Gujarat HC allows Section 11 exemption despite delayed Form 10B filing before assessment order

The Gujarat HC upheld ITAT's decision allowing exemption under Section 11 to the assessee despite delayed e-filing of Form 10B audit report with the return. The court distinguished the Supreme Court's Wipro Limited decision, noting it applied to Section 10B exemptions requiring mandatory pre-filing declarations, not Section 11 exemptions under Section 12A(1)(b). Following precedents in Sarvodaya Charitable Trust and Social Security Scheme cases, the HC held that since the assessee had uploaded the required Form 10B audit report before the original assessment order was passed, the technical delay should not deny the exemption. The court emphasized an equitable and judicious approach in such cases.

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Issues:
The issues involved in this case are:
- Whether the furnishing of audit report in Form No. 10B along with the return of income filed is a procedural requirementRs.
- Whether the denial of exemption under Section 11 of the Income Tax Act due to non-filing of audit report in Form No. 10B was justifiedRs.

Summary:

Issue 1:
The appellant-revenue challenged the decision of the Income Tax Appellate Tribunal (ITA) upholding the view that filing of audit report in Form No. 10B along with the return of income filed is a procedural requirement. The appellant contended that the tax effect involved exceeded the prescribed monetary limit specified by the CBDT.

The assessee, a registered charitable Trust, declared total income for Assessment Year 2018-19, including a voluntary contribution. The Central Processing Centre disallowed the exemption claim under Section 11 as the audit report in Form No. 10B was not e-filed with the return of income. The CIT (Appeals) allowed the claim, considering the filing of the audit report as a procedural requirement and noting that it was submitted before the Assessing Officer during assessment proceedings.

The Tribunal, following a previous decision of the High Court, dismissed the appeal, emphasizing the equitable and judicious approach required in such cases.

Issue 2:
The appellant relied on a Supreme Court decision regarding the mandatory nature of filing declarations for claiming exemptions under specific sections of the Income Tax Act. However, the Court differentiated the case at hand, which involved claiming exemption under different sections that did not require the same declaration as in the cited case.

The Court upheld the Tribunal's decision, stating that the Tribunal correctly followed previous High Court decisions emphasizing the need for substantial compliance and equitable treatment in such matters. The Court found no error in the Tribunal's decision and dismissed the appeal, stating that no substantial question of law arose from the Tribunal's order.

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