TaxTMI 
TaxTMI 
2023 (3) TMI 148
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....case, wherein, the assessee has raised following grounds of appeal: "1. The order passed by the learned Commissioner of Income-Tax (Appeals) (NFAC) (hereinafter referred to as NFAC) is against law and facts of the case. 2. The learned NFAC erred in holding that the appellant has not filed application for condonation of delay for filing form 10B whereby it has been held by various judicial pronouncements that audit report can be filed at even appellate stage more particularly as held by the jurisdictional High Court in case of Trust for Reaching The Unreached Through Trustee v. CIT(Exemption) (2021) 279 Taxman 229 (Guj) that a trust cannot be denied exemption merely on bar of limitation in furnishing audit report in Form 10/10B. 3. The learned NFAC erred in ignoring the audit report filed by the appellant dated 28.05.2021 which is admissible being submitted during appellate stage. 4. The learned NFAC erred in disallowing expenditure incurred for attaining objects of the trust without examining the fact that the accounts of the trust are duly audited and the appellant trust has incurred the expenses towards attainment of objects of the trust. ....
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.... before filing of return of income. 3. Aggrieved by the disallowances, the assessee filed appeal before the ld. CIT(A)-3, Vadodara. The appeal of the assessee was migrated to National Faceless Appeal Centre (NFAC) in term of notification No. 76/2020 dated 25/09/2020 issued by Central Board of Direct Taxes (CBDT), New Delhi. The ld. CIT(A) while deciding the appeal of assessee noted that the return of income was filed by assessee on 17/10/2017 and Form 10B has been filed on 28/05/2021. The reason of disallowance was clearly mentioned in the communication of proposed adjustment under Section 143(1)(a) of the Act, wherein the assessee has neither mentioned about filing application for condonation nor about condonation of delay obtained from jurisdictional Commissioner of Income Tax (Exemption), the disallowances were made due to belated filing of audit report. The ld. CIT(A) further noted that as per Rule 17B of Income Tax Rules, 1962 (in short, the Rules), the audit report of the accounts of trust or institution is to be furnished in Form 10B. As per Rule 12(2) of the Rules, such report is to be furnished electronically. Failure of furnishing of such report in the prescribed forma....
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....10B either before filing of return of income or before due date for filing of return under Section 139(1) of the Act. Thus, the assessee was not eligible for exemption under Section 11 and 12 of the Act. The ld. CIT(A) has passed a very reasoned order, which may be affirmed. 6. I have considered the submissions of ld. CIT-DR for the revenue and have gone through the orders of lower authorities carefully. I have carefully perused the grounds of appeal and the statements of fact filed alongwith Form- 35 [Appeal form before the CIT(A)]. There is no dispute that the assessee is a public charitable trust engaged in imparting education. Admittedly, the assessee was granted exemption certificate under Section 12A as well as recognition under Section 80G(5) of the Act. Further, such exemption certificate are existing. The only reason for disallowance of claim of exemption under Section 11 and 12 of the Act of Rs. 24,69,286/- was for want of Form 10B which was not filed alongwith return of income. The CPC disallowed such claim for want of Form 10B, which was not furnished alongwith return of income or before filing return of income. The ld. CIT(A) confirmed the action of CPC/Assessing of....
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....Where 85% of the income of charitable trust as referred above is not applied to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to charitable or religious purposes in India, such income so accumulated or set apart will not attract tax liability. We would like to state that the assessee has set apart Rs. 17,50,000/- for the relevant assessment year and has also utilized it in the subsequent years itself. However the assessee has genuinely skipped to file Form 10 as per the provisions of the I.T. Act 1961 as the assessee during the period was massively involved in the activities of charitable, religious and educational purpose within the city as well as in the outskirts of the city. We would also like to state that in order to improve the conditions of the poor and the uneducated sector of the society, the Trust along with the Trustees themselves and the entire staff of the trust including the accounts and administration team were involved in such activities. We would like to state that the assessee had genuinely faced hardships and the intention of the assessee was not deliberate and mala....
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.... massively involved in the activities of charitable, religious and educational purpose within the city as well as in the outskirts of the city, it genuinely skipped to file Form 10 as per the provisions of the Act. After coming to know the facts the assessee filed Form 10 on 11-2-2019. It has further submitted that there was neither malafide intention nor any deliberate act in the lapse. In view of the said reasons it has requested to condone the delay vide its application under consideration. 2. The assessee trust was issued letter dated 2-4-2019 to show cause as to why the application for condonation should not be rejected as no genuine hardships is shown which prevented it from filing Form 10 on time. It was requested to file the reply on 15-4-2019. The AR of the assessee on 15-4-2019 filed written submission to the show-cause letter in Dak. In its reply it has reiterated the facts mentioned in the original application. Additionally it stated that the work of filing of Income-tax Return and other related forms were entrusted to a Tax consultant who did not file Form 10 due to ignorance. If condonation is not granted then it will lead to high demand resulting into shortf....
