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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmed & Shri T.R. Senthil Kumar
Shri Swami Vivekanand The DCIT (CPC), Trust, Bangalore Plot No. 1 DC-2, Vs Rambaug Road, (Respondent) Ward-6A, Adipur, Adipur-370205, Gujarat PAN No: AABTS1102L (Appellant) Assessee Represented: Shri D.M. Rindani, A.R. Revenue Represented: Shri B.D. Gupta, Sr.D.R. Date of hearing : 06-07-2023 Date of pronouncement : 12-07-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Assessee as against the Appellate order dated 18.01.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “NFAC”), arising out of the intimation passed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2014-15.
Page No 2 Shri Swami Vivekanand Trust vs. DCIT(CPC)
The brief facts of the case is that the appellant is a registered charitable Trust under section 12A of the Income Tax Act. For the Assessment Year 2014-15, the assessee filed its Return of Income on 30.01.2015. The assessee received Audit Report in Form No. 10B on 24.04.2014 and physically filed the same before the Assessing Officer namely ITO, Gandhidham on 20.05.2014. Invoking section 139(1) of the Act, Centralized Processing Centre (CPC), Bengaluru vide its communication dated 02-03-2016 intimated the assessee that the Audit Report in Form 10B is not filed alongwith the Return of Income as per Section 12A(1)(B) of the Act. The assesse was ensured to file the corrected Return, incorporating the details of such Audit, failing which the Return filed in ITR 7 will be treated as invalid. However the assessee has not responded to the above communication. Therefore the CPC vide its intimation u/s.143(1) dated 16-03-2016 denied the claim of exemption u/s. 11 to the assessee trust and demanded a tax of Rs. 18,35,160/-. It is thereafter the assessee uploaded Audit report in Form 10B by e-filing on 16.04.2019.
Aggrieved against the intimation order, the assessee filed an appeal before Ld. NFAC on 13.06.2020 with a delay of 1519 days. The Ld. NFAC condoned the delay in filing the appeal, however decided the appeal against the assessee on the ground that Form 10B was not filed along with the Return of Income.
Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal:
1. The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in confirming action of CPC Bangalore in making adjustments Page No 3 Shri Swami Vivekanand Trust vs. DCIT(CPC) to the returned income of the Appellant by way of an Intimation u/s 143(1) of the Act and in denying the benefit of Sec. 11 to the appellant, failing to appreciate that this was not a case of prima facie adjustment.
2. The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi erred in upholding action of the CPC Bangalore in not giving deduction of Rs. 37,87,839/- claimed by the Appellant by way of amount applied for charitable/religious purposes.
3. The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi, erred in upholding action of the CPC Bangalore in not giving deduction of Rs. 7,72,184/- claimed by the Appellant u/s 11(1A) of the Act.
4. The learned Commissioner (Appeals), National Faceless Appeal Centre, Delhi, erred in dismissing ground of appellant pertaining to not stating the reasons for adjustments made by CPC to returned income of Appellant.
5. The Appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal.
4.1. Ld. Counsel Mr. D.M. Rindani appearing for the assessee submitted that the Audit Report in Form 10B dated 24.04.2014 was physically filed before Jurisdictional Assessing Officer (JAO) on 20.05.2014 itself. However it was electronically uploaded in the ITB Portal on 16.04.2019. Therefore CPC was not correct in denying the benefit of exemption u/s. 11 to the assessee on the ground that Audit Report in Form 10B was not filed along with the Return of Income. The Ld. Counsel relied upon Jurisdictional High Court Judgment in the case of CIT Vs. Gujarat Oil & Allied Industries reported in 201 ITR 325.
Per contra, the Ld. Sr. D.R. Shri B.D. Gupta appearing for the Revenue supported the order passed by the lower authorities.
