M/S. SETH CHAGAN MALL HIRA LALL DUGAR CHARITABLE TRUST,KOLKATA vs. I.T.O., WARD - 1(3), EXEMPTION, KOLKATA

This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2019-20 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income-tax (Appeals)- 6, Chennai [in short ld. ‘CIT(A)’] dated 12.06.2024 arising out of the assessment order framed u/s 143(1) of the Act dated 05.06.2020. 1.1. The brief facts of the case of the appellant are that the assessee is a registered Trust filed its return of income for the 19- on 31 .10.2019 declaring total income at 'NIL'. The return of income of the assessee was processed u/s I.T.A. No.: 1358/KOL/2024 Assessment Year: 2019-20 M/s. Seth Chagan Mall Hira Lall Dugar Charitable Trust. 143(1) of the Act and an intimation order u/s 143(1) of the Act dated 05.06.2019 received wherein the amount of donation u/s 11(2)(ii) of the Act of Rs. 24,22,654/- has not been treated as deemed application charged to tax on the ground that Form-9A was not filed along with the return of income. The assessee filed an appeal before the ld. CIT (Exemption) wherein also the appeal of the assessee has been dismissed on this ground that the appellate authority is not empowered to condone the delay in filing Form-9A. The ld. Counsel for the assessee challenges the impugned order thereby submitting that the ld. AO as well as ld. CIT (Exemption) have erred in disallowing the application of the income and taxing the non-corpus donation received by the Trust while processing the return on the ground of non-furnishing of Form- 9A ignoring the fact that it was inadvertently omitted to be filed along with the return of income and filed the same later on. The ld. Counsel for the assessee submits that when the intimation order and omission of filing of Form-9A came into the notice, the same has been filed by the assessee on 18.03.2021 and according to him it was simply a bona fide omission on the part of the person, said intimation order was issued in the midst of the COVID restriction period. The ld. Counsel for the assessee further stated that trustee responsible for handling tax related matters of the assessee was hospitalized on 29.08.2020 as he was diagnosed with COVID-19 and was on bed rest following three months as per doctor's advice. The ld. Counsel for the assessee cited several decisions which are as follows:

Judgement of the Ahmedabad ITAT in the-case of The JT. CIT (OSD) Exemption, Circle-2, Ahmedabad vs Vadodara Urban Development Authority in ITA No. 333 to 335 and 342 to 344/Ahd/2023 pronounced on 29.02.2024. 1.2. Contrary to that, the ld. D/R supports the impugned order.

On perusal of the records, it admits of no doubt that the assessee is a registered Trust and he filed the return of income for the AY 2019-20 within the due date by exercising the option of accumulation of income u/s 11(2)(ii) of the Act for an amount of Rs. 24,22,654/-. It is also the definite case of the assessee that when he received the notice u/s 143 of the Act regarding non- filing of Form-9A, the assessee filed the prescribed form at a later date on 18.03.2021. The grounds taken by the assessee which has also been before ld. CIT (Exemption) that the trustee responsible for handling tax related matters of the assessee was hospitalized on 29.08.2020 as he was diagnosed with COVID-19 and he had been advised for bed rest. It further appears that the object of the Trust in carrying out the charitable activities are not in dispute. It is simply that the assessee did not file Form-9A in the prescribed limit. It is also not in dispute that the assessee accepted the notice made by it and upon realization of the same, it took action to rectify the mistake. We have gone through the cited decisions and find that Hon'ble Gujarat High Court in the case of Association of Indian Panelboard Manufacturer petitioner by inadvertence did not file the along with the return of income the audit report in Form-10B and it was admittedly filed electronically on later date. Hon'ble High Court has held thus: “6. The moot aspect thus centres around to the requirement of the availability of the audit report when the assessment was undertaken by the Assessing Officer even though the same may not have been filed along with the return of income. Filing of audit report is held to be substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 12B is filed to be available with the Assessing Page 3 of 7 I.T.A. No.: 1358/KOL/2024 Assessment Year: 2019-20 M/s. Seth Chagan Mall Hira Lall Dugar Charitable Trust. Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income Tax Tribunal was not justified in dismissing the appeal of the assessee.” 2.1. We have also gone through the cited judgment passed by the hon ITAT and find that the Coordinate Bench of ITAT, Kolkata in the case of Bangarh Educational Welfare Trust vs ITO(Exemptions) in order dated 02.01.2022 find that the facts of the case were that a Trust was granted registration u/s 12AA(b)(i) of the Act, return of income filed claiming deduction u/s 11 of the Act and the deduction of Rs. 1,35,87,109/- claimed by the assessee denied on the ground that the assessee failed to file the return before the due date and secondly audit report in Form-10B was not filed before the due date prescribed in this Act. The Hon'ble Member has after going over the Circular of CBDT and after discussing several judgments of the hon ITAT has passed the order in favour of the assessee. The operative portion of the aforesaid decision is as thus:

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 ld. 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'ble 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 Oil and Page 4 of 7 I.T.A. No.: 1358/KOL/2024 Assessment Year: 2019-20 M/s. Seth Chagan Mall Hira Lall Dugar Charitable Trust. 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'ble Court has held that filing of audit report is directory in nature and its substantial compliance would suffice. The ld. 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 Assessment year: 2018-19 Bangarh Educational Welfare Trust 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 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'ble 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 ld. A.O may had an opportunity to go through the audit report. But still when the issue came before ld. CIT(A) who also possesses co- terminus power with that of A.O and as per section 251(1)(a) of the Act, the ld. 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 ld. 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. Assessment year: 2018-19 Bangarh Educational Welfare Trust.

We, therefore, in the given facts and circumstances and respectfully following the judgment of Hon'ble 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 Page 5 of 7 I.T.A. No.: 1358/KOL/2024 Assessment Year: 2019-20 M/s. Seth Chagan Mall Hira Lall Dugar Charitable Trust. 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.” 2.2. We have also gone through the order passed by the cob of ITAT, Kolkata in M/s. Sasha Association for Craft Producers vs. ITO in order dated 16.08.2023 on the issue for non-submission of Form-10, the Hon'ble Member has allowed the appeal of the assessee.

Keeping in view the above cited decisions and considering the facts of the present case, we are of this view that the appellant is entitled to deduction and his claim cannot be denied only on this regard that Form-9A has been filed later on, not with the returned income. The appellant has been able to establish his ground of delay that the trustee responsible for handling tax related matters was hospitalized and he had been suffering from severe illness. It is also not in dispute that the copy of discharge certificate and doctor's prescription has been filed by the assessee before the ld. CIT (Exemption). Accordingly, we condone the delay and the matter is sent back to the file of ld. CIT (Exemption) to pass order as per law. Accordingly, the appeal is hereby allowed.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 16th October, 2024. Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 16.10.2024 Bidhan (P.S.)