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....ulated funds was in specified modes only. Thus compliance of the provisions of section 11(5) are not proved by the assessee. Even no details of the utilization of accumulated funds for the specified objects have been placed on record by the assessee. In this regard CBDT has issued a circular no. 273 dated 3-6-1980 whereby some of the following conditions are to be fulfilled by the assessee for condonation of delay. That the failure to give notice to the Income-Tax Officer under section 11(2) of the Act and investment of the money in the prescribed securities was due only to oversight. That the trustees or the settler have not been benefited by such failure directly or indirectly. That the trust agrees to deposit its funds in the prescribed securities prior to the issue of the Government sanction extending the time under section 11(2); and The assessee has not given such particulars and evidences to show that above conditions are duly fulfilled. Thus the pre-conditions of said circular does not get fulfilled. 6. In view of the above and after having considered the facts and in exercise of the powers conferred on me u/s 119(2)(b) of the Ac....
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....19 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund." 13. In the case of Sitaldas Motwani (supra), this court has held that the expression "genuine hardship" used in section 119(2)(b) of the said Act should be construed liberally, particularly in matters of entertaining of applications seeking condonation of delay. This court was pleased to observe as under (page 228 of 323 ITR): "The phrase 'genuine hardship' used in section 119(2) (b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated October 12, 1993. The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on the merits. The expression 'genuine' has received a liberal meaning in view of the law laid down by the apex court referred to hereinabove and while considering this aspect, the authorities are expected to bear in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefi....
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....tended as otherwise, the entire claim of Rs. 17,84,323/- would be destroyed. The petitioner would neither get deduction in the assessment year 2005-06 nor in the year 2008- 09 as per then prevailing Section 40(a)(ia) of the Act. In our opinion, the petitioner was neither lethargic nor lacking in bona fides in making the claim beyond the period of limitation, which should have a relevance to the desirability and expedience for exercising such power. Before proceeding further we may caution that undoubtedly such powers are not to be exercised in routine manner to extend limitation provided by the Act for various stages. We are conscious that such routine exercise of powers would neither be expedient nor desirable, since the entire machinery of tax calculation, processing of assessment and further recoveries or refunds, would get thrown out of gear, if such powers are routinely exercised without considering its desirability and expedience to do so for avoiding genuine hardship. In the present case, however, considering special facts, we are of the opinion that the Commissioner ought to have exercised such powers. It is true that the Appellate Commissioner recorded that the petitioner ....
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....wn wrong, may also have to be borne in mind. The said principle, it is conceded, has not been applied by the Courts below in this case, but we may take note of a few precedents operating in the field to highlight the aforementioned proposition of law. (See Priyanka Overseas (P.) Ltd.& Anr. v. Union of India & Ors. 1991 Suppl. (1) SCC 102, para 39, Union of India & Ors. v. Maj. Gen. (Retd.) Madan Lal Yadav (1996) 4 SCC 127 at 142, paras 28 and 29, Ashok Kapil v. Sana Ullah (dead) & Ors. (1996) 6 SCC 342 at 345, para 7, Sushil Kumar v. Rakesh Kumar (2003) 8 SCC 673 at 692, para 65, first sentence, Kusheshwar Prasad Singh v. State of Bihar & Ors. (2007) 11 SCC 447, paras 13, 14 and 16).' 30. Section 119 of the Act is couched in very wide terms. The same is quoted below for ready reference : Instructions to subordinate authorities: "119. (1) the Board may, from time to time, issue such orders, instructions and directions to other income- tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directi....
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...., merely on the bar of limitation, especially, when the legislature has conferred wide discretionary powers to condone such delay on the highest executive authority of the Central Board of Direct Taxes under the Act. 13. The general and wide powers given to the Board in this regard, "if it considers it desirable or expedient so to do for avoiding genuine hardship in any case.....", not only gives wide powers to the Board, but confers upon it a obligation to consider facts relevant for condonation of delay as well as the merit of the claim simultaneously. If the claim of exemption or other claim on merits is eminently a fit case for making such claim, it should not normally be defeated on the bar of limitation, particularly, when the delay or the time period for which condonation is sought is not abnormally large. It will of course depend upon the facts of the each case, where such a time period or the merit of the claim deserves such exercise of discretion in favour of the assessee under section 119(2)(b) of the Act or not and therefore, no straight jacket formula or guidelines can be laid down in this regard. However, such orders passed by the Central Board of Direct Taxe....
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....ecessarily be independent proof or material to establish that the auditor in fact acted without diligence. The petitioner did not urge any other grounds such as illness of someone etc., which could reasonably have been substantiated by independent material. In the circumstances of the case, the petitioner, in our opinion, was able to show bonafide reasons why the refund claim could not be made in time. 9. The statute or period of limitation prescribed in provisions of law meant to attach finality, and in that sense are statutes of repose; however, wherever the legislature intends relief against hardship in cases where such statutes lead to hardships, the concerned authorities - including Revenue Authorities have to construe them in a reasonable manner. That was the effect and purport of this court's decision in Indglonal Investment & Finance Ltd. (supra). This court is of the opinion that a similar approach is to be adopted in the circumstances of the case." 33. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technic....