We have given our thoughtful consideration and perused the materials available on record. It is an admitted fact that Audit Page No 4 Shri Swami Vivekanand Trust vs. DCIT(CPC)
Report in Form 10B was physically filed before the Jurisdictional Assessing Officer (JAO) on 20.05.2014 but the same was uploaded in the ITB Portal on 14.04.2019 after denying the benefit u/s. 11 of the Act. Late filing of Audit Report in Form 10B is considered by the very same Bench of this Tribunal in the case of Shree Charitable Trust Vs. ITO (Exemption) in dated 05.07.2023 wherein it was held as follows: “….8. It is no more res integra that filing of Form 10B as required u/s. 12A are directory in nature, as such the Assessing Officer are not powerless to allow an assessee to file Audit Report, if not filed along with return, any time before completion of assessment. 8.1. The Hon’ble High Court of Gujarat in the case of Association of Indian Panel Board Manufacturer (cited supra) held as follows: “….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 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. 6.1 The appellant assessee has to be held to be eligible and entitled to exemptions under Section 11(1) and 11(2) of the Act and the alleged ground of non-filing of audit report alongwith return of income which was at the best procedural omission, could never to an impediment in law in claiming the exemption.” 8.2. On similar set of facts the Mumbai Bench of the Tribunal in the case of Shree Bhairav Seva Samiti (cited supra) held as follows: “…9. In the present case, it is undisputed that the assessee trust is registered under section 12AA of the Act for the past 40 years and the said registration is still in existence. It is also not the case of the Revenue that the assessee has ceased to be a religious or charitable institution. Further, it is also not the case of the Revenue that the accounts of the assessee have not been audited by an accountant, and an audit report in Form 10B has not been obtained. Only on the technical aspect that Form 10B was not filed along with Page No 5 Shri Swami Vivekanand Trust vs. DCIT(CPC) the return of income for the relevant assessment year, the exemption claimed under section 11 of the Act has been denied to the assessee without going into the merits. Further, no relief was granted to the assessee even when the assessee filed the application under section 154 of the Act. We find that while dealing with similar facts the Co–ordinate Bench of the Tribunal in Trinity Education Trust vs ITO, ITA No. 669/Srt./2018, vide order dated 28/02/2022, decided the issue in favour of the taxpayer by observing as under: “8. We have considered the rival submissions both the parties and perused the order of lower authorities carefully. We find that there is no dispute that at the time of filing of return of income, the audit report has required under Form 10B was not uploaded once uploaded on the system consequently the AO/CPC not allowed the exemption claimed under section 11. Assessing Officer/CPC brought the entire receipt as taxable income. On receipt intimation under section 143(1) of the Act the assessee uploaded in Form 10B and filed application for rectification under section 154 of the Act. The application of the assessee was rejected on the ground report in Form 10B was not furnished before due date of return of income. The Id. CIT(A) dismissed the appeal of the assessee by taking view the audit report in Form 10B was not uploaded before due date of return of income.
We find that the Hon'ble jurisdictional High Court in case of CIT vs. Xavier Kalavani Mandal (P.) Ltd. (supra) held that in order to claim exemption under section 11, the assessee can filed audit report in Form 10B even at later stage either before the Assessing Officer or before appellate authority by showing a sufficient cause. Further, Hon'ble jurisdictional High Court decision in case of Sarvodaya charitable Trust vs. ITO (Exemption) (supra) also held that where the assessee is a public charitable trust registered under section 12A of the Act and substantially satisfied condition for availing benefit of exemption as a charitable could not be denied exemption, the assessee merely on bar of limitation in furnishing audit report in Form 10B. Considering the aforesaid and legal discussion, we find that though the assessee has not filed any return of income at the time, however, it was available before the Id. CIT(A) as it was uploaded much before filing application under section 154. Therefore, respectfully following the decisions of Hon'ble jurisdictional High Court in case of CIT vs. Xavier Kalavani Mandal (P.) Ltd. (supra) and in Sarvodaya charitable Trust vs. ITO (Exemption) (supra), we find that the assessee has complied the procedural requirement, therefore, the Assessing Officer/CPC is directed Page No 6 Shri Swami Vivekanand Trust vs. DCIT(CPC)
to verify the claim of the assessee and grant necessary deduction under section 11 of IT Act. In the result, the appeal of the assessee is allowed for statistical purposes.”
