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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI RAJPAL YADAV & SHRI RAKESH MISHRA
Present for: Appellant by : Shri Miraj D Shah, AR Respondent by : Shri L.N. Dash, JCIT Date of Hearing : 25.07.2024 Date of Pronouncement : 20.08.2024 O R D E R
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Addl./JCIT(A)-1, Jaipur (hereinafter referred to as “the Ld. Addl. CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2022-2023, dated 31.01.2024, against the intimation u/s. 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) by the Deputy Director of Income Tax, CPC, Bengaluru, dated 28.03.2023.
The grounds of appeal raised by the assessee are reproduced as under:
“1). For that order passed by the learned ADDL/JCIT (A)-1 is bad in law as proper opportunity of hearing was not given to the assessee to defend the case. Thus, the order passed be quashed. For that the Assessment order passed was in violation of principals of natural justice and hence the entire proceeding was bad in law and thus The Appellate order passed on the basis of such order be cancelled/quashed.
Prayas EK Asha: AY: 2022-23 For that the order passed by the learned CIT (Appeals) is bad in law and therefore the same be set aside for fresh hearing. 2) For that the learned CIT (Appeals) erred in confirming the disallowance made by the Ld. AO of Rs.6,88,000/- being donation received by the Trust towards Corpus fund which is otherwise exempt. This was not justified and thus the same be deleted. 3) For that the learned CIT (Appeals) erred in confirming the disallowance made by the Ld. AO of Rs.2,077/-made on account of Interest received without setting off expenses incurred during the year. This was not justified and thus the same be deleted. 4) For that the learned CIT (Appeals) erred in confirming the interest u/s 234 A/B/C the same was unjustified and hence the same be directed to recomputed the interest as per law. 5) The appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. 6) The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal.”
Brief facts of the case as filed before the Ld. CIT(A) are that the assessee is a Trust and had filed the return of income for AY 2022-23 showing total income of Rs. NIL. The audit report under section 12A(1)(b) of the Act signed on 28.09.2022 was uploaded on the e-portal of the department on 02.11.2022. In response to the discrepancies pointed out by the CPC, Bengaluru, the assessee filed its response on 16.03.2023. In response to the discrepancy regarding not filing the audit report at least one month prior to the due date for furnishing the return of income under section 139(1) and thereby denial of exemptions claimed in accordance with the provision of section 12A(1)(b), the assessee responded that the report on Form No. 10B was signed and obtained on 28.09.2022 and due to technical reason, it was filed afterwards. The DDIT, CPC, Bengaluru issued an intimation under section 143(1) of the Act on 28.03.2023 by making additions/disallowance of Rs.6,90,077/-. The assessee filed an appeal before the Ld. CIT(A) but there was no representation, as is noted in the order under section 250 of the Act. The Ld. Addl. CIT(A) was of the view that the assessee had violated the provisions of section 12A(1)(b) of the Act, wherein it is mandatory to file statutory audit report along with the return Prayas EK Asha: AY: 2022-23 of income within due date. Ld. Addl. CIT(A) held that failure on the part of the assessee to furnish the audit report within the specified date would lead to disentitlement of the assessee from claiming exemption under section 11 of the Act. As the assessee had filed the audit report electronically in Form No. 10B belatedly on 02.11.2022, it was not entitled to claim exemption of income under section 11 of the Act. The Ld. Addl. CIT(A) has referred to Circular No. 2/2020 of the CBDT and has held that in order to get entitlement for claiming exemption of its income under section 11 of the Act, it is mandatory on the part of the appellant to file the Form No. 10B in due time or get a condonation of the delay in filing the Form No. 10B from the CIT (Exemptions). The disallowances as made by the DDIT, CPC, Bengaluru were confirmed. Aggrieved with the order of the Ld. Addl. CIT(A), the assessee has filed the appeal before the Tribunal.
During the course of the hearing before us, the Ld. AR submitted that an application dated 12th June, 2023 had been filed before the Ld. CIT(E) to condone the delay in filing the Form. No. 10B since vide Circular No. 16/2022 dated 19th July, 2022, the power to pass an order under section 119(2)(b) has been vested with the Ld. CIT, if there is a delay not exceeding 365 days in filing the report and a copy of the circular was annexed with the application. Ld. AR also filed a copy of the instruction dated 09.02.1978 wherein it is stipulated that in cases where for the reasons beyond the control of the assessee, some delay has occurred in filing the said report, the exemption available to such trusts under sections 11 and 12 may not be denied merely on account of not furnishing the auditor’s report and the ITO should record reasons for accepting a belated audit report. The Ld. AR also filed a copy of the CBDT’s order extending the due date for filing the return of income to 07.11.2022 and thereby emphasised that the return filed on 02.11.2022 was filed within the due date. Ld. DR, on the other hand relied upon the order of the Ld. Addl. CIT(A).
We have heard the rival submissions. The exemption under section 11/12 of the Act was denied by the DDIT, CPC and the denial was upheld by the Ld. Addl. CIT(A) as the assessee had not filed the Form No. 10B in time. The return was filed in time and the application seeking condonation of delay has been filed before the Ld. CIT(E). Hence, in order to be fair to the assessee as well as the Department, the order of the Ld. Addl. CIT(A) is hereby set aside and the Ld. AO shall take up the matter of pending application before the Ld. CIT(E) for condonation of delay and rectify the intimation issued by the CPC and recompute the income of the assessee under section 143(1) after decision on the pending application for condonation of delay in filing Form No. 10B filed on 02.11.2022 has been taken by the Ld. CIT(E). Hence Ground Nos. 2 and 3 are allowed for statistical purposes. Other grounds are general in nature and do not require any separate adjudication.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 20th August, 2024.