2023 (7) TMI 282 - AT - Income Tax

Tribunal directs AO to verify Form 10B for Section 11 exemption, emphasizing Audit Report availability

Shree Charitable Trust Versus The ITO, (Exemption), Vadodara

The Tribunal set aside the lower authorities' orders and directed the Assessing Officer to verify Form No. 10B, allowing the exemption under Section 11 of ... Exemption u/s. 11 - delay in filing Form No. 10B [not filed before the date specified u/s. 139] - HELD THAT:- 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. See Association of Indian Panel Board Manufacturer [2023 (3) TMI 1374 - GUJARAT HIGH COURT] and Shree Bhairav Seva Samiti [2022 (12) TMI 445 - ITAT MUMBAI] 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 - Appeal filed by the Assessee is allowed for statistical purposes. Issues Involved:1. Denial of exemption under Section 11 of the Income Tax Act, 1961.2. Prima facie adjustment under Section 143(1)(a) of the Act.3. Rectification under Section 154 of the Act.Summary:1. Denial of Exemption under Section 11:The Assessee, a public trust registered under Section 12AA, filed its Return of Income for the Assessment Year 2017-18 on 29-01-2018. The CPC communicated on 22-08-2018 and 09-10-2018 directing the Assessee to file Form No. 10B by 07-11-2018. The Assessee uploaded Form No. 10B on 17-10-2018. However, the CPC, in its intimation order under Section 143(1) dated 27-03-2019, denied the exemption under Section 11, citing that the Audit Report in Form 10B was not filed along with the Return of Income as required under Section 12A(1)(b) of the Act read with Rule 12(2) of the Income Tax Rules.2. Prima Facie Adjustment under Section 143(1)(a):The Assessee filed a rectification application dated 16-11-2019 with the Jurisdictional Assessing Officer (JAO), which was rejected on 05-10-2020. The rejection was based on Circular No. 10/2019 dated 22-05-2019, which stated that the delay in filing Form No. 10B could be condoned if the Audit Report was obtained before the Return of Income's filing and furnished before the date specified under Section 139. Since the Audit Report was not filed before the specified date, the Assessee was denied the exemption.3. Rectification under Section 154:The Assessee appealed to the NFAC, which dismissed the appeal, maintaining that the Audit Report in Form 10B was not filed before the date specified under Section 139. The Assessee argued that the Audit Report was uploaded before the CPC's specified date of 07-11-2018, but this was not considered.Tribunal's Findings:The Tribunal observed that the filing of Form 10B is directory in nature, and the Assessing Officer can allow filing the Audit Report any time before the assessment's completion. Citing the Gujarat High Court's decision in the case of Association of Indian Panel Board Manufacturer, the Tribunal emphasized that the substantive requirement is the availability of the Audit Report before the assessment, not the mode and stage of filing.Conclusion:The Tribunal set aside the orders of the lower authorities and directed the Jurisdictional Assessing Officer to verify the Form No. 10B and allow the claim of exemption under Section 11 of the Act, providing the Assessee an opportunity to present its case. The appeal filed by the Assessee was allowed for statistical purposes.