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2024 (11) TMI 224 - AT - Income TaxDenial of benefits of Section 11 - Appellant did not furnish Audit Report in Form 10-B within the prescribed time - extended due date of e-filing of Form No. 10B being audit report u/s 12A(1)(b) of the Act for the assessment year 2022-23 was 07.10.2022 and the assessee had e-filed Form No. 10B issued by the Chartered Accountant as on 07.11.2022, which is delayed by 31 days. HELD THAT - We find that the AO CPC has made adjustment for the amount of expenditure claimed, amount accumulated and set apart for exemption u/s 11(2) of the Act for the sole reason that the AO did not file the audit report prescribed in Form No. 10B of the Act on or before the due date. The said due date in the case of the assessee under the provisions of section 12A(1)(b) of the Act was 07.10.2022 however, the assessee has e-filed the said Form No. 10B on 07.11.2022 and thus, there was a delay of 31 days in filing such form on the Income-tax Portal. Therefore, the issue is merely for the condonation of the delay of the 31 days. We find that the Ld. CIT(A) has referred to Circular No. 16/2022 dated 19.07.2022 issued by the CBDT, where in the CBDT invoking powers u/s 119(2)(b) of the Act delegated the power for condoning the delay to the Pr. Chief Commissioner/Chief Commissioner or Commissioner of Income-tax as the case may be. The assessee stated that application for condonation of delay in filing Form No. 10B for the year under consideration was filed before the Commissioner of Income-tax (Exemption), Mumbai on 16.03.2023 and said application is still pending for disposal till date. However, we find that under the CBDT circular No. 16/2022 dated 19.07.2022 the concerned Commissioner of Income-tax is preferably required to dispose off the application within the three month of receipt of this application. Before us, assessee expressed ignorance regarding disposal of the application of the assessee. We feel it appropriate to set aside the order of lower authorities and restore the matter back to the file of the Assessing Officer for deciding afresh.
Issues:
1. Denial of benefits under Section 11 due to delayed filing of Audit Report in Form 10-B. 2. Authority to condone the delay in filing Form 10-B. 3. Adjustment made by Assessing Officer under Section 143(1) without opportunity for hearing. 4. Violation of principles of Natural Justice in making adjustments. 5. Delegation of power for condonation of delay in filing Form 10-B. Analysis: 1. The appeal was filed against the denial of benefits under Section 11 due to the delayed filing of the Audit Report in Form 10-B. The assessee contended that the delay in filing the report should not result in the denial of benefits under Section 11. The CIT(A) upheld the denial, stating that the authority to condone the delay lies with the Pr. Chief Commissioner/Chief Commissioner or Commissioner of Income-tax, as per Circulars issued by CBDT. 2. The Tribunal found that the delay in filing Form 10-B was 31 days, and the assessee had applied for condonation of the delay. However, the application was still pending for disposal. Referring to the CBDT Circulars, the Tribunal directed the Assessing Officer to reconsider the claim for exemption under Section 11 after verifying the status of the condonation application. The Tribunal emphasized that the assessee should be given a fair hearing in this regard. 3. The Assessing Officer had made adjustments under Section 143(1) without providing an opportunity for the assessee to be heard, resulting in a substantial tax demand. The Tribunal noted that such adjustments should be made after giving the assessee a chance to present their case, in line with the principles of Natural Justice. 4. The Tribunal highlighted the violation of Natural Justice principles by the Assessing Officer in making significant adjustments without affording the assessee an opportunity to be heard. This lack of procedural fairness was deemed unjust, and the Tribunal directed the Assessing Officer to reconsider the adjustments after allowing the assessee to present their case. 5. The Tribunal discussed the delegation of power for condonation of delay in filing Form 10-B as per Circulars issued by CBDT. It noted that the concerned Commissioner of Income-tax should ideally dispose of such applications within three months. The Tribunal instructed the Assessing Officer to ensure timely consideration of the condonation application and to grant the assessee a fair opportunity to present their case before making any final decisions on the exemption under Section 11. In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of procedural fairness, timely consideration of applications, and providing the assessee with a fair opportunity to be heard in matters concerning tax assessments and exemptions under Section 11.
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