Charitable trust granted section 11-12 exemption despite delayed Form 10B filing under discretionary powers

The ITAT Jodhpur allowed the assessee's appeal regarding denial of section 11-12 exemption benefits. The assessee, a charitable trust, was denied exemption for failing to file Form 10B before the due date. Following precedents from Gujarat HC in Sarvodaya Charitable Trust and ITAT decisions, the tribunal held that when a trust substantially satisfies exemption conditions, it cannot be denied benefits merely due to delayed filing of Form 10B, especially given authorities' discretionary powers to condone delays. The tribunal directed the JAO to consider Form 10B and allow section 11 exemption, noting the form was filed within extended due date.

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Issues:
Appeals against order of National Faceless Appeal Centre under section 143(1) & 154 of the Income Tax Act for assessment year 2018-19.

Analysis:
The appeals were filed by the assessee challenging the order passed by the National Faceless Appeal Centre (NFAC) for assessment year 2018-19. The issues involved in both appeals were almost identical, one against the intimation issued under section 143(1) and the other against the order passed under section 154 of the Act regarding the same intimation. The appeals were heard together and disposed of by a consolidated order.

The assessee raised multiple grounds challenging the validity of the order passed by the NFAC, the disallowance of exemption under section 11 of the Act, and the failure to follow decisions of various courts. The intimation issued under section 143(1) highlighted the non-filing of the audit report in Form no. 10B along with the return of income, leading to the disallowance of exemption under section 11.

The NFAC provided the assessee with multiple opportunities to submit documents and respond to the grounds of appeal, but the assessee failed to provide any explanation or evidence. Consequently, the NFAC upheld the addition made by the assessing officer due to the lack of response from the appellant.

The assessee argued that the order was passed during the Covid period, and they had submitted the required documents within the extended due date. The assessee contended that the intimation and subsequent order passed under section 154 were incorrect. The revenue department argued that the assessee failed to file the necessary documents before the due date, making them ineligible for the benefits under sections 11 & 12.

The Tribunal considered the evidence presented by the assessee, including the CBDT order extending the due date, and noted that the audit report was filed within the extended deadline. The Tribunal also referred to relevant court decisions where trusts were not denied exemption solely based on delayed filing of the audit report. Consequently, the Tribunal directed the Assessing Officer to consider Form no. 10B and allow the claim of exemption under section 11 to the assessee.

As the Tribunal found in favor of the assessee regarding the denial of section 11 benefit, the appeal in ITA no. 137/Jodh/2023 was allowed. Consequently, the appeal against the order under section 154 became infructuous. Both appeals of the assessee were allowed based on the Tribunal's observations and findings.

In conclusion, the Tribunal's decision favored the assessee, allowing the appeal against the intimation under section 143(1) and rendering the appeal against the order under section 154 infructuous.

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