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2024 (7) TMI 1336 - AT - Income TaxDenial of exemption u/s 11 - Assessee failed to file Form 10B due to delay of the auditors in filing the audit report, which it filed the same belatedly, but before the assessment was finalised - HELD THAT - As decided in the case of Ramji Mandir Religious and Charitable Trust 2023 (12) TMI 1295 - ITAT AHMEDABAD after reviewing the entire case law on this aspect, in unequivocal terms, it was held that the requirement of filing Form 10/10B is merely directory in nature and failure to furnish Form 10/10B before the due date prescribed under section 139(1) of the Act cannot be so fatal as to deny the claim of exemption under section 11(2) of the Act, especially when Form 10/10B was available on record when the intimation was passed by CPC under section 143(1) of the Act. Thus, since the Form 10B was available when the CPC passed the intimation in this case, disallowance of the claim of the assessee under section 11 of the Act is not proper. AO is, therefore, is directed to consider Form 10 available on record and to pass appropriate orders. Appeal of the assessee is allowed.
Issues:
1. Whether the failure to file Form 10B before the due date prescribed under section 139(1) of the Income Tax Act, 1961 can lead to denial of exemption claimed under section 11 of the Act. 2. Whether the requirement of filing Form 10B is mandatory or directory in nature. 3. Whether the Circular No. 2/2020 dated 3/1/2020 issued by CBDT requires the assessee to file a condonation application under section 119(2) of the Act before the concerned CIT for belated filing of the audit report. Detailed Analysis: Issue 1: The case involved the denial of exemption claimed by the assessee under section 11 of the Income Tax Act due to the failure to file Form 10B before the due date prescribed under section 139(1). The Ld. CIT(A) upheld the disallowance by the CPC, leading to the assessee filing an appeal contending that the failure to furnish Form 10B before the due date should not result in the denial of the exemption. The Tribunal referred to previous judgments, including the one by the Hon'ble Gujarat High Court, emphasizing that the denial of exemption solely based on the non-filing of Form 10B is not proper. The Tribunal directed the Assessing Officer to consider Form 10 available on record and make appropriate orders, ultimately allowing the appeal of the assessee. Issue 2: The Tribunal addressed the nature of the requirement of filing Form 10B, determining whether it is mandatory or directory. Citing precedents and decisions, including the case of Ramji Mandir Religious and Charitable Trust, the Tribunal concluded that the requirement of filing Form 10B is directory in nature. It held that the failure to furnish Form 10B before the due date prescribed under section 139(1) should not be fatal to deny the claim of exemption under section 11 of the Act, especially when the form was available on record during the processing of the return by the CPC under section 143(1) of the Act. Issue 3: The Ld. DR argued that the assessee should have followed the procedure outlined in Circular No. 2/2020 dated 3/1/2020 issued by CBDT, which required filing a condonation application under section 119(2) of the Act before the concerned CIT for belated filing of the audit report. The Ld. DR contended that since the assessee did not adhere to this procedure, the CPC rightly disallowed the exemption claimed by the trust under section 11(2) of the Act. However, the Tribunal did not find merit in this argument and ruled in favor of the assessee based on the nature of the requirement of filing Form 10B and its availability on record during the processing of the return. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the denial of exemption solely based on the non-filing of Form 10B before the due date prescribed under section 139(1) is not justified, especially when the form was available on record during the processing of the return. The Tribunal's decision was in line with previous judgments and legal interpretations regarding the nature of the requirement of filing Form 10B and its impact on the claim of exemption under section 11 of the Income Tax Act.
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