AL MEHMOOD CHARITABLE TRUST,BHARUCH vs. INCOME TAX OFFICER, WARD- 1(5),, BHARUCH

These two appeals, relate to the single assessee for different assessment years, however facts are identical and similar, therefore these two appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The facts as well as grounds of appeal narrated in for AY.2016-17 have been considered for deciding these two appeals en masse.

The grounds of appeal

raised by the assessee in “lead” case in for A.Y.2016-17, are as follows: -93/SRT/2022 AYs.16-17 & 17-18 Al Mehmood Charitable Trust “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer (Central Processing Centre, Bengaluru) in making adjustment u/s 143(1) by disallowing the claim of deduction of Rs.1,77,41,090/- u/s 11 although the adjustment does not fall within the ambit of section 143(1) and thereby erred in rejecting the application u/s 154.

We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. In our considered view, it was wholly erroneous on the part of the authorities below to disallow the claim of assessee in respect of exemption u/s 11 of the Act, as audit report was filed on 29.03.2018 by way of Form 10B, which was available before the assessing officer at the time of processing return of income under section 143(1) of the Act. The audit report was filed on 29.03.2018 by assessee, whereas assessee`s return of income was processed under section 143(1) on 07.06.2019. The return of income was filed on 28.03.2018 while the audit report was uploaded on 29.03.2018. As per the provision stood at that time, there was no requirement to file the audit report along with the return of income, within due date for claiming the exemption.

We note that clause (ba) of section 12A(1) was inserted only w.e.f. 01.04.2018 which is reproduced as under: "the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under that section."

The relevant clause, which is applicable is clause (b) of section 12A(1). Before amendment made w.e.f. 01.04.2020, the relevant clause (b) was as under: "(b) where the total income of the trust of institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant to defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of -93/SRT/2022 AYs.16-17 & 17-18 Al Mehmood Charitable Trust income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed”

From the above, it is clear that there was no requirement before 01.04.2020 to file the audit report within due date. Of course, the assessee didn't file the audit report along with the return of income but it was prepared and filed immediately on next day within the time limit available u/s 139(4) of the Act. Further, it is submitted that the report was available at the time of processing the return of income made on 01.03.2019 for A.Y. 2016-17 and 27.03.2019 for A.Y. 2017-18. We note that ld Counsel for the assessee relied on case laws, wherein it was held that the report u/s 10B of the Act can be filed at the time of assessment proceedings, for claiming exemption / deduction for assessment years 2016-17 and 2017-18. The case law relied on by the ld Counsel are as follows:

Based on these facts and circumstances, as narrated above, we are of the view that assessee trust is entitled to claim exemption u/s 11 of the Act. We note that assessing officer disallowed the claim of the assessee under section 143(1) of the Act, by making adjustments, based on the technical issue (not filing the audit report on time), hence there is no adjudication on merit by the Assessing Officer. -93/SRT/2022 AYs.16-17 & 17-18 Al Mehmood Charitable Trust Therefore, we direct the Assessing Officer to allow the claim of the assessee u/s 11 of the Act, after verification of relevant documents and as per the provisions of section 11 of the Act, in accordance with law. For statistical purposes, both appeals filed by the assessee are allowed.

Since, we have remitted the entire issue back to the file of the Assessing Officer for fresh adjudication on merit, therefore we do not adjudicate ground No.1 raised by the assessee (in both these appeals).

In the result, appeals filed by the assessee (ITA No. 92 and 93/SRT/2022) are allowed for statistical purposes.