2023 (5) TMI 1427 - AT - Income Tax

Denial of benefit of exemption due to the delay in filing Form 10B - assessee in order to get condonation of delay in filing of Form 10B filed an application before CIT(E) Kolkata u/s 119(2)(b) but petition filed by the assessee was rejected since delay in filing the application was more than 365 days. HELD THAT - We noticed that the ld. CIT(A) allowed the appeal of the assessee by relying on the decision of Gujrat Oil Allied Industries 1992 (9) TMI 67 - GUJARAT HIGH COURT has held that filing of Form 10B is directory and not mandatory. In the case of assessee Form 10B was obtained on 31.07.2018 and which was subsequently uploaded on e-portal on 12.12.2019. In such scenario the claim of the assessee cannot be denied. We have noticed that subsequent to the Board s Circular No. 2/2020 dated 03.01.2020 another Board s Circular No. 16/2022 dated 19.07.2022 issued under which the provision of section 119(2)(b) has delegated the powers to PCIT/CIT to condone the delay in filing Form 10B beyond 365 days upto 3 years from the assessment year 2018-19 or for subsequent years and if this circular had applied in the case of assessee then also the time for condonation is as much as within 3 years of such prescribed limit in filing Form 10B. No infirmity in the order passed by CIT(A) NFAC by allowing the appeal of the assessee.

Summary

The appeal in ITA No. 480/Kol/2022 for A.Y. 2018-19 was brought by the revenue against the order of the Commissioner of Income Tax, National Faceless Appeal Centre, Delhi. The revenue raised grounds challenging the decision of the Commissioner not to grant the benefit of exemption due to the delay in filing Form 10B. The key issues considered in this case were whether the Commissioner erred in not considering the rejection of the condonation of delay in filing Form 10B by the CIT (Exemptions) Kolkata and whether the Commissioner's decision contravened the provisions of the Income Tax Act.The brief facts of the case involved the assessee filing its return of income, which was found defective, and subsequently filing another return with Form 10B beyond the due date for the relevant period. The Central Processing Centre (CPC) denied the claim for exemption, leading the assessee to file a rectification petition, which was also denied. The assessee then applied for condonation of delay in filing Form 10B, which was rejected by the CIT (Exemptions) Kolkata.The Commissioner at the National Faceless Appeal Centre allowed the appeal of the assessee, citing that the filing of Form 10B is directory in nature and that the deduction under section 11 cannot be denied once the form has been filed. The Tribunal upheld the Commissioner's decision, noting that subsequent circulars delegated powers to condone the delay in filing Form 10B up to three years from the assessment year.The Tribunal rejected the revenue's appeal, emphasizing that the filing of Form 10B was not mandatory and that the circulars provided for condonation of delay within the prescribed time limits. Therefore, the Tribunal found no error in the Commissioner's decision and dismissed the revenue's appeal.In conclusion, the Tribunal upheld the decision of the Commissioner to grant the benefit of exemption to the assessee based on the directory nature of filing Form 10B and the circulars allowing for condonation of delay within specified time limits. The appeal of the revenue was dismissed, and the decision was pronounced on 25.05.2023.