2024 (8) TMI 1359 - AT - Income Tax

Denial of benefit of section 11 12 - assessee failed to file the return of income and form no. 10B before the due date of filling the return of income - HELD THAT - This issue is decided in the case of Sarvodaya Charitable Trust 2021 (1) TMI 214 - GUJARAT HIGH COURT where assessee, a public charitable trust registered u/s 12A, had substantially satisfied condition for availing benefit of exemption as a trust, it could not be denied exemption merely on bar of limitation in furnishing audit report in Form No.10B especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. The similar issue is also dealt in the case of ITO(E) Vs. Shri Laxmanarayan Dev Shrishan Seva Khendra 2023 (7) TMI 293 - ITAT AHMEDABAD and Sh. Rajkot Vishashrimali Jain Samaj 2023 (3) TMI 765 - ITAT RAJKOT . On being consistent view in the matter we direct the ld. Jurisdiction Assessing Officer (JAO) to consider the Form no. 10B and allow the claim of exemption u/s. 11 of the Act to the assessee. The bench in fact noted that the assessee filed the form no. 10 B within the extended due date and thus the denial of section 11 benefit was on account incorrect appreciation of the fact. Thus, based on this observation ground raised by the assessee is allowed.

Summary

Issues:
Appeals against order of National Faceless Appeal Centre under section 143(1) & 154 of the Income Tax Act for assessment year 2018-19.

Analysis:
The appeals were filed by the assessee challenging the order passed by the National Faceless Appeal Centre (NFAC) for assessment year 2018-19. The issues involved in both appeals were almost identical, one against the intimation issued under section 143(1) and the other against the order passed under section 154 of the Act regarding the same intimation. The appeals were heard together and disposed of by a consolidated order.

The assessee raised multiple grounds challenging the validity of the order passed by the NFAC, the disallowance of exemption under section 11 of the Act, and the failure to follow decisions of various courts. The intimation issued under section 143(1) highlighted the non-filing of the audit report in Form no. 10B along with the return of income, leading to the disallowance of exemption under section 11.

The NFAC provided the assessee with multiple opportunities to submit documents and respond to the grounds of appeal, but the assessee failed to provide any explanation or evidence. Consequently, the NFAC upheld the addition made by the assessing officer due to the lack of response from the appellant.

The assessee argued that the order was passed during the Covid period, and they had submitted the required documents within the extended due date. The assessee contended that the intimation and subsequent order passed under section 154 were incorrect. The revenue department argued that the assessee failed to file the necessary documents before the due date, making them ineligible for the benefits under sections 11 & 12.

The Tribunal considered the evidence presented by the assessee, including the CBDT order extending the due date, and noted that the audit report was filed within the extended deadline. The Tribunal also referred to relevant court decisions where trusts were not denied exemption solely based on delayed filing of the audit report. Consequently, the Tribunal directed the Assessing Officer to consider Form no. 10B and allow the claim of exemption under section 11 to the assessee.

As the Tribunal found in favor of the assessee regarding the denial of section 11 benefit, the appeal in ITA no. 137/Jodh/2023 was allowed. Consequently, the appeal against the order under section 154 became infructuous. Both appeals of the assessee were allowed based on the Tribunal's observations and findings.

In conclusion, the Tribunal's decision favored the assessee, allowing the appeal against the intimation under section 143(1) and rendering the appeal against the order under section 154 infructuous.