1992 (4) TMI 69 - AT - Income Tax

Assessing Officer, Charitable Institution, Charitable Or Religious Trust, Income From Property

Summary

Issues involved:
Denial of exemption to the appellant-association u/s 11 of the IT Act due to failure to file audit report in Form No. 10B along with return of income.

Details of the Judgment:

1. Denial of Exemption under Section 11:
The main dispute in the appeal was the denial of exemption u/s 11 of the IT Act to the appellant-association for the assessment year 1984-85. The Assessing Officer and the CIT (Appeals) held that the failure to file the audit report in Form No. 10B along with the return of income disentitled the appellant from the exemption. However, the Tribunal referred to a judgment of the Calcutta High Court which stated that the provisions of section 12A are directory, not mandatory. The Tribunal found that the appellant's failure to file the audit report was likely due to oversight, and the CIT (Appeals) should have considered the audit report and the appellant's claim for exemption. The Tribunal set aside the assessment and directed a fresh assessment by the Assessing Officer, considering the audit report and the appellant's claims.

2. Powers of CIT (Appeals):
The Tribunal noted that the powers of the CIT (Appeals) are coterminous with that of the ITO, as established by the Supreme Court in previous cases. The Tribunal emphasized that the CIT (Appeals) should have exercised judicial discretion and considered the audit report and the appellant's claims, rather than dismissing the appeal outright.

3. Fresh Assessment:
In light of the judgment of the Calcutta High Court and the oversight by the appellant in not filing the audit report, the Tribunal set aside the assessment and restored the matter to the Assessing Officer for a fresh assessment. The Tribunal directed the Assessing Officer to consider the audit report in Form No. 10B, the appellant's claim for exemption u/s 11, and the plea for deduction of expenses. The Tribunal emphasized the need for a fair assessment process and giving the appellant a reasonable opportunity to present its case.

Conclusion:
The Tribunal partly allowed the appeal and ordered a fresh assessment by the Assessing Officer, considering the audit report and the appellant's claims for exemption and deduction of expenses.