Charitable trust tax exemption u/s11: missing Form 10B audit report can't trigger s.143(1)(a) adjustment; remanded.

Denial of exemption under s.11 through an adjustment in intimation under s.143(1)(a) for non-furnishing of audit report in Form No.10B along with the return was held impermissible. The ITAT found that Form No.10B could not be treated as "information required to be furnished" for s.143(1)(a) adjustment, and that the question whether Form No.10B must accompany the return or can be furnished up to completion of assessment is a debatable issue; hence, denial of s.11 at the intimation stage was unsustainable. The impugned order was set aside and the matter remanded to the AO for fresh adjudication after hearing the assessee, and the appeal was allowed for statistical purposes.

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Issues: (i) Whether denial of exemption under section 11 on the ground that the audit report in Form No.10B was not filed with the return and the consequent adjustment under clause (ii) of section 143(1)(a) was permissible; (ii) Whether the matter should be remitted to the Assessing Officer to consider condonation of delay in filing Form No.10B.

Analysis: The question turns on the scope of clause (ii) of section 143(1)(a) and the Explanation thereto which refers to an "incorrect claim apparent from any information in the return"; the audit report in Form No.10B is not itself "information in the return" and the contemporaneous requirement to upload Form No.10B has been treated in authorities and administrative guidance as a procedural requirement capable of condonation. The CBDT circular permitting consideration of sufficient cause for delay and judicial precedents treating filing of Form No.10B as a curable defect indicate that summary disallowance by CPC under the processing provision was not appropriate without affording an opportunity to seek condonation and for the AO to examine and decide the issue afresh.

Conclusion: The intimation under section 143(1)(a) denying exemption under section 11 on the ground of non-filing of Form No.10B is set aside and the matter is remitted to the Assessing Officer with liberty to the assessee to apply for condonation of delay in filing Form No.10B; the AO is to decide the issue afresh after affording opportunity of hearing. The appeal is treated as allowed for statistical purposes.

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