2024 (2) TMI 629 - AT - Income Tax

Section 11 exemption restored despite delayed Form 10B audit report filing as procedural omission

Gyandeep Charitable Trust Versus A.D.I.T, CPC, Bengaluru, Now Income Tax Officer, Ward-3 (3) (1), Ahmedabad.

ITAT Ahmedabad allowed the appeal regarding exemption under section 11 denial due to delayed filing of Form 10B audit report. Following precedent in Hari ... Exemption u/s 11 - claim denied as there was a delay in filing Form 10B i.e. audit report - procedural defect or mandatory compliances - HELD THAT:- We note that this Tribunal in identical facts and circumstances in the case of Hari Gyan Pracharak Trust [2023 (6) TMI 923 - ITAT AHMEDABAD] has decided the issue in favour of the assessee stating that non filing of Audit Report along with return of income is a procedural omission and cannot be an impediment in law in claiming the exemption, we allow this appeal condoning the delay in filing the Audit Report in Form No. 10B. Thus we condone the delay and restore the matter to the file of ld. CIT(A) to allow exemption u/s 11 of the Act to the assessee as per the provisions of law. Hence, the grounds of appeal of the assessee are allowed for statistical purposes. Issues Involved:The appeal filed by the Assessee against the order of the National Faceless Appeal Centre(NFAC), Delhi, regarding the denial of exemption u/s 11 of the Income Tax Act, 1961 due to a delay in filing Form 10B.Issue 1: Denial of Exemption u/s 11 of the ActThe Assessee, a public charitable trust, filed its return of income declaring income at Rs. 1,83,230.00 for the Assessment Year 2021-2022. However, the exemption claimed u/s 11 of the Act was denied during processing under s.143(1) of the Act, and the income was assessed at Rs. 2,68,841.00. The ld. CIT(A) upheld the denial of exemption on the grounds of a delay in filing Form 10B, which was filed 3 months after the actual date of filing the return of income. The appellant trust failed to provide evidence of condonation of delay or compliance with section 12A(1)(b), making it ineligible for exemption u/s 11. The denial of exemption was upheld by the AO, CPC. The Assessee appealed against this decision.Issue 2: Arguments and Counter-argumentsThe Assessee argued that the requirement of filing audit report in Form 10B is procedural and therefore the exemption under section 11 cannot be denied. The Assessee cited precedents to support their contention. The Assessee further relied on CBDT Circular No. 16/2020, which delegates the power to admit applications for condonation of delay u/s 119(2) of the Act. The Revenue contended that the Assessee should have moved an application before the concerned Income Tax Authorities for condoning the delay. The Assessee, in response, stated that since the Tribunal had already considered the matter, they did not opt for an alternate remedy.Issue 3: Tribunal DecisionThe Tribunal noted a previous decision in a similar case where the Hon'ble Jurisdictional High Court held that non-filing of the audit report along with the return of income is a procedural omission and cannot be an impediment in claiming the exemption. Following this precedent, the Tribunal allowed the appeal, condoned the delay in filing the audit report, and restored the matter to the ld. CIT(A) for a decision on the exemption claimed by the Assessee in accordance with the law. The Tribunal allowed the appeal for statistical purposes, directing the ld. CIT(A) to grant the exemption u/s 11 of the Act to the Assessee.