2023 (6) TMI 1120 - AT - Income Tax

Exemption u/s 11/12 as claimed in the return of income - Delayed audit-report (Form No. 10B) was filed after filing of return but before processing u/s 143(1) - HELD THAT - As relying on Savitri Foundation 2022 (8) TMI 1372 - ITAT MUMBAI where following the decision of Mumbai Metropolitan Regional Iron Steel Market Committee 2015 (4) TMI 512 - BOMBAY HIGH COURT are of the view that in the present case, the assessee can t be denied the benefit of exemption u/s 11 as claimed in the return of income for mere delay in filing of audit-report. Remand this matter back to the file of AO for a fresh assessment after considering the audit-report filed by assessee, in accordance with law. The assessee succeeds in this appeal.

Summary

Issues involved: Whether the assessee was entitled for exemption u/s 11/12 as claimed in the return of income when the audit-report (Form No. 10B) was filed after the return but before processing u/s 143(1)?

Summary:

Background: The assessee, a charitable/religious trust, filed a return of income claiming exemption u/s 11/12. The AO denied the exemption as the audit report was not filed with the return. Despite subsequent efforts, the exemption was still denied at the AO and CIT(A) levels, leading to the current appeal.

Assessee's Argument: The assessee, engaged in religious activities, had a valid registration u/s 12A/12AA and had fulfilled all conditions for exemption u/s 11/12. The audit report, although not filed with the return, was uploaded before processing by the AO. The assessee argued that the denial based on a technical defect was unjust, as the audit report was available and the delay was due to inadvertent human error.

Case Precedents: The assessee cited a recent ITAT decision and other tribunal and high court decisions supporting the acceptance of audit reports even if filed after the return due to genuine reasons.

Revenue's Argument: The Revenue contended that the audit report should have been filed with the return as a pre-condition for exemption u/s 11, and the denial by lower authorities was justified.

Judgment: The Tribunal, considering relevant case laws, held in favor of the assessee. Citing the decision in Savitri Foundation case, it emphasized that the delay in filing the audit report was a procedural defect that should not disentitle the assessee from exemption u/s 11. The matter was remanded back to the AO for fresh assessment considering the audit report filed by the assessee.

Conclusion: The appeal of the assessee was allowed for statistical purposes, and the matter was directed to be reassessed by the AO in accordance with the law.