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2024 (11) TMI 1248 - AT - Income TaxDisallowing the application of income - denial of benefit of section 11 and 12 - non-filing of form 10B before filing of return - CIT(A) held that the Form 10B has been filed after five months of its filing the return, which was not filed within the time frame outlined in the Act - HELD THAT - The undisputed fact is that the assessee has obtained audit report alongwith Form 10B prior to filing of return of income. The CBDT vide Circular 3/2020 dated 03.01.2020 and Circular 16/2022 dated 19.07.2022 have mandated condonation of delay upto 365 days for delay in filing Form 10B for AY 2018-19 or for any subsequent AYs. We direct the AO to admit the audit report with Form 10B and decide the issue afresh as per provisions of law. We restore the issue to the file of the AO. The assessee is directed to furnish the original documents for verification and the AO is directed to examine the same and decide the issue as per the provisions of law after affording reasonable and sufficient opportunity of being heard to the assessee. Appeal of the assessee allowed for statistical purposes.
Issues:
1. Disallowance of application of income due to non-filing of Form 10B before filing return 2. Rejection of claim of application of income as expenditure 3. Misinformation by a professional leading to errors in filing 4. Denial of proper opportunity for the Assessee to be heard 5. Condonation of delay in filing audit report 6. Legality and fairness of the order by NFAC, JCIT (A) Analysis: Issue 1: Disallowance of application of income due to non-filing of Form 10B before filing return The assessee, a trust, initially filed its return of income for A.Y 2019-20 without submitting Form No. 10B. Despite filing a revised return later, the Form was still not submitted. The NFAC, JCIT (A) upheld the disallowance of the application of income citing the delay in filing Form 10B. However, the ITAT Delhi noted that the audit report and Form 10B were obtained before the original filing, and recent CBDT circulars allowed for condonation of delay up to 365 days for such filings. Consequently, the ITAT directed the Assessing Officer to consider the audit report with Form 10B and reevaluate the issue in accordance with the law, emphasizing the importance of affording the Assessee a fair opportunity to present their case. Issue 2: Rejection of claim of application of income as expenditure The Assessee contended that the application of income declared in the return should not be treated as income but as expenditure. However, the NFAC, JCIT (A) aligned with the Assessing Officer's view. The ITAT did not directly address this issue in the judgment, as the primary focus was on the Form 10B filing and the subsequent directions given regarding the same. Issue 3: Misinformation by a professional leading to errors in filing The Assessee raised the point that they were misinformed by a professional, which led to the filing errors. While this was mentioned in the Assessee's grievances, the judgment did not elaborate on this aspect in detail. The ITAT's decision primarily centered around procedural aspects and the filing of Form 10B. Issue 4: Denial of proper opportunity for the Assessee to be heard The Assessee alleged that they were not given a proper opportunity to be heard during the proceedings. This issue was not extensively discussed in the judgment, but the ITAT's direction to the Assessing Officer to reexamine the case and provide a fair hearing implied a consideration of this aspect. Issue 5: Condonation of delay in filing audit report The Assessee also contested the denial of condonation for the delay in filing the audit report. The ITAT's decision to allow the appeal for statistical purposes indicated a recognition of the need for leniency in certain procedural matters, as evidenced by the reference to recent CBDT circulars permitting condonation of such delays. Issue 6: Legality and fairness of the order by NFAC, JCIT (A) The Assessee challenged the legality and fairness of the NFAC, JCIT (A)'s order, alleging it was against the principles of natural justice. The ITAT's decision to remand the case to the Assessing Officer for a fresh review, emphasizing adherence to the law and the Assessee's right to be heard, addressed these concerns indirectly by ensuring a fair and just reconsideration of the matter.
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