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Income Tax Appellate Tribunal, “SMC” BENCH, NAGPUR
Before: SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER S.S. VISWANETHRA RAVI, JM :
This appeal by the assessee against the order dated 27-04-2022 passed by the National Faceless Appeal Centre (“NFAC”), Delhi for assessment year 2016-17.
I find that this appeal was filed with a delay of 16 days. Upon hearing both the parties, I find that the delay of 16 days is saved by the decision of Hon’ble Supreme Court passed during National Lockdown imposed on account of pandemic Covid-19. Therefore, the delay of 16 days are condoned.
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The ld. AR, Shri Mahavir Atal drew my attention to the additional grounds of appeal raised under Rule 11 of ITAT, Rules vide letter dated 14- 10-2022. He submits that the additional ground Nos. 1 and 2 may be taken up as preliminary grounds as it requires no fresh examination of the facts of the case. The ld. DR, G.J. Ninawe did not report any objection in taking up the said additional grounds of appeal. The additional ground Nos. 1 and 2 raised by the assessee reads as under : “1. Whether on the facts and circumstances of the case the disallowance of exemption under section 11 on delayed filing of Form 10B is justified and valid in law, when the Hon’ble CBDT has condoned the delay for AY 2016-17 vide Circular No. 10/2019 dated 22nd May, 2019. 2. Whether on the facts and circumstances of the case, the Hon’ble CIT(A) was justified in upholding the disallowance made by CPC without perusing the facts of the case.”
The ld. AR submits that the assessee filed return of income on 02- 01-2017 and received communication dated 04-04-2017 with an error description that the claim u/s. 11 of the Act will be denied without Form 10B of the Act. The said communication also suggested to file corrected return incorporating the details of audit, failing which the income tax return filed by the assessee will be treated as defective. In response to the said error description, the assessee filed return of income on 04-05-2017 along with Form 10B and drew my attention to page 15 of the paper book. The ld. AR submits that the CPC, Bangalore vide intimation dated 03-01- 2018 u/s. 143(1) of the Act denied exemption u/s. 11 and drew my attention to page 2 of the paper book. He argued that the CPC without considering the Form 10B filed along with return of income on 04-05-2017 complying the error description communication dated 04-04-2017, simply denied exemption u/s. 11 of the Act, which is not justified and ignoring the Circular No. 10/2019 dated 22-05-2019 issued by the CBDT.
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The ld. DR, Shri G.J. Ninawe submits that the assessee is required to file Form 10B along with return of income but failed to file the same. The CPC correctly denied exemption u/s. 11 of the Act for not filing the Form 10B. The CIT(A) considering the submissions of assessee and on an examination of record, justified in holding that the assessee failed to furnish the statement referred to in clause (a) of section 11(2) of the Act on or before the due date specified in section 139(1) of the Act. He vehemently supported the order of CIT(A).
Heard both the parties and perused the material available on record. I note that the assessee filed return of income on 02-01-2017 vide e-filing acknowledgment No. 580267610020117. In terms of the said return of income, the assessee received communication on 04-04-2017 by error code 57, the description being that the assessee claimed exemption u/s. 11 without Form 10B, which is evident from page 13 of the paper book. The CPC, Bangalore also suggested probable resolution to file corrected return incorporating the details of audit report. In pursuance of such communication, the assessee filed Form 10B along with corrected return on 04-05-2017 vide e-filing acknowledgment No. 76908130040517 incorporating Form 10B dated 25-04-2017 which is evident from pages 15 to 18 of the paper book. The CPC, Bangalore in spite of having Form 10B filed in response to error code 57, again denied exemption u/s. 11 of the Act vide order dated 03-01-2018. The main contention of ld. AR vide additional grounds of appeal whether denial of exemption u/s. 11 of the Act is justified on delayed filing of Form 10B and the CIT(A) is justified upholding the said denial. It is noted that the assessee got audit report in Form 10B on 03-11-2016 and the same could not be uploaded on-line along with the return of income filed on 02-01-2017 for want of access to the Income Tax website. Thereafter, after receipt of error description order dated 04-04-2017, the assessee uploaded tax audit report in the digital
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format in Form 10B on 01-05-2017 vide acknowledgment No. 766977391010517 in terms of probable resolution provided by CPC, Bangalore vide defect notice. Further, the assessee incorporated the details relating to audit as required through Income Tax return of income filed on 04-05-2017. In spite of same, the CPC, Bangalore vide order dated 03-01-2018 denied exemption u/s. 11 of the Act. The CIT(A) vide para 5.2 of the impugned order held the statement referred to in clause (a) of section 11(2) is not furnished on or before due date specified in section 139(1) of the Act and confirmed the order of CPC in denying exemption u/s. 11 of the Act for failure to file return of income within due date before specified u/s. 139(1) of the Act. The ld. AR placed on record Circular No. 10/2019 dated 22nd May, 2019 issued by the CBDT with a subject condonation of delay in filing of Form 10B for years prior to A.Y. 2018-19. On perusal of the said circular it is clear that the delay in filing of Form 10B for A.Ys. 2016-17 and 2017-18 is condoned in all such cases where the audit report is obtained before filing of return of income and furnished subsequent to filing of return of income. In the present case, there is no dispute with regard to obtaining copy of audit report on 03-11-2016 but however the same could not be uploaded on-line for want of access to the Income Tax official website along with the return of income dated 02-01-2017. I note that the said fact of obtaining audit report before filing of return of income on 02-01-2017 has been brought to the notice of CIT(A) but however, without considering the Circular No. 10/2019 issued by the CBDT, the CIT(A) confirmed disallowance made on account of denial of exemption u/s. 11 of the Act.
