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2022 (12) TMI 1483 - AT - Income TaxDenial of exemption u/s 11 - non-submission of audit report in Form 10B alongwith or before filing the ITR - non-compliance with communication u/s 143(1)(a) of the Act due to IT Website technical glitches - HELD THAT - We note that the ITR for the impugned AY was filed on 13/07/2018 and notice calling the audit report u/s 143(1)(a) was served on 28/02/2019 according thereby 30 days to remove deficiency by filing audit report in Form No 10B however in the absence of any such compliance from the appellant ITR was finally processed on 26/06/2019 denying the exemption which the Ld. FAA upheld quoting equi-reasons. We also note that the assessee could not attend the communication due to IT-Website technical glitches however has eventually filed the audit report in Form No 10B on 29/02/2020 and complied with the condition laid in section 12A(1)(b) so as to entitle for a claim of exemption envisaged u/s 11 12 of the Act. In the evince of details filed at clause M2 of ITR filed on 13/07/2018 it undisputedly establishes that the appellant got its books audited u/s 12A(1)(b) of the Act from M/s S. D. Pednekar Co which issued furnished the said audit report on 05/07/2017 i.e. prior to filing of ITR for the impugned AY however the copy thereof remained to be filed alongwith ITR as well in response to communication u/s 143(1)(a) of the Act on account of technical glitches beyond the control of the assessee and the deficiency came to light only upon service of demand u/s 156 of the Act. Thus the non-compliance with communication u/s 143(1)(a) of the Act due to IT Website technical glitches was unintentional and beyond the control of the appellant is sufficient to form a reasonable cause for non-compliance a nd since the procedural compliance has been duly made good by fling the audit report on record we see no reason to deny the exemption in the present facts and circumstance ergo we set-aside the order of both the tax authorities below and direct the Ld. AO to grant the claim of exemption in the evince of Form No 10B. Decided in favour of assessee.
Issues Involved:
1. Denial of exemption under Section 11 of the Income Tax Act due to delay in furnishing the audit report electronically. 2. Disallowance of exemption under Section 143(1) of the Act on account of delay in submitting the audit report. 3. Residuary Ground - Request for adding, amending, modifying, or raising any ground of appeal at the time of hearing. Issue 1: Denial of Exemption under Section 11: The Appellate Tribunal ITAT Pune addressed the challenge to the denial of exemption claimed under Section 11 of the Income Tax Act. The appellant, a Trust engaged in charitable activities, filed its return of income but faced denial of exemption by the Deputy Commissioner of Income Tax due to delay in submitting the audit report electronically. The Tribunal noted that the appellant, despite technical glitches preventing timely compliance, eventually submitted the audit report in Form No. 10B. The Tribunal found that the non-compliance with the communication due to technical glitches was unintentional and beyond the appellant's control. As the procedural compliance was rectified by filing the audit report, the Tribunal set aside the orders of the lower authorities and directed the Income Tax Officer to grant the exemption based on the submitted Form No. 10B. Issue 2: Disallowance of Exemption under Section 143(1): The Tribunal also considered the disallowance of exemption under Section 143(1) of the Act. The appellant's return of income was processed, denying the exemption due to non-submission of the audit report in Form 10B. The Tribunal observed that the appellant, facing technical glitches, could not attend the communication regarding the audit report. Despite this, the appellant later submitted the audit report, fulfilling the conditions for claiming exemption under Sections 11 and 12 of the Act. The Tribunal found that the denial of exemption was unjust in the circumstances presented, and therefore, ruled in favor of the appellant by allowing the appeal and directing the Income Tax Officer to grant the exemption based on the submitted audit report. Issue 3: Residuary Ground - Amendment of Appeal: The appellant also sought to add, amend, modify, rectify, delete, or raise any ground of appeal at the time of hearing. The Tribunal, after considering the arguments and evidence presented by both parties, found in favor of the appellant on the primary issue of denial of exemption under Sections 11 and 12. Consequently, the Tribunal deemed the remaining grounds as academic, as the main issue had been resolved in favor of the appellant. The appeal was allowed, and the order was pronounced in favor of the appellant. In conclusion, the Appellate Tribunal ITAT Pune overturned the denial of exemption under Sections 11 and 12 of the Income Tax Act, citing technical glitches as a valid reason for the delay in submitting the audit report. The Tribunal emphasized that the appellant's eventual compliance with the submission of the audit report warranted the grant of exemption. The appeal was allowed, and the Income Tax Officer was directed to grant the exemption based on the submitted audit report.
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