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2023 (1) TMI 41 - AT - Income TaxRectification of error u/s 154 - Filing of ITR in wrong form and capacity - Exemption u/s 11 - Denial of exemption on failure to file of audit report in Form No.10B - HELD THAT - We find that the appellant had filed the return of income in Form No.5. However no documents were filed along with the return of income justifying the claim for exemption u/s 11 of the Act. It is only after receipt of intimation the appellant took a plea that its income was exempt u/s 11 by virtue of registration u/s 12A of the Act. Even the audit report was admittedly not filed along with the petition u/s 154 or before the NFAC. The CPC while processing the return of income u/s 143(1) can take into consideration only the return of income an accompanied document when the appellant had filed the return of income in Form No.5 the natural inference to be drawn is that the assessee is a partnership firm. When the return was filed as if it is a firm it follows that computation of tax liability should be made on the basis that it is a partnership firm. The CPC cannot go beyond the return of income. In the circumstances we are of the considered opinion that the AO had rightly rejected the 154 petition as well as the NFAC justified in confirming the action of the Assessing Officer. Therefore the appeal filed by the assessee stands dismissed.
Issues:
Appeal against NFAC order for assessment year 2012-13. Analysis: Issue 1: Validity of the rejection of the petition u/s 154 by Assessing Officer. The appellant, a charitable trust, filed a return of income in Form No.5 for the assessment year 2012-13, claiming exemption u/s 11 by virtue of registration u/s 12A of the Income Tax Act, 1961. The Assessing Officer rejected the petition u/s 154 stating that the audit report in Form No.10B was not filed as required under Rule 17B of the Income Tax Rules, 1962. The NFAC upheld this decision. Analysis: The tribunal noted that the appellant failed to provide any documents justifying the exemption claim u/s 11 when filing the return of income in Form No.5. The audit report was not submitted with the petition u/s 154 or before the NFAC. The tribunal emphasized that the CPC can only consider documents submitted with the return of income. As the return was filed as if the appellant was a partnership firm, the tax liability computation should follow that assumption. Therefore, the rejection of the petition u/s 154 by the Assessing Officer was deemed appropriate, and the NFAC's decision was upheld. Issue 2: Contention regarding the requirement of filing audit report in Form No.10B. The appellant argued that the filing of the audit report in Form No.10B is directory and not filing it should not disentitle the assessee to claim exemption u/s 11 of the Act. Analysis: The tribunal considered the appellant's argument but emphasized that the failure to file the audit report in Form No.10B, as required by Rule 17B, impacted the assessment process. The tribunal held that the Assessing Officer's decision to reject the petition u/s 154 due to the absence of the audit report was justified. Therefore, the contention regarding the audit report filing requirement was not accepted. Conclusion: The tribunal dismissed the appeal filed by the assessee against the NFAC order, upholding the rejection of the petition u/s 154 by the Assessing Officer. The failure to provide necessary documents justifying the exemption claim u/s 11 and the absence of the audit report led to the dismissal of the appeal. The tribunal affirmed that the CPC could only consider documents submitted with the return of income, and the tax liability computation should align with the return filed.
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