As discussed above the Circular No. 10/2019, I note that the said circular issued for condonation of delay in filing of Form 10B for years prior to A.Y. 2018-19. Admittedly, the year under consideration before me is A.Y. 2016-17, therefore, the said circular issued by the CBDT for
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condonation of delay in filing form 10B is applicable for the present assessment year. On perusal of the said circular which explains that the accounts of the trust or institution have to be audited by an Accountant and such audit is required to furnish in the prescribed form duly signed and verified by such Accountant along with return of income. Admittedly, in the present case, no such audit was filed in prescribed form i.e. Form 10B along with the return of income which is evident from communication dated 04-04-2017 issued by the CPC, Bangalore which is on record at pages 12 and 13 of the paper book. The assessee obtained audit in Form 10B on 03-11-2016 and the hard copy of such audit could not be uploaded for want of access to the Income Tax official website, but however, the said Form 10B was uploaded along with return of income filed on 04-05-2017 which is evident from pages 15 to 19 of the paper book, but the CPC did not consider the said audit in prescribed form in Form 10B in its order dated 03-01-2018 which is clearly evident from pages 1 and 2 of the paper book. Therefore, the question arises whether the CIT(A) is justified in confirming the denial of exemption u/s. 11 of the Act made by the CPC for not filing Form 10B along with return of income in terms of Circular No. 10/2019 issued by the CBDT. In my opinion, the CBDT vide para 4(i) clearly explained the delay in filing of Form 10B for A.Ys. 2016-17 and 2017-18 is condoned where the audit report obtained before filing of return of income and furnished subsequent to filing of return of income before due date specified u/s. 139 of the Act. There is no dispute with regard to the assessee filing the original return of income on 02-01-2017 before the date specified u/s. 139 of the Act vide para 4.1 of the said circular. It is also not disputed in obtaining the hard copy of audit report in Form 10B on 03-11-2016 which is the date prior to filing of return of income on 02- 01-2017. Therefore, in my opinion, the assessee obtained Form 10B before filing return of income under the provisions u/s. 139 of the Act but it could not be uploaded digitally for want of access to the Income Tax official
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website. Therefore, the clarification in condoning the delay in filing Form 10B for A.Y. 2016-17 is binding on the CPC, but however, was ignored to consider the same. Therefore, the delay in filing audit report in Form 10B is condoned in terms of CBDT Circular No. 10/2019 dated 22-05-2019 and the denial of exemption u/s. 11 of the Act by the CIT(A) is not justified. The Additional Ground Nos. 1 and 2 raised by the assessee are allowed.
In view of my decision in Additional Ground Nos. 1 and 2 in setting aside the order of CIT(A) in denying the exemption u/s. 11 of the Act, the original ground Nos. 1 and 2 raised by the assessee becomes infructuous, hence, require no adjudication.
In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 28th October, 2022.
Sd/- (S.S. Viswanethra Ravi) JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 28th October, 2022. रदव आदेश की प्रविवलवप अग्रेवर्ि / Copy of the Order forwarded to : अपीलार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The CIT(A), NFAC, Delhi. 4. The CIT concerned. धिभागीय प्रधिधनधि, आयकर अपीलीय अधिकरण, “एक सदस्य मामला” बेंच, 5. नागपुर / DR, ITAT, “SMC” Bench, Nagpur. गार्ड फ़ाइल / Guard File. 6. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER,
वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune