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2023 (12) TMI 711 - AT - Income TaxExemption u/s 11 - Claim denied on non-filing of Form 10B prior to furnishing return of income - assessee could not attend the communication due to IT-website technical glitches - HELD THAT - Hon ble Gujarat High Court in the case of Gujarat Oil Allied Industries, 1992 (9) TMI 67 - GUJARAT HIGH COURT held that where an assessee could not file audit report along with return of income but filed it later before completion of assessment before the Assessing Officer, the assessee was entitled to claim deduction. We note that the law in this regard is settled that benefit of exemption under section 11 and 12 should not be denied merely on account of delay in furnishing the audit report, and it would be sufficient compliance, if the audit report is furnished at a later stage either before the assessing officer during the assessment proceedings or before the ld.CIT(A) in the appellate proceedings. Therefore, we state that assessee has filed Form No. 10B on 04.08.2022 (after filing return of income) but before the assessment/ intimation u/s 143(1) was made by the Department. The intimation/assessment order was framed under section 143(1) of the Act, on 23.08.2022, hence Form No. 10B was available before the AO/CPC, at the time making the assessment/processing the return of income of the assessee. The assessee could not attend the communication due to IT-website technical glitches, however has eventually filed the audit report in Form No 10B on 04.08.2022 and complied with the condition laid in section 12A(1)(b) so as to entitle for a claim of exemption envisaged under sections 11 and 12 of the Act, hence we delete the disallowances made by the AO and allow the appeal of the assessee.
Issues Involved:
1. Disallowance of exemption under Section 11 of the Income Tax Act. 2. Taxation of gross income without deduction of expenses. 3. Procedural compliance regarding the filing of Form 10B. Comprehensive Summary: Issue 1: Disallowance of Exemption under Section 11 The assessee, a registered trust under Section 12AA, filed its return for AY 2021-22 declaring "Nil" income after claiming an exemption of Rs. 3,30,07,028 under Section 11. The Centralized Processing Centre (CPC) disallowed this exemption due to the non-filing of Form 10B prior to the return filing. The assessee argued that the delay was due to technical glitches on the Income Tax Portal and had filed the form subsequently. The CIT(A) upheld the CPC's decision, stating that Form 10B must be filed one month prior to the due date of the return, which was not complied with by the assessee. However, the Tribunal noted that the Form 10B was filed before the assessment/intimation under Section 143(1) and cited various judicial precedents to condone the delay, thus allowing the exemption. Issue 2: Taxation of Gross Income Without Deduction of Expenses The CPC also added voluntary contributions forming part of the corpus amounting to Rs. 1,50,000 to the total income. The Tribunal, considering the facts and the filing of Form 10B during the assessment stage, held that the assessee is entitled to the exemption under Section 11, thereby implying that the gross income should not be taxed without allowing deductions for expenses. Issue 3: Procedural Compliance Regarding Filing of Form 10B The Tribunal emphasized that the procedural requirement of filing Form 10B should not lead to the denial of substantial justice. It relied on various judgments, including those from the Gujarat High Court and ITAT Pune, which held that filing the audit report during assessment proceedings is sufficient compliance. The Tribunal concluded that the delay in filing Form 10B was due to technical glitches and should be condoned, thus allowing the appeal. Conclusion: The Tribunal allowed the appeal of the assessee, condoning the delay in filing Form 10B and granting the exemption under Section 11. The disallowances made by the Assessing Officer were deleted, and the appeal was allowed.
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