TaxTMI 
TaxTMI 
2026 (6) TMI 128
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.... been passed by Ld. CIT(A) in both matters]: "4.3 The appellant's submission has been carefully perused. The appellant had stated that it was registered u/s 12AA of the Act and it did not file Form 10B while filing the return of income. The core issue in the instant appeal is delay in filing Form 10B and the appellant had pleaded before the undersigned to give relief and argued that mere delay in submission of Form 10B cannot result in denial of exemptions claimed u/s 11 of the Act. The Hon'ble ITAT Ahmedabad Bench 'SMC' in the case of Association of Indian Panel board Manufacturer vs. Deputy Commissioner of Income-tax [2022] 143 taxmann.com 418 (Ahmedabad - ITAT)[22-07-2022) had delivered its observation that here there was delay in filing Form No.10B, assessee was required to approach jurisdictional Commissioner/Director of Income-tax to condone delay in filing Form 10B; Commissioner (Appeals) had no power to condone such delay as per section 119(2)(b). The excerpts of the decision is reproduced hereunder: - "Section 119 of the Income-tax Act, 1961 Central Board of Direct Taxes - Instructions to subordinate authorities (Condonation of delay in fi....
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....see filed Audit Report [Form No. 10B] on 29.09.2015 whereas the specified date for filing the same was 31.08.2015 and the AO passed intimation u/s 143(1) on 25.03.2017. The Ld. CIT(A) has thereafter quoted an excerpt from the decision of ITAT, Ahmedabad in case of Association of Indian Panel board Manufacturer Vs. Deputy Commissioner of Income-tax (2022) 143 taxmann.com 418 (Ahmedabad - ITAT), order dated 22.07.2022 and relying upon same, given his conclusion, against assessee, in Para 5 of above order. 5. We, however, find that against the above decision of ITAT, Ahmedabad relied by Ld. CIT(A), the assessee went in Tax Appeal No. 655 of 2022 before Hon'ble Gujrat High Court whereupon the Hon'ble Gujrat High Court, vide their Judgement & Order dated 21.03.2023, reversed ITAT's order. We re-produce below the order of Hon'ble High Court: "2. The present Tax Appeal under Section 260A of the Income Tax Act, 1961 is directed against judgment and order dated 22.7.2022 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench in Income Tax Appeal No.24 of 2022 for the assessment year 2018-19. The appeal filed by the assessee came to be dismissed. 3. The facts are t....
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....as admittedly filed electronically well before the order denying such exemptions came to be passed ? (ii) Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in not following the binding judgements of Hon'ble the jurisdictional High Court? (iii) Whether the order passed by the Income Tax Appellate Tribunal is perverse inasmuch as the same is contrary to law laid down by the Hon'ble the jurisdictional High Court?" Notice for final disposal, returnable on 13/12/2022." 4. Assailing the impugned judgment and order of Tribunal, following submissions were made on behalf of the appellant. (i) Though Form 10B has been filed belatedly, the same was very much available on record when return on income was being processed under Section 143(1); hence, exemptions under Section 11(1) and 11(2) could not have been denied by the authorities. (ii) Though the requirement of furnishing of audit report may be a mandatory requirement, the same to be filed along with return of income is held to be a procedural and therefore directory in nature. (iii) Under the circumstances, even if ....
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....s substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income, but produced before completion of the assessment. The Punjab and Haryana High Court in CIT Vs. Shahzadanand Charity Trust [(1997) 228 ITR 292] has reiterated the same principle holding that the benefit of exemption should not be denied merely in account of delay in furnishing the same, and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by showing a sufficient cause. This decision of Punjab & Haryana High Court has been relied on by the Tribunal." 5.2 The decision of this court in Mayur Foundation (supra) stands to support the submission of the appellant. The decision in Rai Bahadur Trust (supra) of Culcutta High Court takes a same view as was taken as by this court in Xaviers Kelavni Mandal (supra). It that case the assessee- charitable trust filed the return of income but was not accompanied by audit report in Form 10B as required under Section 12A. The Culcutta High Court held that the provisions of Section 12A are directory in the sense....
