Appeal on Exemption Denial Upheld, Assessing Officer to Reconsider Expenses

The appeal challenged the denial of exemption under Section 11 due to late filing of Form 10B. The Tribunal upheld the denial of exemption but directed the Assessing Officer to consider the allowable expenses for the relevant assessment years, providing the assessee with a reasonable opportunity to be heard. The appeals for A.Y. 2016-17 and A.Y. 2017-18 were partly allowed for statistical purposes.

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Issues Involved:
1. Denial of exemption under Section 11 due to late filing of Form 10B.
2. Condonation of delay in filing Form 10B.
3. Assessment of gross receipts as income without considering allowable expenses.

Summary:

1. Denial of Exemption under Section 11:
The assessee's appeal challenges the denial of exemption under Section 11 amounting to Rs. 24,83,562/- by the CIT(A), who cited the failure to file the audit report in Form No. 10B before the due date of filing the return of income under Section 139. The assessee argued that there was no change in the objects and activities of the trust, and no activity was carried out beyond its objectives, thus the exemption under Section 11 should not be denied.

2. Condonation of Delay in Filing Form 10B:
The appeals involved a delay of one day, which was admitted due to the Supreme Court's orders in Suo Moto Writ Petition (Civil) No.3 of 2020. The assessee trust, a religious-cum-charitable trust registered under Section 12AA(1)(b)(i), filed its return of income for A.Y. 2016-17 on 28.03.2018. The CPC, Bangalore declined the exemption under Section 11(2) because Form 10B was not filed within the "due date" specified under Section 139(1). The CIT(A) upheld this decision, stating that the delay did not fall within the parameters of CBDT Circular No.28/2019 read with Circular No.7/2021. The assessee argued that the delay was due to technical glitches and should be condoned as per CBDT Circular No.10 and Circular No.28.

3. Assessment of Gross Receipts as Income:
The Tribunal observed that even though the exemption under Section 11 was rightly denied due to the late filing of Form 10B, the A.O. should have considered the assessee's claim for deduction of expenses as per the income and expenditure account. The matter was restored to the A.O. to consider these deductions, ensuring a reasonable opportunity for the assessee to be heard.

Conclusion:
The appeals for both A.Y. 2016-17 and A.Y. 2017-18 were partly allowed for statistical purposes. The Tribunal upheld the denial of exemption under Section 11 but directed the A.O. to reassess the allowable expenses for the respective assessment years.

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