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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: DR. MANISH BORAD & PRADIP KUMAR CHOUBEY
order
: August 12th, 2024 ORDER
Per Pradip Kumar Choubey, Judicial Member:
The instant 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 ld. Commissioner of Income- tax (Appeal)-2, Gurugram [in short ld. ‘CIT(A)’] dated 26.03.2024 arising out of the assessment order framed u/s 143(1) of the Act dated 04.04.2023. 1.1. The brief facts of the case of the appellant are that the assessee is a registered Society, filed its return of income for the AY 2022-23 declaring total income at ‘NIL’ after taking exemption u/s 11 of the Act. The return was I.T.A. No.: 759/KOL/2024 Assessment Years: 2022-23 M/s. Jain Swetamber Society. processed u/s 143(1) of the Act determining the total income at Rs. 9,80,91,905/- thereby denying the exemption claimed u/s 10(23C)(v) of the Act on the ground that the audit report in Form-10BB was not filed within the due date. The assessee has filed appeal before the ld. CIT(A) wherein also his appeal has been dismissed on this ground that appellant had failed to file Form-10BB with the return of income, hence, not eligible for exemption. Being aggrieved and dissatisfied with the action of the ld. CIT(A), assessee has preferred the present appeal. 1.2. Ld. Counsel for the assessee challenges the impugned order thereby submitting that the authorities below erred in disallowing exemption claimed u/s 10(23C)(v) of the Act only on this ground that the audit report in Form- 10BB was not filed within the due date ignoring the fact that inadvertently in place of Form-10BB, Form-10B was filed. However, the latter was rectified by Form-10BB. It has been argued by the ld. A/R that assessee should not be penalised for the bona fide mistake of the auditor in uploading the incorrect Form. He has cited the decision of the ITAT, Bangalore Bench in the case of The Bangalore Fruit Commission Agents Association vs. ACIT in order dated 16.04.2024. 1.3. Ld. D/R supports the impugned order.
In the present case the sole issue is that failure in filing Form-10BB with its return of income. It is the definite case of the assessee that it was due to the mistake of the auditor that Form-10B has been filed instead of Form- 10BB. The submission of the ld. Counsel for the assessee is that ld. CIT(A) had to allow the appeal of the assessee by accepting Form-10BB which in fact, no doubt, had been filed later. 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 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:
Page 2 of 5 I.T.A. No.: 759/KOL/2024 Assessment Years: 2022-23 M/s. Jain Swetamber Society. “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 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
Page 3 of 5 I.T.A. No.: 759/KOL/2024 Assessment Years: 2022-23 M/s. Jain Swetamber Society. 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.” 2.1. Keeping in view the above decision as well as the present facts of the case, we find that in the present case also the disallowance has been made on this ground that Form-10BB had not been filed rather Form-10B was filed. Hence, the present case is squarely covered by the cited decision of the Tribunal. Accordingly, the appeal is allowed by condoning the delay. The AO is directed to consider Form-10BB as filed within the time and thereafter, assess the income. Accordingly, the case is again remanded back to the file of the AO by setting aside both the orders of ld. CIT(A) as well as ld. AO.