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....bout 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 claiming the exemption. 6.2 Accordingly the substantial questions of law have to be decided in favor of the appellant. 7. They are accordingly decided. The appeal is allowed." [emphasis supplied] 6. Thus, i....
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.... is a charitable society registered u/s 12A of the Income-tax Act, 1961 and entitled for exemption u/s 11/12; accordingly it claimed exemption u/s 11/12 in the return of income. But when the AO processed return u/s 143(1) vide intimation dated 09.03.2019, he did not allow exemption u/s 11/12 for the reason that the audit report (Form No. 10B) was not filed by assessee with return of income. Subsequently after processing of return, the Form No. 10B was e-filed/uploaded on 03.04.2019 / 04.05.2019 before filing of first-appeal. 10. Ld. AR submitted that the assessee was engaged in charitable activities; that the registration granted to it by tax authorities u/s 12A was in force; that the assessee had been granted benefit of section 11/12 in preceding assessment-years as well as subsequent assessment-years. He further submitted that the assessee filed return of income on 03.08.2017 and prior to such filing, the accounts of assessee were duly audited on 08.06.2017, a copy of the audited-accounts is placed in the Paper-Book. However, the auditors of assessee failed to upload the audit-report alongwith the return of income. But, post-processing of return u/s 143(1) and before fil....
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....come is a pre-condition for allowability of exemption u/s 11. Since the assessee has not fulfilled such condition, the lower-authorities have rightly denied the assessee's claim of exemption u/s 11 and there is no infirmity in the action of lower-authorities. 12. We have heard rival contentions of both sides and examined the present controversy in the light of judicial decisions. At first, we are convinced that the controversy is directly settled in favour of assessee by decision in Savitri Foundation (supra) where the Hon'ble Mumbai ITAT, following the decision of Hon'ble Mumbai High Court in CIT vs. Mumbai Metropolitan Regional Iron & Steel Market Committee 378 ITR 103 has observed and held thus: "4. Submissions made by rival sides heard, orders of authorities below examined and the case law on which the ld. Authorized Representative of the assessee placed reliance considered. The assessee is a charitable trust registered under section 12AA of the Act and has been purportedly enjoying the benefits of section 11 since 2011. In the impugned assessment year, the benefit of exemption under section 11 of the Act has been denied to the assessee for the reason that ass....
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....12A(1)(b) of the Act, it is necessary for the assessee in order to claim exemption under section 11 of the Act to get the accounts audited as well as obtain the audit report in the prescribed form from the qualified chartered accountant which is to be filed along with the return of income. Admittedly, in the case on hand the assessee has not filed form 10B being the audit report along with the return of income and the same was also not filed till the completion of the assessment order as well as appellate order by the learned CIT(A). As such the order of the learned CIT(A) was passed dated 30th November 2017 whereas the Form 10B of the audit report was filed/uploaded dated 25th December 2017 which evidences that the audit report in Form 10B was filed subsequent to the appellate order by the learned CIT(A). At this juncture it is also pertinent to note that the audit report in the prescribed form was prepared and signed by the qualified chartered accountant dated 5th September 2014 much before the date of filing the return of income by the assessee. Thus, it appears that report for the audit in the prescribed form was prepared well in time but it was filed belatedly. 12.1 N....
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.... above it was observed that procedural requirement for filing the audit report was fulfilled by the assessee before the completion of the assessment. But the facts of the case on hand are different in so far the audit report was filed by the assessee after the completion of the assessment framed under section 143(3) of the Act. In this regard we note that the assessment remains pending if any appeal is pending before the higher forum. In other words, if any appeal is pending either before the ld. CIT(A) or before the ITAT which transpires the fact that the assessment is pending. In holding so we draw support and guidance from the judgment of Hon'ble Gujarat High Court in case of CIT vs. Mayur Foundation reported in 274 ITR 562, wherein it was held as under: "Thus, the proceedings before the Tribunal are meant to correctly assess the tax liability of an assessee: If this be so, it follows that the assessment proceeding cannot be said to be complete and is pending till the appeal is heard and disposed of by the Tribunal and the order of the Tribunal is given effect to by the assessing authority by computing the correct tax liability of an assessee. In other words, whether an....