2026 (5) TMI 48

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....ngs. 3. We have heard the rival submissions and perused the materials available on record. The Assessee is a charitable trust duly registered under section 12AA of the Act. The return of income for the assessment year 2018-19 was filed by the Assessee Trust on 31-10-2018 declaring total income of Rs 3,00,000. The case of the Assessee was selected for complete scrutiny in order to examine the issue of accumulation of income by the trust and belated filing of Form No. 10 for accumulation of surplus. The Assessee in the return of income claimed accumulation of income under section 11(2) of the Act amounting to Rs 1,37,00,000. However, the prescribed Form No. 10 seeking accumulation was filed by the Assessee Trust only on 07-8-2020 which was beyond the prescribed time limit, but before the completion of assessment proceedings. The evidence in this regard is enclosed in page 47 and 48 of the paper book. The provisions of section 11(2) of the Act has been amended with effect from 01-04 -2016 wherein it mandated that filing of Form No. 10 is to be made within the due date of filing the return of income under section 139(1) of the Act. Now the short question that arises for our consider....

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....t came to exist on the statute book pursuant to the Income-tax (1st Amendment) Rules, 20169 and which came into effect from 01 April 2016. Rule 17(3) as introduced then has remained unchanged thereafter. .......... 28. In our considered opinion, an action for reassessment would have to be based on the formation of an opinion that income chargeable to tax has escaped assessment. That primordial condition would clearly not be satisfied on the mere allegation of a delayed digital filing of Form 10. 29. Quite apart from the above, we also bear in mind the underlying intent of Section 11(2) and the submission of Form 10 in connection therewith which were aspects succinctly explained by the Supreme Court in Commissioner of Income-tax v. Nagpur Hotel Owners' Assn. (2001) 2 SCC 128/[2001] 114 Taxman 255/247 ITR 201 (SC). The Bench of three learned judges in Nagpur Hotel Owners' Assn. (supra) rendered the following pertinent observations:- "6. It is abundantly clear from the wordings of sub-section (2) of Section 11 that it is mandatory for the person claiming the benefit of Section 11 to intimate to the assessing authority the particulars require....

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....ed will not arise for consideration. Accordingly these appeals are allowed." 30. Of equal significance is the judgment rendered by a Division Bench of our Court in Commissioner of Income-tax v. Contimeters Electricals (P.) Ltd. 2008 SCC Online Delhi 1458/[2009] 178 Taxman 422/317 ITR 249 (Delhi) and where the Court had observed:- "8. In view of this long line of decisions of various High Courts in considering the provisions of section 80J(6A) which are similar to the provisions of section 80-IA(7), we feel that the Tribunal has arrived at the correct conclusion that the requirement of filing the audit report along with the return is not mandatory but directory and that if the audit report is filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met." 31. While we are conscious that the judgments in Nagpur Hotel Owners' Assn. as well as Contimeters Electricals P. Ltd. were rendered prior to the promulgation of the 2015 Act and the 2016 Amendment Rules, the said decisions clearly underline the importance of due disclosure as opposed to adherence to the mere procedural requirements of the digital filing of a....

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.... only change is with regard to compulsory filing of audit report in Form 10B in electronically form which is made mandatory under Rule 12 (2) of the Income Tax Rules, 1962 but there is no change with regard to the substantive law about filing of audit report as stated above. 6. The moot aspect thus centres around to the requirement of the availability of the audit report when the assessment was undertaken by the Assessing Officer even though the same may not have been filed along with the return of income. Filing of audit report is held to be substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 12B is filed to be available with the Assessing Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income Tax Tribunal was not justified in dismissing the appeal of the assessee. 6.1 The appellant assessee has to be held to be eligible and entitled to exemptions under Section 11(1) and 11(2) of the Act and the alleged ground of non-filing of audit report alongwith return of income which was at the best procedural omission, could never to an impediment in law in....