2024 (6) TMI 735 - AT - Income Tax

Exemption u/s 11 denied through Order/intimation u/s 143 (1) - form 10 B had not been filed by the assessee within the due date - audit report is filed before the assessment order - HELD THAT - Notice u/s 143 (1) (a) was issued on 19-12-2019. The audit report of the assessee trust was filed on the income tax portal by the auditors of the assessee trust on 20-01-2020. Intimation u/s 143 (1) denying the claim of the application of income was issued by CPC, Bengaluru on 08-02-2020. Therefore, what can be seen is that as on the date on which the intimation/order under section 143(1) of the Act was passed by CPC, Bengaluru, the auditor of the assessee trust had already filed the audit report in form 10B, before such order/intimation under section 143 (1) of the Act was issued. From the facts placed on record before us, we see no deliberate/mala fide intention on the part of the assessee or it s auditor to file the audit report in form 10B belatedly. We are of the considered view that the claim of application of income cannot be denied to the assessee only on the ground that the assessee/the auditor of the assessee omitted to file form 10 B (auditor s report) along with return of income, when the same was submitted to the tax authorities before the order/intimation under section 143 (1) of the Act was issued. Levy of Fee u/s 234F - delayed filing of the income tax return - HELD THAT - We observe that as per Explanation 2(a)(ii) of section 139(1) of the act, the due date for filing the Income-tax return in case of a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force, is 30th day of September of the assessment year. Accordingly, due date for filing the Income-tax return in the case of appellant-trust, for AY 2018-19, as per section 139(1) of the act, is 30th September, 2018. Further, from the facts of the case, we observe that appellant trust had filed its return of income as on 26th September, 2018 (i.e. before 30th September, 2018). Thus, we understand that the return of income of appellant trust was duly filed within the prescribed time limit u/s 139(1) of the act. As per section 234F of the act, fees is payable by a person when such person is required to furnish a return of income u/s 139 of the Act and the person fails to do so within the time prescribed in section 139(1) of the act. Now, as observed above, the appellant-trust had filed its return of income before the prescribed time limit u/s 139(1) of the act. Thus, in our view, section 234F is not applicable in the case of appellant trust. Appeal of assessee allowed.

Summary

Issues Involved:
1. Exemption u/s 11 of the Income Tax Act.
2. Adjustment u/s 143(1) of the Income Tax Act.
3. Levy of fee u/s 234F of the Income Tax Act.

Summary:

Issue 1: Exemption u/s 11 of the Income Tax Act
The assessee appealed against the denial of exemption of Rs. 32,98,068/- u/s 11 due to the late filing of the audit report (Form 10B). The audit report was signed before the due date but filed late on the Income Tax portal. The CIT(A) upheld the denial, citing that Form 10B was not filed before the due date of filing the return of income. The Tribunal referred to several judicial precedents, including the cases of Shree Jain Swetamber Murtipujak Tapagachha Sangh v CIT and Social Security Scheme of GICEA v. CIT, which supported the assessee's contention that the exemption should not be denied if the audit report is filed before the assessment order is passed. The Tribunal concluded that the claim of application of income cannot be denied solely on the ground of late filing of Form 10B and allowed the appeal.

Issue 2: Adjustment u/s 143(1) of the Income Tax Act
The adjustment of Rs. 32,98,068/- was made u/s 143(1) due to the late filing of the audit report. The Tribunal noted that the audit report was filed before the intimation u/s 143(1) was issued. Citing various judicial precedents, the Tribunal held that the application of income should not be denied if the audit report is filed before the assessment order is passed. Therefore, the Tribunal allowed the appeal on this ground as well.

Issue 3: Levy of Fee u/s 234F of the Income Tax Act
The assessee challenged the levy of a fee of Rs. 5000/- u/s 234F for delayed filing of the income tax return. The Tribunal observed that the due date for filing the return was 30th September 2018, and the assessee had filed the return on 26th September 2018. Since the return was filed within the prescribed time limit, the Tribunal held that section 234F was not applicable and allowed the additional ground of appeal.

Conclusion:
The Tribunal allowed the appeal of the assessee on all grounds, including the exemption u/s 11, adjustment u/s 143(1), and the levy of fee u/s 234F. The order was pronounced in the open court on 14-06-2024.