TaxTMI 
TaxTMI 
2025 (8) TMI 831
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.... Appeal Centre (NFAC) is correct in directing the Assessing Officer to allow exemption u/s 11 to the assessee, given the fact that the assessee has failed to file its Audit Report within the due date prescribed u/s 139(1) of the Income Tax Act, 1961? 2. Whether in the facts and circumstances of the case, the National Faceless Appeal Centre (NFAC) is correct in directing the Assessing Officer to allow exemption u/s 11 to the assessee, given the fact that the assessee has failed to file its Return of Income within the due date prescribed u/s 139 of the Income Tax Act, 1961? 3. The assessee has raised the following common grounds of cross objection in CO Nos.32 & 33/Chny/2025: 1. The order of the National Faceless Appeal Centre, Delhi dated 20.12.2024 vide DIN & Order No.ITBA/NFAC/S/250/2024-25/1071403529(1) in so far as the issues raised in the present Cross Objection for the above mentioned assessment year is contrary to law, facts, and in the circumstances of the case. 2. The NFAC, Delhi erred in directing the verification of the audit report in Form No. 10B/10BB dated 16.02.2022 (which was not filed factually) and hence ought to have appreciated that ....
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....essment in its entirety. 7. The NFAC, Delhi failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law and further ought to have appreciated that having not adhered to the prescription of faceless regime, the consequential re-assessment order and appellate order passed should be reckoned as bad in law. 8. The Respondent craves leave to file additional grounds/arguments at the time of hearing. 4. The brief facts of the case are that the assessee trust is a temple functioning and monitored by the Hindu Religious and Charitable Endowments Department. The Ministry of Finance had notified the assessee temple in terms of Section 10(23C)(v) of the Act from assessment year 1977-78 vide Notification No.2625 (F.No.197/187/78-IT(AI) dated 30.12.1978. The assessee temple did not file the return of income in terms of Section 139(4A) of the Income Tax Act, 1961 (in short 'the Act') for Assessment years under consideration, i.e. 2013-14 & 2014-15. 5. The Assessing Officer (AO) upon receipt of information available under Annual Information Re....
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....of the Act and such exemption could not have been denied by the AO for mere want of filing of audit report within the due dates prescribed u/s. 10(23C)(v) of the Act. 11. The Ld.CIT(A) had further concluded in his order that non-filing of audit report should be reckoned as procedural lapse and in fact dispensed such statutory requirement by relying on the law declared by the Hon'ble Gujarat High Court in the case of Sarvodaya charitable Trust vs. ITO (Exemption), reported in (2021) 125 Taxmann.com 75 (Gujarat) & in the case of Association of Indian Panelboard Manufacturer v Deputy Commissioner of Income Tax, reported in [2023] 157 taxmann.com 550 (Gujarat). While doing so, the Ld.CIT(Appeals) had directed the AO to consider the assessee's claim of tax exemption computation on merits by accepting the ITR and audit report filed. 12. Aggrieved by the decision of the Ld.CIT(A) that the non-filing of audit report within the stipulated time as procedural lapse, the revenue preferred an appeal before us. Similarly, the assessee had filed cross objections against the impugned order passed by the Ld.CIT(A) both by raising legal grounds and by challenging the directions given by th....
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....ictional High Court in the case of Sree Venkateswara Educational Trust v. The Income Tax Officer, Exemptions Ward, Salem, in TCA Nos.168 and 169 of 2020 dated 02.09.2004. 17. The Ld.AR also brought to our notice the effect giving order passed on 06.03.2025 by the AO had denied the claim of tax exemption u/s. 10(23C)(v) of the Act on the ground that the audit reports stated in the income tax return were not electronically filed in the income tax web portal. The Ld.AR fairly submitted that the audit report was not electronically uploaded in the income tax web portal and pleaded for alternatively giving an opportunity before the AO to file a fresh audit report in the income tax web portal which may be considered on its merits. 18. We have heard the rival contentions perused the material available on record and gone through the orders of the authorities below along with case laws relied on. The core issue in the present appeals revolves around the technical breach of not electronically uploading the Audit Report in support of the tax exemption claimed u/s. 10(23C)(v) of the Act. It is an admitted fact that the assessee had not filed its return of income and audit report within th....
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....ption by insertion of sub-section (9) to Section 13 with effect from 01.04.2016 and the said sub-section reads as under: "Nothing contained in sub-section (2) of section 11 shall operate so as to exclude any income from the total income of the previous year of a person in receipt thereof, if- (i) the statement referred to in clause (a) of the said sub-section in respect of such income is not furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year, or (ii) the return of income for the previous year is not furnished by such person on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the said previous year." 24. Whereas, in the present case, the tax exemption u/s. 10(23C)(v) of the Act is claimed and it was argued that there was no such specific prohibition for denying the exemption in the context of non-filing of return of income within the time stipulated u/s. 139(1)/139(4A) of the Act. Moreover, it was also rightly pointed out by the ld.AR that even in the context of Section 11, the computation benefit for the....
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....xpayer and considering the facts of the present case the computation benefit u/s. 10(23C)(v) of the Act needs to be granted to the assessee especially in view of the nature of receipts under consideration inasmuch as the receipts in the form of offering/Hundial collections predominantly to an institution wholly for religious purpose cannot partake the character of taxable receipts thereby, justifying our decision for dispensing such technical breach. The ground of the Revenue on the second facet of electronic filing of audit report is rejected. Accordingly, we order so. 29. We further find that the Assessee has been notified as an exempted entity in terms of Section 10(23C)(v) of the Act by virtue of a notification dated 30.12.1978 issued by the Union Secretary to the Government of India and the copy of the same is extracted below: 30. In view of the above peculiar facts and having held that the nature of receipts cannot be brought within the ambit of taxation, namely the offerings from the general public to an institution recognised and notified as wholly existing for religious purposes, the denial of exemption on technical breach would defy the principles of fairness in tax....