMENT IS ATTACHED BY WAY OF SIGNED PETITION. That your assessee had also e-filed the Audit Report in 10B vide Ack No 256116071130221 dt. 13/02/2021 and a copy of system generated ACKNOWLEDGEMENT OF RECEIPT OF FORM (Other Than ITR) is attached for ready reference and marked as-Annexure A] 4. That in view of the aforesaid facts it is requested that the Application of Income accepted in the Intimation in “ 4.1. It is an admitted fact that from March, 2020 to March, 2022, country was passing through Covid Pandemic and there were various restriction on the movements of the citizens and carrying out of the normal official works was hindered. It is also an accepted fact that many changes have been brought into the Act regarding procedure of filing of income-tax return as well as audit reports and certain technical glitches have been faced time and again. Also on account of change of the utility of furnishing the reports, the forms and change in the due dates have given rise to delay in furnishing of details and documents with the revenue authorities. Considering these aspects, CBDT firstly came up with a Notification dt. 03/01/2020 authorising the Commissioners to admit applications of condonation of delay in filing Form No. 10B for Assessment Year 2018-19 and subsequent Assessment Years, where there is a delay of up to 365 days. Subsequently on 19/07/2022 i.e., after the end of the Covid Pandemic restrictions again a Circular 16/2022 was issued where the delays in filing of Form 10B beyond 365 days but upto three years were also directed to be considered for admitting the application for condonation of delay. This Circular in itself shows that the Income-tax Department was aware about the technical glitches and the problems faced by the tax-payers in furnishing various types of Forms including Form No. 10B is with regard to the furnishing of audit report in case of Trusts and Societies. In the instant case since, delay is merely 28 days, we find that the said delay deserves to be ignored in larger interest of justice. The assessee is thus entitled to claim exemption u/s 11 of the Act made in the Income-tax return e-filed by it. We further fund support from the decisions of this Tribunal in the case of Bangarh Assessment Year: 2020-21 Kedar Nath Saraf Charity Trust Educational Welfare Trust vs. ITO (Exemptions) in ITA No. 496/Kol/2021; Assessment Year 2018-19, order dt. 02/01/2022, wherein also similar issue was raised for Assessment Year 2018-19 and the return was filed within time limit prescribed u/s 139(1) of the Act but there was a delay in furnishing of the audit report on Form 10B and this Tribunal after considering the facts of the case as well as judicial precedents allowed the benefit of Section 11 & 12 of the Act to the assessee.

In view of the discussion (supra) and consistent with the view taken by this Tribunal in the case Bangarh Educational Welfare Trust vs. ITO (Exemptions), we allow the benefit of Section 11 of the Act to the assessee “7. Admittedly, the assessee is a charitable trust and is registered with the Commissioner. It was not disputed that the assessee, for the past several years, was treated as a charitable institution and granted exemption under 11. The assessee had been denied the benefit of exemption undersection 11 as the audit report in No. 10B was not filed along with the return and the filing of the said report later on 6-3-1987, did not satisfy the condition stated in section 12A. The denial of exemption is supported on the ground that the provisions of section 12A are mandatory..... ....9. Having regard to the other provisions of the Act regarding filing of the return or revised return or rectifying the defects in the return, we are of the opinion that the provisions of section 12A are directory in the sense that the Assessing Officer is not powerless to allow an assessee to file the audit report, if not filed along with the return, any time before the completion of the assessment. One has to look at the purpose of the provisions. One has to construe the provision to ensure coherence and consistency to avoid undesirable consequences. Where the audit report was made ready after the return was filed, there was no reason why such audit report should not be allowed to be filed before the completion of the assessment...... No mala fides have been alleged. No case has been made out that the delay in getting the accounts audited and in filing of the report in Form No. 108 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.

In our view, the income-tax authorities fell into error in denying the claim of exemption under section 11. It was not disputed, as we have already indicated, that the assessee, for the past several years, was treated as a charitable institution and granted exemption under section 11."

Further reliance is also placed by the assessee on the decision of Hon'ble Gujarat High Court in the case of Association of Indian Panelboard Manufacturer Vs. DCIT (2023) 157 taxmann.com 550 (Gujarat) order dated 21st march, 2023.

As regards the delay in filing Form No.10B, the same was filed on 13th February, 2001, i.e. after 29 days from the due date i.e. on 15th January, 2001 and the delay was primarily attributable to Covid 19 pandemic due to which normal activity

The assessee further relied on the jurisdictional High Court decisions (supra) in support of the claim that the Form No.10B filed at the time of the assessment proceedings should be accepted and considered while completing the assessment and granting exemption u/s 11 of the Act.

As regards the decision of the Hon'ble Supreme Court in the case of Wipro Ltd. (supra), the same is distinguishable and is not applicable on the instant case as the same related to carry forward of loss which are made for the first time in the revised return and the claim was made post due date prescribed u/s 139(1) of the Act. The submission of the assessee in this regard is as under:-