9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (11) TMI 844 - AT - Income TaxExemption u/s.11 - Denial of exemption audit report in form 10B was not furnished along with the return of income - HELD THAT - 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. Whether the assessee can claim the benefit of exemption under section 11 of the Act in a situation where the audit report in the prescribed form was not filed along with return of income ? - In this context we note that act of the assessee to file the audit report duly signed by the qualified chartered accountant is a procedural requirement and the courts have held that the assessee cannot be denied the benefit for which it is entitled in the event of any procedural contravention specified under the provisions of the Act. We hold that the assessee cannot be denied the benefit of exemption for which it is entitled merely on the lapse of procedural requirement i.e. delay in filing the audit report in the prescribed form. In the judgment cited above, it was provided that the audit report was filed by the assessee before the completion of the assessment. In other words, the compliance of the law was made by the assessee when the assessment proceedings was pending before the AO whereas in the case on hand the assessee complied the requirement at the stage of appellate proceeding before tribunal. Admittedly, the appeal was pending before the ITAT at the time when the audit report in form 10B was filed which transpires that the assessment has not reached to the finality and therefore principle laid down by the Hon ble High Court of Gujarat in the case of CIT vs. Gujarat Oil Allied Industries 1992 (9) TMI 67 - GUJARAT HIGH COURT that the requirement for filing the audit report is a procedural requirement, can be applied in the given facts and circumstances. Therefore, the benefit for which the assessee is entitled cannot be denied. Thus there was lack of guidance on the part of the assessee by the tax professionals. Thus, in the event of any disallowance of the benefits available to the assessee, it will cause undue hardship to it in the given facts and circumstances. Thus after considering the facts in totality, we set aside the finding of the learned CIT-A, and direct the AO to allow the exemption under section 11 of the Act. Hence the ground of appeal of the assessee is allowed.
Issues Involved:
1. Eligibility for exemption under Section 11 of the Income Tax Act despite holding valid registration under Section 12AA. 2. Conditional grant of benefit under Section 11 read with Section 12A(1)(b) based on filing audited accounts and Form 10B with the return of income. 3. Alleged breach of law and Principles of Natural Justice by lower authorities in ignoring submissions and explanations provided by the appellant. Detailed Analysis: 1. Eligibility for Exemption under Section 11 Despite Valid Registration under Section 12AA: The primary issue raised by the assessee was the denial of exemption under Section 11 of the Income Tax Act, despite holding a valid registration under Section 12AA. The assessee argued that the exemption should be granted based on the registration status. The Tribunal noted that the assessee, a charitable trust, had filed a belated return and subsequently failed to claim the exemption in the return due to an error and lack of proper guidance. The AO rejected the claim based on the Supreme Court's ruling in Goetze (India) Ltd vs. CIT, which prohibits admitting claims not made in the return of income. 2. Conditional Grant of Benefit under Section 11 read with Section 12A(1)(b): The CIT(A) allowed the appeal for statistical purposes, directing the AO to verify if the assessee had filed audited accounts and Form 10B with the return of income. The CIT(A) held that the benefit under Section 11 and 12 of the Act would only be granted if these documents were filed in compliance with Section 12A(1)(b). The Tribunal observed that the audit report in Form 10B was prepared and signed before the filing of the return but was submitted late, after the appellate order. 3. Alleged Breach of Law and Principles of Natural Justice: The assessee contended that the lower authorities ignored various submissions and explanations, constituting a breach of law and Principles of Natural Justice. The Tribunal acknowledged that the assessee was not properly guided by the tax consultants and emphasized that legitimate deductions should be allowed even if there was a procedural lapse. Tribunal's Findings: - Condonation of Delay: The Tribunal condoned the delay in filing the appeal, citing the bona fide belief of the assessee and the principle that meritorious cases should not be dismissed on technical grounds. The Tribunal referenced the Gujarat High Court's rulings in S.R. Koshti Vs. CIT and Vareli Textile Industry Vs. CIT, emphasizing that over-assessment should be corrected regardless of procedural errors. - Procedural vs. Substantive Compliance: The Tribunal held that the requirement to file the audit report along with the return is procedural. Citing the Gujarat High Court's judgment in CIT vs. Gujarat Oil & Allied Industries, the Tribunal stated that substantial compliance should suffice, and the benefit of exemption should not be denied due to procedural lapses. - Assessment Pending During Appeal: The Tribunal noted that the assessment remains pending if an appeal is ongoing, allowing for procedural compliance at the appellate stage. This interpretation was supported by the Gujarat High Court's ruling in CIT vs. Mayur Foundation. - Reasonable Cause for Delay: The Tribunal found that the lack of proper guidance from tax consultants constituted a reasonable cause for the delay in filing the audit report. The Tribunal directed the AO to allow the exemption under Section 11, emphasizing that denying the benefit would cause undue hardship to the assessee. Conclusion: The Tribunal allowed the appeal, directing the AO to grant the exemption under Section 11 of the Income Tax Act, recognizing the procedural nature of the lapse and the reasonable cause for the delay. The decision underscores the importance of substantive compliance and the need to avoid undue hardship to taxpayers due to procedural errors. The appeal was allowed, and the order was pronounced on 16/11/2022 at Ahmedabad.
|