As in the present case also the assessee has complied with the procedural requirement of obtaining and filing Form 10B, therefore, respectfully following the aforesaid decision of the Co-ordinate Bench of the Tribunal, the Assessing Officer is directed to decide the claim of the assessee under section 11 on merits, after accepting the Form 10B filed by the assessee. 8.3. Further very same Bench of this Tribunal in the case of ITO Vs. Shri Laxmanarayan Dev Shrishan Seva Khendra in dated 19-05-2022 held as follows: “….6. We have given our thoughtful consideration and perused the materials available on record. The moot question whether it is permissible to the assessee to produce the audit report at the appellate stage is correct in law is been decided by the Jurisdictional High Court in the case of CIT Vs. Gujarat Oil & Allied Industries Ltd. [1993] 201 ITR 325 (Guj.) wherein it is held that the provisions regarding furnishing of audit report along with the return has to be treated as a procedural provision. It is directory in nature and its substantial compliance would suffice. Thus the Hon’ble Court Held that the benefit of exemption should not be denied merely on account of delay in furnishing the same. 6.1. Similarly in the case of Social Security Scheme of GICEA (cited supra) the Hon’ble Jurisdictional High Court held as follows: 5. “…..the only question which falls for consideration is whether respondent committed an error in passing the order by not condoning the delay in filing Form No. 10B along with the return filed. In the decision of this Court in Sarvodaya Charitable Trust (supra) this Court has observed that furnishing of audit report along with return filed is to be treated as a procedural requirement. It is though mandatory in nature the substantial compliance is required to be made. In the case of Sarvodaya Charitable Trust (supra) the assessee had produced the audit report after processing the return under section 143(1). This Court in the said order has observed that the approach of the authority in these type of cases should be equitable, balancing and judicious. Technically speaking, respondent No. 2 might be justified in denying the exemption under section 11 of the Act by rejecting such condonation application, but an assessee, which is a public charitable trust for past 30 years which substantially satisfies the conditions for availing such exemption, should not be denied the same merely on the bar Page No 7 Shri Swami Vivekanand Trust vs. DCIT(CPC)
of limitation especially when the legislature has conferred wide discretionary powers to condone such delay. Applying the said principle, the petition is allowed. The impugned order passed by respondent dated 12-3-2021 is quashed and aside. The impugned order of rectification under section 154 of the Act dated 25-1-2019 is also quashed and set aside. The application for condonation of delay filed by the petitioner before the respondent is allowed.
6. The respondent is now directed to process the return in accordance with law. It is noticed that no assessment is framed and only an intimation under section 143(1) of the Act was issued. No scrutiny could be carried out by the respondent since the audit report under section 10B was not on record. Learned advocate for the petitioner Mr. B.S. Soparkar fairly submitted that the issue of benefit of exemption may be examined by issuance of notice u/s 143(1)/143(2) and the petitioner shall not object to the said proceedings by taking the ground of limitations.” 6.2. Respectfully following the above judicial pronouncements by Jurisdictional High Court, we have no hesitation in confirming the order passed by Ld. CIT(A) who has directed the Jurisdictional Assessing Officer (JAO) to verify the Form No. 10B and allow the claim of exemption u/s. 11 and compute the total income. Thus the grounds raised
by the Revenue is devoid of merits and the same is liable to be dismissed.”
9. In the present case before us Audit Report in Form 10B though filed belatedly by the assessee, the same was not considered and verified by the Assessing Officer both u/s. 143(1) proceeding as well as in u/s. 154 proceeding, so the said orders are hereby set aside. Further there is no regular assessment orders passed u/s. 143(3) of the Act in the assessee case, therefore we hereby direct the Jurisdictional Assessing Officer to verify the Form No. 10B and then allow the claim of exemption u/s. 11 of the Act in accordance with law by giving opportunity to the assessee. Thus the grounds raised by the assessee are hereby allowed.” 6.1. Respectfully following the above decision of the Tribunal which has followed Jurisdictional High Court judgments, we hereby set aside the impugned order passed by the lower authorities, with a direction to the Jurisdictional Assessing Officer (JAO) to verify Form No. 10B and then allow the claim of exemption u/s. 11 of the Act in accordance with law by giving proper opportunity to the Page No 8 Shri Swami Vivekanand Trust vs. DCIT(CPC) assessee. Thus the grounds raised by the Assessee are hereby allowed.
In the result, the appeal filed by the Assessee is allowed for statistical purposes.
Order pronounced in the open court on 12-07-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 12/07/2023 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, राजकोट