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2022 (2) TMI 775 - AT - Income TaxExemption u/s 11 - disallowing exemption and treating the gross receipts and corpus donation as taxable income, though the appellant trust is registered/s 12A and the appellant Trust had electronically furnished Form No.10B on the portal of the income Tax Department - HELD THAT - There is no dispute that assessee is a registered under section 12A. We find that filing return of income assessee claimed exemption under section 11 of the Act and CPC/Assessing Officer disallowed the said exemption vide intimation dated 11.05.2020. On appeal before Ld. NFAC/CIT(A) the action of CPC/Assessing Officer was upheld by taking view that Form-10B as required by under Rule-17 of income-tax Rule, 1962 was not furnished. We find merit on the submission of assessee that the assessee has furnished its audit report under section 12A(1)(b) as required under Rule 17B of Income Tax Rule, 1962 prior to due date of filing its return of income on 26.08.2019. The objection of Ld. NFAC/CIT(A) that report is filed subsequently is misplaced, in fact, the date mentioned on the right side of screen shot is the date of printing the document on 10.02.2022, in fact it was uploaded on the portal of department on 26.08.2019. Considering that assessee has furnished its audit report under Form-10B well within time and the intimation u/s 143(1) is issued without verification of fact. Similarly, Ld. NFAC/CIT(A) has also not verified the fact that about the furnishing required audit report, the appeal of assessee is allowed. The CPC/Assessing Officer is directed to allow the necessary exemption under section 11 of the Act. We order accordingly.
Issues involved:
1. Disallowance of exemption under section 11 and treatment of gross receipts as taxable income. Analysis: The appeal was filed by the assessee against the order of the National Faceless Appeal Centre (NFAC) for the assessment year 2019-20, challenging the disallowance of exemption under section 11 of the Income Tax Act. The assessee, a public charitable trust registered under section 12AA, claimed exemption under section 11 in its return of income. The assessment order passed by the Assessing Officer did not allow the claimed exemption, leading to the appeal before the CIT(A) and subsequently transferred to NFAC. The NFAC/CIT(A) upheld the disallowance, stating that the assessee had not provided the required Form-10B/10BB as per section 12A r.w.s. 17B. The appeal was then brought before the Tribunal for further consideration. The Authorized Representative (AR) of the assessee argued that the audit report was uploaded on the Income-tax portal before filing the return of income, along with other necessary documents. The AR contended that the CPC/Assessing Officer did not verify the uploaded Form-10B, which was submitted as per the Income-tax Rule-17. The AR emphasized that the lower authorities did not issue a show-cause notice to the assessee before disallowing the exemption under section 11. The AR requested the Tribunal to allow the appeal with costs. On the other hand, the Commissioner of Income Tax - Departmental Representative (CIT-DR) supported the decision of the lower authorities, stating that the Form-10B/Audit report was not furnished to the Assessing Officer in due time, leading to the disallowance of the exemption under section 11. After considering the submissions of both parties and reviewing the orders of the lower authorities, the Tribunal observed that the assessee had indeed filed the required audit report under Form-10B before the due date of filing the return of income. The Tribunal found merit in the AR's argument that the report was uploaded on the department's portal on time, despite the date mentioned on the screen shot being the date of printing the document. The Tribunal concluded that the exemption under section 11 should be allowed as the audit report was submitted within the stipulated timeframe. Therefore, the appeal of the assessee was allowed, directing the CPC/Assessing Officer to grant the necessary exemption under section 11 of the Act. In conclusion, the Tribunal ruled in favor of the assessee, allowing the appeal and ordering the necessary exemption under section 11 to be granted.
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