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2022 (10) TMI 1116 - AT - Income TaxExemption u/s. 11 - claim denied as delay in filing audit report in Form 10B - whether the CIT(A) is justified in confirming the denial of exemption u/s. 11 of the Act made by the CPC for not filing Form 10B along with return of income in terms of Circular No. 10/2019 issued by the CBDT? - HELD THAT - CBDT vide para 4(i) clearly explained the delay in filing of Form 10B for A.Ys. 2016-17 and 2017-18 is condoned where the audit report obtained before filing of return of income and furnished subsequent to filing of return of income before due date specified u/s. 139 of the Act. There is no dispute with regard to the assessee filing the original return of income on 02-01-2017 before the date specified u/s. 139 of the Act vide para 4.1 of the said circular. It is also not disputed in obtaining the hard copy of audit report in Form 10B on 03-11-2016 which is the date prior to filing of return of income on 02- 01-2017. Therefore, assessee obtained Form 10B before filing return of income under the provisions u/s. 139 of the Act but it could not be uploaded digitally for want of access to the Income Tax official website. Therefore, the clarification in condoning the delay in filing Form 10B for A.Y. 2016-17 is binding on the CPC, but however, was ignored to consider the same. Therefore, the delay in filing audit report in Form 10B is condoned in terms of CBDT Circular No. 10/2019 dated 22-05-2019 and the denial of exemption u/s. 11 of the Act by the CIT(A) is not justified. The Additional Ground Nos. 1 and 2 raised by the assessee are allowed.
Issues:
Delay in filing appeal, Disallowance of exemption under section 11 on delayed filing of Form 10B, Justification of upholding the disallowance made by CPC without perusing the facts of the case. Delay in filing appeal: The appeal by the assessee was filed with a delay of 16 days. The delay was attributed to the National Lockdown imposed due to the Covid-19 pandemic. The delay was condoned based on a decision by the Hon'ble Supreme Court during the lockdown period. Disallowance of exemption under section 11 on delayed filing of Form 10B: The assessee filed the return of income on 02-01-2017 but received a communication on 04-04-2017 stating that the claim under section 11 would be denied without Form 10B. The assessee then filed Form 10B on 04-05-2017. However, the CPC, Bangalore denied the exemption under section 11, citing non-filing of Form 10B. The dispute revolved around whether the denial of exemption was justified given the circumstances. The assessee argued that the audit report in Form 10B was obtained before filing the return but could not be uploaded online due to access issues. The Circular No. 10/2019 dated 22nd May, 2019 issued by the CBDT was also invoked to support the condonation of the delay in filing Form 10B for the relevant assessment year. The ITAT observed that the delay in filing the audit report in Form 10B was condoned as per the circular, and the denial of exemption under section 11 by the CIT(A) was not justified. Consequently, the Additional Grounds raised by the assessee were allowed. Justification of upholding the disallowance made by CPC without perusing the facts of the case: The CPC denied the exemption under section 11 based on the non-filing of Form 10B along with the return of income. The CIT(A) upheld this denial, stating that the statement referred to in section 11(2) was not furnished before the due date specified in section 139(1) of the Act. However, the ITAT found that the Circular No. 10/2019 issued by the CBDT provided for the condonation of delay in filing Form 10B for the relevant assessment year. The ITAT concluded that the denial of exemption under section 11 by the CIT(A) was not justified, considering the circumstances and the circular issued by the CBDT. As a result, the appeal of the assessee was allowed. In conclusion, the ITAT Nagpur allowed the appeal of the assessee, setting aside the order of the CIT(A) in denying the exemption under section 11 of the Act. The delay in filing the audit report in Form 10B was condoned as per the CBDT Circular No. 10/2019, and the denial of exemption under section 11 was deemed unjustified.
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