2021 (9) TMI 689 - AT - Income Tax

Exemption u/s 11 denied - delay in filing Form no. 10 - computation of the income not allowing the accumulation under section 11(2) condonation of delay of Form no. 10 order - HELD THAT - As regards the contention regarding the ld. CIT(A) having ignored the provisions of section 12A(1)(b) of the Act, this provision states that the provisions of sections 11 and 12 of the Act shall not apply in relation to the income of any Trust or Institution unless, in a case where the total income of the Trust or Institution as computed under the Income Tax Act without giving effect to the provisions of sections 11 and 12 of the Act exceeds the maximum amount which is not chargeable to income-tax in any previous year, the account of the Trust or Institution for that year have been audited by an Accountant as defined in the Explanation below section 288(2) of the Act, before the specified date referred to in section 44AB of the Act and the person in receipt of the income furnishes by that date the report of such audit in the prescribed form duly signed and verified by such Accountant and setting forth such particulars as may be prescribed. The order dated 19.2.2019 passed by the CIT (Exemptions) under section 119(2)(b) of the Act is part of record and the same has been relied on by the ld. CIT(A) in holding that the addition made by the Assessing Officer by denying the accumulation under section 11(2) of the Act, had become infructuous. It was, therefore, the ld. CIT(A) directed the Assessing Officer to allow the benefit of section 11 of the Act to the assessee and compute the income after allowing the accumulation under section 11(2) of the Act. Department's objection that the audit report in Form no. 10B was also delayed and such delay had neither been applied for condonation of delay nor been condoned, it was the submission of the assessee that the delay in filing Form no. 10B has been condoned, in general, by the CBDT, vide Circular No. 10/2019, dated 22.5.2019, it has been stated at the Bar by the ld. Counsel for the assessee that the Audit Report in Form no. 10B had been e-filed on 4.2.2017 by the Auditor within the time prescribed under the Act, i.e., before the time prescribed for filing the return of income. The same was e-verified on 20.4.2017, as available from the e-verification screen-shot, and as also available from the website of the Department. A copy of such e-verification screen-shot, having acknowledgement No. 761769971200417, has been placed on record. Therefore, this objection is also of no aid to the Department and the same is also rejected. - Decided against revenue.

Summary

Issues:
1. Delay in filing Form no. 10 and its impact on exemption under section 11 of the Income Tax Act.
2. Condonation of delay in filing Form no. 10B and its relevance to the assessment.
3. Application of provisions of sections 11 and 12 of the Act in relation to the income of a Trust or Institution.

Analysis:
1. The case involved a dispute regarding the filing of Form no. 10 by the Assessee, leading to a denial of exemption under section 11 of the Income Tax Act by the Assessing Officer. The Assessing Officer deducted a specific amount from the gross receipt due to the delay in filing Form no. 10, impacting the tax assessment for the year 2016-17.

2. The Appellate Tribunal considered the condonation of delay in filing Form no. 10B and its significance in the assessment process. The Tribunal noted that the delay in filing Form no. 10 was due to a technical error and relied on Circular No. 10/2019 dated 22.05.2019, which condoned the delay in filing such forms. The Tribunal upheld the decision of the CIT(A) in allowing the appeal of the assessee based on the condonation of delay and the proper application of relevant provisions.

3. The Tribunal analyzed the application of sections 11 and 12 of the Act concerning the income of a Trust or Institution. It highlighted the conditions under which these sections apply, emphasizing the need for proper audit and compliance with prescribed forms. The Tribunal considered the audit report in Form no. 10B and its timely filing, rejecting the Department's objection regarding the delay in filing the report. The Tribunal concluded that the appeal of the Department was dismissed, affirming the decision in favor of the assessee.

In conclusion, the judgment addressed the issues related to the delay in filing Form no. 10, condonation of delay in filing Form no. 10B, and the application of sections 11 and 12 of the Income Tax Act. The decision favored the assessee based on the technical error leading to the delay and the subsequent condonation by relevant authorities, ultimately impacting the tax assessment for the year in question.