AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (3) TMI 470
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.... the case and in law, the ld. CIT (A) failed to appreciate the fact that the assessee had not filed its return of income for A.Y. 2002-03 either u/s 139(1) of the Act but in response to notice u/s 148 of the Act and that too without the Audit report in form 10B as is requisitioned as per provisions of Sec. 12A(b) for claiming of exemption u/s 11/12 of the Act. 3. On the facts and circumstances of the case and in law, the ld. CIT(A) failed to appreciate the facts findings of the AO, which were based on the observations of the ld. CIT(A)-III Pune before whom the assessee had submitted its Audit Report inform 10B and who after going through the assessee"s submissions for submitting the Audit Report during the appellate proceedings had documented his non=-satisfaction for the explanation given by the assessee for the same in the appellate order dated 31-1-2008, since the audit report in form No. 10B was not submitted before the AO during the assessment proceedings. 4. On the facts and circumstances of the case and in law, the ld. CIT(A) failed to appreciate the fact that the A.O has stated the same facts as stated by the ld. CIT(A(-III, Pune, before whom the assessee submitted the ....
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....or the year under consideration, and the said fact had came to the latter"s notice for the first time during the course of the assessment proceedings. It was stated by the assessee that as in the past there was a theft in the society in which some documents were stolen and the "audit report" in Form No. 10B in all probabilities was a part of the stolen documents, therefore, it not being in possession of a copy of the said "audit report" could not produce the same in the course of the assessment proceedings. Backed by the aforesaid state of affairs, it was submitted by the assessee that it had requested its part time accountant, viz. Shri. Sunil Acharya to trace its erstwhile chartered accountant, viz. Shri P.V. Shah (supra) and obtain a copy of the "audit report" for the year under consideration from him. However, as stated by the assessee, Shri. Sunil Acharaya (supra) had thereafter reported that Mr. P.V. Shah, i.e the erstwhile auditor of the assessee trust had left India for employment abroad and hence was not traceable. In support of his aforesaid claim the assessee had in the course of the proceedings before the CIT(A) filed a copy of the "Affidavit" of its accountant, viz. Mr....
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.... under the said statutory provision. 4. On further appeal by the assessee, the Tribunal vide its order passed in ITA No. 548/PN/2008, dated 31-05-2011, after considering the facts therein involved, observed, that the CIT(A) had erred in not entertaining the "audit report" in Form No. 10B that was filed by the assessee in the course of proceedings before him. In the backdrop of the bonafide reasons for non-filing of the "audit report" earlier, the Tribunal in all fairness restored the issue to the file of the A.O with a direction to decide the same as per the facts and law after providing adequate opportunity of being heard to the assessee. For the sake of clarity the relevant observations of the Tribunal are culled out as under: "After hearing both the parties and perusing the material on record, we find that the assessee has filed the requisite audit report at appellate stage which was not entertained by the CIT(A) inspite of the fact that the reasons for non-filing of the requisite audit report at the relevant point of time were given at appellate stage. Same should have been judiciously appreciated which has not been done. So in the interest of justice, we restore this issue ....
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....for the year under consideration i.e. A.Y. 2002-03 and a copy of the same was lost in a theft which had taken place at the assessee"s premises. It was further observed by the CIT(A) that his predecessor while rejecting the aforesaid claim of the assessee had ignored the panchnama, FIR etc. that was filed before him by the assessee to support his aforesaid claim of having lost the documents which, inter alia, included the "audit report" in Form No. 10B. It was further observed by the CIT(A) that the assessee was a Public Charitable Trust created for the objects which were charitable in nature within the provisions of Sec. 2(15) of the Act, and neither the A.O nor the CIT(A) who had dismissed the assessee"s appeal nor the Tribunal had given any observation or finding contrary to the charitable activities that were being carried out by the assessee in pursuance to its objectives enumerated in the trust deed. It was further noticed by the CIT(A) that it was not a case where the benefit of registration granted to the assessee-trust u/s 12A of the Act had been withdrawn for any non-charitable activities etc. prejudicial to the interest of the public at large. Also, it was observed by the....
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....e Act. Observing, that the assessee had failed to file the "audit report" in Form No. 10B a/w its return of income, the A.O had thereafter called upon it to explain as to why it"s claim for deduction u/ss. 11/12 may not be declined. In reply, it was submitted by the assessee, viz. (i) that the audit of the assessee-trust for the year under consideration, i.e, A.Y 2002-03 was conducted by its erstwhile Mr. P.V. Shah, Chartered Accountant; (ii) that the assessee had learnt about the non-filing of the "audit report" in Form No. 10B a/w its return of income for the year under consideration only in the course of the assessment proceedings; and (iii) that as the assessee trust was not in possession of a copy of the "audit report", and was also unable to locate Mr. P.V. Shah, Chartered Accountant who had left India a/w his family and shifted abroad, therefore, the same could not be placed on record in the course of the original assessment proceedings. However, as observed by us hereinabove, the A.O holding a conviction that the assessee having failed to comply with the statutory obligation of filing it"s "audit report" in the prescribed Form No. 10B a/w return of income, had thus, decline....
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....suance of its objectives enumerated in the trust deed, nor was it a case that there were any instances of diversion of income of the assessee for the benefit of interested persons as contemplated in Sec. 13(3) of the Act which would have attracted the provisions of sec. 13(2)(a) to 13(2)(h) r.w.s. 13(1)(c) of the Act; and last but not the least there was no violation of the provisions of Sec. 13(1)(d) r.w.s. 11(5) of the Act, the CIT(A) was of the view that there was no justification on the part of the A.O in declining the assessee"s claim for exemption u/s 11 of the Act for the reason, that it had delayed filing of the "Form No. 10B" in compliance with the provisions of Sec 12A(b) of the Act, more so, when the said Form No. 10B was available with him during the course of the set-aside proceedings u/s 143(3) r.w.s 254 of the Act, and no defect as regards the same could be detected by him. 12. Backed by the aforesaid facts, we shall now deal with the sustainability of the view taken by the CIT(A) as regards the entitlement of the assessee for exemption u/s 11 of the Act. Before adverting any further, we deem it fit to cull out the provisions Sec. 12A(b) of the Act, which reads as u....
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.... in holding that filing of the "audit report" in Form No. 10B a/w return of income was not mandatory and filing of it at any stage during the course of assessment proceedings was to be taken as a sufficient compliance of Clause (b) to Sec. 12A of the Act. Adopting a similar view, the Hon"ble High Court of Calcutta in the case of CIT Vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal), had observed, that filing of the "audit report" in Form No. 10B a/w return of income was not mandatory, and the trust can file the same before completion of the assessment. At the same time, it was observed by the High Court that as the powers of an appellate authority are co-terminus and co-extensive with that of the A.O, therefore, the appeal being in continuation of the original assessment proceedings, the appellate authority had the power to accept the "audit report" and direct the A.O to redo the assessment. Also we find that the Hon"ble High Court of Punjab and Haryana in the case of CIT Vs. Shahzedanand Charity Trust (1997) 228 ITR 292 (P&H) after drawing support from the CBDT Circular No. 267/482/77-IT, dated 9-2-1978, had observed, that normally a charitable or religious trust or instituti....