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Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD
Before: SHRI K. NARASIMHA CHARY
आदेश / ORDER Aggrieved by the order dated 29/04/2024 passed by the learned Commissioner of Income Tax (Appeals)- Na�onal Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Touchalife Founda�on India (“the assessee”) for the assessment year 2022-23, assessee preferred this appeal. 2. Assessee is a company limited by shares not-for-profit filed under section 8 of the Companies Act, 2013. Its case is that while filing the return of income for the assessment year 2022-23, it failed to file Form 10B due to delay of the auditors in filing the audit report, which it filed the same belatedly, but before the assessment was finalised. Because of such lapse, CPC while processing the return, issued an intimation under section 143(1) of the Income Tax Act, 1961 (for short “the Act”) disallowing exemption claimed by the trust under section 11 of the Act. Assessee preferred appeal before the Ld. CIT(A), but the Ld. CIT(A) by way of impugned order held that the reasons for the delay in submission of the audit report or material, subsequent filing of any document cannot be considered for processing the return and intimation, and the AO-CPC rightly disallowed the assessee’s claim of exemption under section 11/12 of the Act in the absence of audit report filed after due date prescribed under section 139(1) of the Act, and accordingly dismissed the appeal of the assessee.
Hence the assessee filed this appeal contending that the requirement of filing Form 10B is merely directory in nature and failure to furnish the same before the due date prescribed in section 139(1) of the Act cannot be so fatal as to deny the claim of exemption under section 11 of the Act, especially when such Form was available on record when the intimation was processed by CPC under section 143(1) of the Act. He placed reliance on various decisions including the one in the case of ITO vs. Ramji mandir religious and charitable trust (2024) 158 Taxmann.com 114 (Ahmedabad-Trib) and also the decision of the Hon’ble Gujarat High Court in the case of Association of Indian panelboard manufacturer vs. DCIT (2023) 157 Taxmann.com 550 (Gujarat) in support of his contention.
Ld. DR submitted that as rightly pointed out by the Ld. CIT(A), in terms of the CBDT Circular No. 2/2020 dated 3/1/2020 the assessee has to file condonation application under section 119 (2) of the act before the concerned CIT with the reasons for belated filing of the audit report and it is only on such condonation of the delay, the issue will be decided on merits by the Commissioner of Income Tax (Appeals). Ld. DR submitted that the assessee did not resort to such a procedure contemplated under the Circular and therefore, the CPC rightly disallowed the exemption claimed by the trust under section 11(2) of the Act. 5. I have gone through the record in the light of the submissions made on either side. As a matter of fact, this issue is no longer res integra. In the case of Association of Indian panelboard manufacturer (supra) the Hon’ble Gujarat High Court held in unequivocal terms that although the requirement of furnishing report was mandatory, filing thereof is a procedural aspect; and that even though the form can be was filed at a later stage, when it was part of the record of learned Assessing O�icer in the course of proceedings of the return of income, the learned Assessing O�icer could not have denied the exemption claimed by the assessee under section 11 of the Act on the ground that the audit report was not filed. It is also decided by the coordinate Bench of the Ahmadabad Tribunal in the case of Ramji Mandir Religious and Charitable Trust (supra) wherein, after reviewing the entire case law on this aspect, in unequivocal terms, it was held that the requirement of filing Form 10/10B is merely directory in nature and failure to furnish Form 10/10B before the due date prescribed under section 139(1) of the Act cannot be so fatal as to deny the claim of exemption under section 11(2) of the Act, especially when Form 10/10B was available on record when the intimation was passed by CPC under section 143(1) of the Act. In reaching such a conclusion the Bench considered the binding precedents rendered by the Hon’ble Gujarat High Court and other high courts and also the Hon’ble Supreme Court. Respectfully following the same I hold that since the Form 10B was available when the CPC passed the intimation in this case, disallowance of the claim of the assessee under section 11of the Act is not proper.