2022 (12) TMI 445 - AT - Income Tax

Tribunal allows appeal for reevaluation of exemption claim under Income Tax Act, emphasizing procedural compliance.

The Tribunal allowed the appeal by the assessee for statistical purposes, directing the Assessing Officer to reevaluate the claim under section 11 after ... Exemption under section 11 - Form 10B - rectification under section 154 - registration under section 12AA - claim to be decided on meritsExemption under section 11 - Form 10B - rectification under section 154 - claim to be decided on merits - Whether denial of exemption under section 11 solely because the audit report in Form 10B was uploaded after filing the return and rectification under section 154 was rejected, warranted disposal without considering the merits. - HELD THAT: - The Tribunal found that the assessee is a long-standing registered trust under section 12AA and that an audit report in Form 10B was obtained though uploaded after filing the return due to technical/e filing issues. The Revenue did not dispute continued registration, the audited accounts, or existence of Form 10B. Relying on a Coordinate Bench decision and jurisdictional High Court authority cited therein, the Tribunal held that where Form 10B exists and has been filed (albeit later), the claim for exemption under section 11 should not be denied on that sole procedural ground without examination on merits. Consequently the matter was not a 'mistake apparent from record' warranting dismissal of the rectification, and the Assessing Officer/CPC was directed to accept the Form 10B and verify and decide the assessee's claim under section 11 on merits. [Paras 8, 9, 10]Form 10B filed after return must be accepted for consideration; the Assessing Officer is directed to adjudicate the claim for exemption under section 11 on merits after accepting the Form 10B.Final Conclusion: The appeal is allowed for statistical purposes and the Assessing Officer is directed to accept the filed Form 10B and decide the exemption claim under section 11 on merits for assessment year 2016-17. Issues:Challenge to order denying exemption under section 11 of the Income Tax Act, 1961 based on delayed filing of Form 10B.Analysis:1. The assessee appealed against the order denying exemption under section 11 of the Act due to the delayed filing of Form 10B after submitting the return of income for the relevant assessment year. The CPC Bangalore initially denied the exemption claimed and raised a demand. The rectification application filed by the assessee under section 154 of the Act was rejected by the ITO, Exemption Ward, citing non-fulfillment of conditions under section 12(1)(b) for claiming the exemption. 2. The learned CIT(A) upheld the denial of exemption, stating that the issue was not a mistake apparent from the record. The assessee contended that the delay in uploading Form 10B was due to procedural and technical issues faced during the e-filing process. The Revenue argued that there was no mistake apparent from the record justifying the rejection of the rectification application.3. The Tribunal observed that the assessee, a trust registered under section 12AA for over 40 years, had a valid registration and fulfilled the necessary audit requirements. Despite the delayed filing of Form 10B, the denial of exemption solely on technical grounds without considering the merits was deemed unjust. Referring to a similar case, the Tribunal ruled in favor of the taxpayer, emphasizing that compliance with procedural requirements should suffice for claiming the exemption under section 11.4. Citing relevant High Court decisions, the Tribunal directed the Assessing Officer to verify the claim of the assessee and grant necessary deductions under section 11 after accepting the belatedly filed Form 10B. The Tribunal allowed the appeal for statistical purposes, emphasizing that the procedural compliance was met, warranting a review of the exemption claim on its merits.5. Consequently, the Tribunal allowed the appeal by the assessee for statistical purposes, instructing the Assessing Officer to reevaluate the claim under section 11 after accepting the Form 10B filed by the assessee. The decision highlighted the importance of procedural compliance in claiming exemptions under the Income Tax Act.Conclusion:The Tribunal's judgment favored the assessee, emphasizing the significance of procedural compliance in claiming exemptions under the Income Tax Act and directed the Assessing Officer to reconsider the exemption claim under section 11 based on the accepted Form 10B filing.