TaxTMI 
TaxTMI 
2026 (1) TMI 1598
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....Return of the assessee was processed u/s. 143(1) of the Act vide intimation order dated 23/08/2022. While processing ITR of the assessee-trust, the Central Processing Center, Bangaluru/Assessing Officer ("AO/CPC") denied the exemption u/s. 11 of the Act on the ground that audit report in Form 10B was filed belatedly. 3. Aggrieved, the assessee filed an appeal before the Ld. CIT(A) challenging the intimation order passed u/s. 143(1) of the Act dated 23/08/2022. The appeal was filed with a delay of 449 days, however, Ld. CIT(A) condoned the same and decided the assessee's appeal on the impugned issue holding that assessee is entitled for exemption u/s. 11 of the Act and directed the Ld.AO/CPC to delete the addition of Rs. 6,37,30,847/-. The relevant findings and observations of the Ld. CIT(A) are reproduced below:- "6.2.1 Verdict: The contention of the appellant has been gone through. During the course of appellate proceedings the appellant had submitted that: With reference to the notice dated 20.02.2024 fixing the date of furnishing of written submissions in the captioned appeal on or before 27.02.2024. In response to the same, we hereby submit as under in this....
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....s. An affidavit to this effect was also submitted along with the appeal memo, that is also attached herewith Annexure-1 for your ready reference. Considering the facts as well as the law, we earnestly request that the appeal may kindly be accepted and the delay may please be condoned. Ground No.1 & 2: Brief facts of the case are as under, For the year under consideration ie. AY 2021-22, it filed its Income Tax return on 30.12.2021, vide Ack No. 653076820301221 declaring total income of Rs. 36,460. The due date for filing of the Income, Tax return was 15.02.2022. In the ITR filed, the assessee trust has stated that it is a Trust/Institution Registered u/s 12A and claiming exemption u/s 11 of the Act. The extended due date for filing of the Income Tax return was 15.02.2022 and the extended due date for filing of Form 10B was 15.01.2022. The assessee trust filed the audit report in Form 10B along with its return of income on 23.09.2022 i.e. with a delay of 251 days from the due date for filing of the same. But the audit u/s 12A of the Act for the year under consideration was already completed on 30.06.2021, The assessee trust has a....
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....f the revenue by delaying the filing of Form 10B. Also, this is merely a procedural default that does not invalidate the eligibility of the exemption u/s 11 of the Act to the assessee trust. Subsequently, the assessee trust was given to understand that all the compliances were made and nothing further is required to be done and thus under the bonafide belief that the subject filing of Form 10B will be sufficient to resolve the issues as well as the demand from the subject intimation u/s 143(1) of the Act to get the eligible claim u/s 11 of the Act vis-à-vis nullify the demand raised therein. However, while processing the ITR of the assessee trust at CPC, Bengaluru, the return was processed without providing with the eligible claim of exemption u/s 11 of the Act, on the basis that the Audit Report in form 10B was filed after the due date of filing of the same. The assessee was not provided with the opportunity of being heard before making such a disallowance which is not in line with the provisions of section 143(1) of the Act. The moot question now is whether furnishing of audit report u/s 12A(1)(b) of the Income Tax Act 1961 beyond the specified date but before the....
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.... laws are devised and enacted for the purpose of advancing justice. It does not mean that the procedural laws should be brushed aside by the Court. It depends on the facts and circumstances of a particular case as to whether a breach in the observance of any procedural law, would cause real and substantial injustice to the parties. Having regard to the object of section 12A, it cannot be said that the legislature intended that, even where the trust has got its accounts audited and the certificate obtained in Form No. 10B before the assessment is completed, merely because such report could not be filed in the course of filing of ITR, it would deprive a trust of getting the exemption if it is otherwise entitled to it in law. It must also be appreciated that, the word "shall" occurring in section 12A cannot, under the circumstances, be read as a "must" making it mandatory for the trust to furnish the auditor's report along with the filing of the return. If for certain unavoidable circumstances, the assessee is unable to furnish the auditor's report along with the return then the same can be furnished at a later date. We would like to bring Your Honor's kind attent....
