SHRI JAIN SHWETAMBER MURTIPUJAK SANGH,DHAMTARI vs. INCOME TAX OFFICER, EXEMPTION, WARD-1, RAIPUR

The captioned appeals filed by the assessee are directed against the respective orders passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 29.11.2021 & 02.12.2021, which in turn arises from the orders passed by the Central Processing Center (CPC)/A.O under Sec. 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) dated 29.03.2019 & 27.03.2019 for the assessment years 2016-17 & 2017-18. As the issues involved in the captioned appeals are inextricably interlinked; or in fact interwoven, therefore, the same are being taken up and disposed off together by way of a consolidated order.

The assessee trust had e-filed its return of income u/s.139(4) of the Act for A.Y.2016-17 on 28.03.2018, declaring nil income (after claiming exemption u/s.11 of the Act).

Intimation u/s.143(1)(a) dated 29.03.2019 was issued by the DCIT, CPC, Bangalore, wherein the assessee’s claim for exemption u/s.11(2) of the Act was declined, for the reason that the same was to be allowed only if Form 10 (sic.10B) a/w. return of income were furnished electronically within the “due date” specified u/s.139(1) of the Act. For the sake of clarity, the reasons

On appeal, the CIT(Appeals) did not find favour with the contentions advanced by the assessee. It was observed by the CIT(Appeals) that the assessee trust had filed Form 10B r.w.r. 12(2) of the Income Tax Rules, 1962 on 21.06.2019 i.e. much after the “due date” for filing of its return of income u/s.139 of the Act. Apropos the request of the assessee for condonation of the delay involved in filing of Form 10B, it was observed by the CIT(Appeals) that the same did not fall within the four parameters of CBDT Circular No.28/2019 [F.No.197/55/2018-ITA-1], dated 27.09.2019 read a/w. Circular No.7/2021 [F.NO.197/49/2021-ITA-1] dated 26.03.2021. It was, inter alia, provided in CBDT Circular NO. 10 [F.No.197/55/2018-ITA-1], dated 22.05.2019 Para 4(i)

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.

I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.

It is the claim of the Ld. Authorized Representative (for short ‘AR’), that the assessee trust had though obtained the audit report in Form 10B dated 30.09.2016 but the same due to certain technical glitches could not be filed a/w. its return of income that was filed u/s.139(4) of the Act on 28.03.2018. Carrying his contention further, it was submitted by the Ld. AR that the audit report dated 30.09.2016 was, thereafter, e-filed/uploaded on 21.06.2019. My attention was drawn by the Ld. AR to the audit report u/s.12A(b) of the Act in Form 10B, dated 30.09.2016 Page 3 to 9 of APB. Further, the Ld. AR has taken me through Form 10B dated 19.06.2019 that was uploaded by the assessee on 21.06.2019. On the basis of the aforesaid facts, it was submitted by the Ld. AR that as the assessee-trust had obtained the audit report u/s.12A(b) of the Act in Form 10B on 30.09.2016, i.e. before filing of its return of income u/s.139(4) of the Act on 28.03.2018, and had further e-filed/uploaded the same subsequent to filing of its return of income, i.e. on 21.06.2019, therefore, the delay involved in filing of Form No.10B was to be condoned as per Para 4(i) (supra) of CBDT Circular No.10 (supra) r.w. Circular No.28 (supra). On the basis of the aforesaid facts, it was submitted by the Ld. AR that as the assessee had cumulatively satisfied the conditions provided in Para 4(i) of the CBDT Circular No.10 [F No.197/55/2018-ITA-I], dated 22.05.2019, therefore, the delay involved in e-filing/uploading of Form 10B for the year under consideration i.e. A.Y.2016-17 was mandatorily required to be condoned.

Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the assessee-trust was obligated to e-file/upload its “audit report” u/s.12A(b) of the Act in Form 10B a/w. its return of income for the year under consideration, which it had failed to do, therefore, its entitlement for exemption u/s.11 of the Act was rightly declined by the DCIT, CPC vide intimation u/s.143(1)(a) of the Act, which order was thereafter was sustained by the CIT(Appeals).

