2025 (2) TMI 541 - AT - Income Tax

Denial of benefit of exemption u/s 11 - delay in filing of audit report in Form 10B - HELD THAT - Since the assessee has furnished income tax return in time and subsequently the audit report in Form 10B was filed the UDIN Number of which was generated at the time of filing of return itself therefore we are inclined to hold that the assessee deserves to succeed on ground and the Jurisdictional Assessing Officer is directed to grant the claim of exemption u/s 11 of the Act. Findings of Ld. CIT(A) is set-aside and ground nos.1 2 and 3 are allowed.

Summary

The appeal in this case was filed by the assessee against the order of the Ld. Addl./JCIT(A)-2, Gurugram dated 28.06.2024, arising from an intimation dated 11.05.2020 for the Assessment Year 2019-20 issued by the ADIT, CPC, Bangalore. The core issues raised by the assessee included the addition to taxable income, denial of exemption under section 11 of the ITA, 1961 due to delay in filing Form 10B, and the treatment of gross receipts instead of net income for taxation purposes.The Court noted that the assessee, a charitable trust, had filed its return of income for the relevant assessment year but had delayed in filing the audit report in Form 10B. The CPC denied the benefit of exemption under section 11 of the Act based on this delay. The assessee contended that despite the delay, the audit report was ready and the UDIN number was generated at the time of filing the return. The Court observed that the audit report was eventually uploaded and made available during the appellate proceedings before the Ld. CIT(A).The Court referred to a previous Tribunal decision in the case of Kokan Kala Shikshan Vikaas Sanstha Vs. DCIT, CPC, Bengaluru, where it was held that non-compliance with the communication due to technical glitches beyond the control of the assessee was a reasonable cause for non-compliance. The Tribunal directed the Assessing Officer to grant the claim of exemption under section 11 of the Act based on the timely filing of the audit report.In light of the above, the Court allowed the appeal of the assessee, setting aside the Ld. CIT(A)'s order and directing the Assessing Officer to grant the exemption under section 11 of the Act. The Court did not adjudicate on the alternate contention regarding the taxation of net income, as it became academic after allowing the primary grounds of appeal.In conclusion, the significant holdings of the Court include the allowance of the assessee's appeal based on the timely filing of the audit report and the direction to grant the exemption under section 11 of the Act. The Court's decision was based on the principle that non-compliance due to technical glitches beyond the assessee's control could be considered a reasonable cause for delay.