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2023 (11) TMI 397 - AT - Income TaxBenefit of accumulation u/s 11(2) as Audit report in form 10 filed during the assessment proceedings - assessee has not filed form No.10 along with its income tax return as required u/s 139(1) but filed subsequently along with income tax return u/s 139(4) - HELD THAT - This issue has already been decided in case of Commissioner of Income Tax vs. Nagpur Hotel Owners Association 2000 (12) TMI 99 - SUPREME COURT as well as Bochasanwasi Shri Akshar Purshottam Public Charitable Trust 2018 (10) TMI 995 - GUJARAT HIGH COURT So in view of the matter we are of the considered view that filing of audit report in form No.10 by the assessee on 23.12.2016 during the assessment proceedings as the assessment order was passed on 25.10.2018 is a valid compliance under the Act and as such seeking benefit of section 11 by the assessee on the basis of audit report is admissible under the law. AO as well as the Ld. CIT(A) have erred in not extending the benefit of section 11(2) for want of filing audit report in form 10 along with the return of income. So the AO is directed to extend the benefit claimed by the assessee under section 11(2) on the basis of audit report in form 10 filed on 23.12.2016 during the assessment proceedings subject to verification. Appeal filed by the assessee is allowed.
Issues Involved:
The appellant sought to set aside the order passed by the National Faceless Appeal Centre regarding the assessment year 2016-17 on grounds including dismissal of appeal for non-compliance, addition of income by disallowing exemption claimed, and denial of natural justice. Dismissal of Appeal for Non-Compliance: The Hon. CIT(A) dismissed the appeal ex-parte for alleged non-compliance to appeal and hearing notices, denying the appellant an opportunity to furnish explanations. The appellant contended that this breached principles of equity, fairplay, and natural justice. The order was challenged to be quashed or set aside. Disallowance of Exemption Claimed: The Hon. CIT(A) upheld the addition of Rs. 31,84,320 made by the AO by disallowing the exemption claimed under section 11(2) of the Income Tax Act 1961. This disallowance was based on the failure to furnish Form no.10 before the due date of filing the return of income under section 139(1) of the Act. The appellant argued that this action was unjustified and requested the benefit of exemption under section 11(2) to be granted. Judgment Details: The appellant, a trust registered under section 12A of the Act, filed its return of income but did not submit Form No.10 along with it, as required under section 139(1) of the Act. The AO assessed the income at Rs. 31,84,320, denying the benefit of accumulation of income under section 11(2) due to the late submission of Form No.10. The matter was taken to the Ld. CIT(A), who confirmed the addition by dismissing the appeal for want of prosecution. The appellant then approached the Tribunal, arguing that the filing of the audit report in Form No.10 during the assessment proceedings should be considered sufficient compliance to extend the benefit of accumulation under section 11(2) of the Act. The Tribunal referred to relevant legal precedents and determined that the filing of the audit report in Form No.10 during the assessment proceedings was a valid compliance under the Act. The benefit claimed by the assessee under section 11(2) based on the audit report was deemed admissible under the law. The AO was directed to extend the benefit claimed by the assessee under section 11(2) subject to verification. As a result, the appeal filed by the assessee was allowed, and the order was pronounced in the open court on 07.11.2023.
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