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2022 (4) TMI 500 - AT - Income TaxExemption u/s 11 - exemption denied as assessee not furnishing the audit report in form No. 10B along with return of income filed by the assessee - HELD THAT - Since the assessee in the instant case has got its accounts audited before the due date and has undisputedly filed the same before the completion of the assessment therefore we are of the considered opinion that the CIT(Appeals) is not justified in denying the claim of exemption u/s 11 on the allegation that form No. 10B has not been filed in time. Accordingly order of the learned CIT(Appeals) is set aside and the grounds raised by the assessee on this issue are allowed.
Issues Involved:
1. Whether the CIT(Appeals) erred in passing the order in contravention of Section 250(6) of the Income Tax Act, 1961. 2. Whether the CIT(Appeals) erred in confirming the disallowance of Rs. 20,12,451/- for charitable purposes under Section 11 due to the late filing of Form No. 10B. 3. Whether the CIT(Appeals) erred in confirming the disallowance of exemption under Section 11(1) amounting to Rs. 52,414/- due to the late filing of Form No. 10B. Issue-wise Detailed Analysis: 1. Contravention of Section 250(6) of the Income Tax Act, 1961: The appellant argued that the CIT(Appeals) passed the order in contravention of Section 250(6) which mandates that the order should state the points for determination, the decision thereon, and the reasons for the decision. The Tribunal did not specifically address this issue in the judgment, focusing instead on the substantive issues related to the filing and acceptance of Form No. 10B. 2. Disallowance of Rs. 20,12,451/- for Charitable Purposes under Section 11: The appellant contended that the audit report in Form No. 10B was filed belatedly due to technical issues with the Income-tax Department's website, but it was still filed before the completion of the assessment. The Tribunal noted that the audit report was dated 05.06.2017 and was filed along with the return of income. Citing various High Court decisions, including CIT Vs. Web Commerce (India)(P) Ltd. and CIT Vs. Hardeodas Agarwalla Trust, the Tribunal held that the provisions requiring the audit report to be filed along with the return are directory and not mandatory. Therefore, the CIT(Appeals) was not justified in disallowing the claim under Section 11 based on the late filing of Form No. 10B. The Tribunal allowed the appellant's claim for the deduction of Rs. 20,12,451/-. 3. Disallowance of Exemption under Section 11(1) Amounting to Rs. 52,414/-: The appellant also challenged the disallowance of Rs. 52,414/- under Section 11(1), which was similarly based on the late filing of Form No. 10B. The Tribunal, consistent with its findings on the previous issue, held that the CIT(Appeals) was not justified in confirming the disallowance. The Tribunal reiterated that as long as the audit report is filed before the completion of the assessment, the requirement is met. Consequently, the Tribunal allowed the appellant's claim for the exemption of Rs. 52,414/- under Section 11(1). Conclusion: The Tribunal found that the appellant had filed the audit report in Form No. 10B within the prescribed time and before the completion of the assessment. It held that the CIT(Appeals) erred in disallowing the claims for deductions and exemptions under Section 11 based on the late filing of Form No. 10B. The Tribunal allowed the appeal, setting aside the order of the CIT(Appeals) and granting the appellant's claims for deductions and exemptions. Order Pronounced: The appeal filed by the assessee was allowed, and the order was pronounced in open court on 08/04/2022.
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