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....the same before the completion of the assessment, CIT(Appeals) is not justified in denying the claim of exemption u/s 11 on the allegation that form No. 10B has not been filed in time." We also rely upon the decision of Hon'ble MP High court in case of CIT v. Devradhan Madhavlal Genda Trust [(1998) 230 ITR 714, 717 (MP HC)] it has been held that if the audit report is not at all filed, there would be justification to reject the claim for exemption under s. 11 but if the same has been filed, even after the return has been filed but within the period permitted by law, it would be against the spirit of the Act to deny exemption. The requirement is, thus, directory and we find that the Tribunal was justified in holding that filing of the audit report in Form No. 10B with the return of income was not mandatory and it was sufficient compliance with section 124(b), if the same was filed during the course of the assessment proceedings. The aforesaid principal is also upheld by courts in the following cases - CIT vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal HC) CIT v. Shahzedanand Charity Trust, (1997) 228 ITR 292, 299 (Pun HC) ....
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.... dated 03.01.2020, since the assessee had not uploaded its Form No. 10B for A.Y. 2021-22 within the prescribed time allowed u/s. 139 of the Act. 2. On facts and circumstance of the case, the Ld. Addl./Jt. CIT(A) erred in allowing the benefit of exemption u/s. 11 of the I.T. Act to the assessee by holding that filing of Audit Report is merely a procedural formality, without appreciating the fact that as per the specific provisions of clause (b) of Sub-Section (1) of Section 12A of the Act, the failure to furnish such report in the prescribed form within the prescribed due date would result in disentitlement of the trust from claiming exemption u/s. 11 & 12 of the Act. 3. On facts and circumstance of the case, the Ld. AddI./Jt. CIT(A) erred in allowing the benefit of exemption u/s. 11 of the I.T. Act to the assessee by holding that filing of Audit Report is merely a procedural formality, without appreciating the ratio laid down by the Hon'ble Supreme Court vide its decision in the case of Principal Commissioner of Income Tax vs. Wipro Limited, Civil Appeal No. 1449 of 2022 dated 11.07.2022 [140 Taxmann.com 223 (SC)] that the exemption provisions should be constr....
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....he case of ACIT (Exemptions) vs. The Nanded Sikhgurudwara Sachkhand Hazur Sahib in ITA Nos. 808 & 809/PUN/2024, order dated 26/05/2025. 7. We have heard Ld. Representatives of both the parties and perused the material available on record. We have also perused the judicial precedents cited before us. We find that Ld.AO/CPC while processing the intimation order u/s. 143(1) of the Act, has denied the assessee's claim of exemption u/s. 11 of the Act on account of late filing of Form 10B, which was filed on 23/09/2022, but due date was 15/02/2022 for A.Y. 2021-22. The Ld. CIT(A) allowed the assessee's claim of exemption u/s.11 for the reasons already reproduced in the preceding paragraphs. Undisputedly, the audit report in Form 10B was filed on 23/09/2022 and the intimation order u/s. 143(1) of the Act was passed on 23/08/2022. Thus, in the instant case, the audit report in Form 10B has been filed after the return of income has been processed u/s. 143(1) of the Act. It is, however, the contention of the assessee that Form 10B was duly available before the Ld. CIT(A) at the time of appellate proceedings before him and, therefore, the assessee is entitled to claim exemption u/s. 11 of ....
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....as held that requirement of Section 10B(8) of the Act which provides for requirement of furnishing declaration for claiming exemption under Section 10B of the Act is mandatory but the time limit within which such declaration is to be filed is also held to be mandatory. Relying upon the aforesaid decision, it was submitted that the assessee ought to have filed the audit report in Form 10B of the Act before the due date of filing of the return to claim the exemption under Section 12A of the Act. 5. Reliance placed by the learned Senior Standing Counsel Ms.Maithili Mehta for the appellant on the decision of the Hon'ble Supreme Court in case of The Principal Commissioner of Income Tax-III and Others versus M/s. Wipro Limited in Civil Appeal No.1499 of 2022 would not be applicable in the facts of the case, as in the facts of the present case, the assessee has claimed the exemption under Section 11 read with Section 12A(1)(b) of the Act which required the assessee to file Audit Report in Form of 10B of the Act which has nothing to do with claiming 100% exemption of total income in respect of newly established 100% Export Oriented Undertakings under Section 10B of the Act. Se....