2022 (7) TMI 1050 - AT - Income Tax

Exemption u/s 11 - assessee is a Trust registered u/s. 12AA - assessee has not filed the Audit Report in Form 10B along with the return - HELD THAT - As filing of Form 10B electronically along with the Return of Income has become mandatory because of the amended Sections 11 13 of the Act, by the Finance Act, 2015. This being the first year of e-filing of these forms, representations have been received by the Board/field authorities stating that the Form No. 10 could not be filed with in the specified time for the assessment year 2016-17. Considering the hardship faced by the assessee, the CBDT issued Circular No. 7/2018, authorizing Commissioner of Income Tax, to admit belated application in Form No. 10 in respect of Assessment Year 2016-17 which were filed belatedly. Thus, the finding of the ld. CIT(A) that, he has no power in condoning the delay in filing Form 10B is legally correct in law. As rightly argued by the Ld. D.R., the assessee seems to be consistently filing the above Form 10B belatedly, for which proper remedy left to the assessee is approaching the Administrative CIT, who is to condone the delay but not with filing appeal u/s. 250 of the Act. We do not find any infirmity in the order passed by the CIT(A) and it has open to the assessee to avail the appropriate legal remedy in accordance with Income Tax Act. We also further found that the case laws relied upon by the Ld. Senior Counsel will not be applicable to the present case, since in the case of Mayur Foundation cited 2004 (12) TMI 48 - GUJARAT HIGH COURT wherein the Assessment year involved is 1980-81 and in the case of Xavier Kelavani Mandal P. Ltd. ( 2004 (12) TMI 48 - GUJARAT HIGH COURT wherein the Assessment Year involved is 2006-07. In our considered view, filing of Form 10B is being mandatory because of the amendment made in Finance Act, 2015 with effect from 01.04.2016 applicable for the Assessment Year 2016-17. Therefore the above case laws are clearly distinguishable to the facts of the present case. Thus, the grounds raised by the assessee are hereby rejected and the appeal filed by the Assessee is dismissed.

Summary

Issues:
Appeal against denial of exemption under section 11 of the Income Tax Act for Assessment Year 2018-19 due to belated filing of Form 10B.

Analysis:
1. The appellant, a Trust registered under section 12AA of the Act, filed its Return of income for A.Y. 2018-19 declaring Nil income. However, the Assessing Officer denied exemption under section 11 of the Act and demanded tax of Rs. 16,55,288/- due to the belated filing of Form 10B. The NFAC upheld the disallowance, stating that the belated filing justified the action.

2. The CIT(A) held that as per Rule 12(2) of the Income Tax Rules, Form 10B must be submitted electronically from 01.04.2016 onwards. The appellant's argument for condonation of delay was dismissed as the CIT(A) lacked the power under section 119(2)(b) to grant such relief. The appellant was advised to seek remedy from the jurisdictional CIT/PCIT/DIT for condoning the delay.

3. The appellant contended before the Tribunal that the requirement to file Form 10B along with the Return of Income is directory, and failure to do so should not lead to denial of exemption under section 11. Citing relevant case laws, the appellant argued that the belated filing was a technical breach causing no revenue loss. However, the Revenue supported the lower authorities' decision, emphasizing the mandatory nature of filing Form 10B post the Finance Act, 2015 amendment.

4. The Tribunal noted the appellant's awareness of the filing requirement and the belated submission of Form 10B. Referring to Circular No. 7/2018, the Tribunal highlighted the obligation to file Form 10B electronically due to the amendment in 2015. The Tribunal agreed with the lower authorities that the CIT(A) rightly dismissed the appeal, as the appellant consistently filed Form 10B belatedly without seeking condonation. The Tribunal rejected the appellant's arguments and upheld the dismissal of the appeal.

5. In conclusion, the Tribunal dismissed the appeal, stating that the appellant's consistent belated filing of Form 10B did not warrant interference with the lower authorities' decision. The Tribunal emphasized the mandatory nature of filing Form 10B post the 2015 amendment and advised the appellant to seek appropriate legal remedies in line with the Income Tax Act.

This detailed analysis covers the issues raised in the legal judgment comprehensively, outlining the arguments presented by both parties and the Tribunal's reasoning for dismissing the appeal.