Controversy involved in the present appeal lies in a narrow compass, i.e. as to whether or not the case of the assessee falls within the realm of Para 4(i) of the CBDT Circular No.10 [F.No.197/55/2018-ITA-I], dated 22.05.2019.

As per Rule 17B of the Income-tax Rules, 1962 (hereafter ‘Rules’) the audit report of the accounts of such a trust or institution is to be furnished in Form No. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed form along with the return of income results in disentitlement of the trust from claiming exemption under sections 11 and 12 of the Act.

Representations have been received by the Board/field authorities stating that Form No. 10B could not be filed along with the return of income for AY 2016-17 and AY 2017-18. It has been requested that the delay in filing of Form No. 10B may be condoned. Previously, vide instruction in F. No. 267/482/77-IT(part) dated 09-02-1978, the CBDT had authorized the ITO to accept a belated audit report after recording reasons in cases where some delay has occurred for reasons beyond the control of the assessee.

On the basis of the aforesaid “Explanation 1”, it can safely be gathered that the “specified date” in the case of the assessee trust before me for A.Y.2016-17 will be 30.06.2016. As the assessee trust in the case before me, had e-filed/uploaded the “audit report” in Form 10B as on 21.06.2019, which is much beyond the date specified u/s.139 of the Act, therefore, it’s case would clearly fall beyond the scope and gamut of Para 4(i) of the CBDT Circular No. 10 dated 22.05.2019. On the basis of the aforesaid facts, I am of the considered view that the case of the assessee before me would not fall within the meaning of Para 4(i) of the CBDT Circular (supra.).

As the assessee’s case with respect to condonation of delay in filing of Form 10B would not be covered by Para 4(i) (supra), therefore, the same

Be that as it may, as the assessee-trust does not cumulatively satisfy the set of conditions specified in Para 4(i) of the CBDT Circular No.10 (supra), and also had not filed any application for condonation of delay u/s.119(2)(b) of the Act as provided in Para 4(ii) of the said circular, therefore, there remains no occasion for condoning the delay involved in filing of Form 10B by the assessee beyond the stipulated time period. I, thus, on the basis of my aforesaid observations, find no infirmity in the view taken by the lower authorities who had rightly declined the assessee’s claim for exemption u/s.11 of the Act. However, I may herein observe that the A.O after declining the assessee’s claim for exemption u/s.11 of the Act could not have summarily held its gross receipts of Rs.24,83,562/- as its income. In sum and substance, the A.O after treating the assessee as an unregistered trust was obligated to have considered its claim for deduction of expenses as were raised in the income and expenditure account. Accordingly, on the basis of my aforesaid deliberations, I though uphold the declining of the assessee’s claim for 12 Shri Jain Shwetamber Murtipujak Sangh Vs. ITO, Exemption, Ward-1, Raipur & 16/RPR/2022 exemption u/s.11 of the Act, but at the same time, restore the matter to the file of the A.O with a direction to consider the assessee’s claim for deduction of expenses as debited in the income and expenditure account, i.e. to the extent the same are allowable under the Act. Needless to say, the A.O shall grant a reasonable opportunity of being heard to the assessee in the course of set-aside proceedings.

In the result, appeal of the assessee in A.Y.2016-17 is partly allowed for statistical purposes in terms of my aforesaid observations.

As the facts and the issue involved in the captioned appeal remains the same as were there before me in the aforementioned appeal in A.Y.2016-17, therefore, my findings recorded while disposing off the appeal in for A.Y.2016-17 shall apply mutatis-mutandis for disposing off the captioned appeal i.e. ITA No.16/RPR/2022 for A.Y. 2017-18. Accordingly, in this case also I restore the matter to the file of the A.O with similar directions as were recorded in ITA No.15/RPR/2022 for A.Y.2016-17.

In the result, the appeal of the assessee in for A.Y.2017-18 is partly allowed for statistical purposes in terms of my aforesaid observations.

In the combined result, both the appeals of the assessee are partly allowed for statistical purposes in terms of my aforesaid observations.