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TMI Blog2022 (3) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... s wisdom vide the Finance Act 2017 w.e.f. 01-4-2018 i.e from A.Y 2018-19 by inserting Clause (ab) to sub-sec.(1) of Sec. 12A of the Act. In the backdrop of our aforesaid observations, we find no infirmity in the view taken by the CIT(A) who had on the basis of his well reasoned observations, concluded, that there was no justification on the part of the A.O in declining the assessee s claim of exemption u/s 11 for the reason, that it had delayed filing of its audit report in Form No. 10B in compliance with the provisions of Sec. 12A (b), more so, when the said Form No. 10B was available on his record during the course of the set-aside proceedings, i.e, while framing the assessment vide his order passed u/s 143(3) r.w.s 254 of the Act, and no defect therein could be detected by him. We, thus, in terms of our aforesaid observations uphold the view taken by the CIT (A). - Decided against revenue. - ITA No. 361//PUN/2019 - - - Dated:- 7-3-2022 - Shri Inturi Rama Rao, AM And Shri Ravish Sood, JM For the Department : Shri M.G. Jasnani, D.R For the Assessee : Shri Kishor Phadke, A.R ORDER PER RAVISH SOOD, JM The present appeal filed by the Department is dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee trust which was engaged in carrying out educational activities and setting up educational institutions had though made huge investments but not filed its return of income for the year under consideration, the A.O re-opened its case u/s 147 of the Act. In compliance, the assessee-trust filed its return of income for A.Y 2002-03 on 16-11-2006 along with a consolidated and unit-wise profit loss account and balance sheet. On a perusal of the return of income, it was observed by the A.O that the return of income of the assessee trust was neither accompanied with the computation of income nor the audit report in Form No. 10B to support its claim for exemption u/s 11 of the Act. Backed by the fact that the assessee trust had failed to file the audit report in Form No. 10B which was mandatory for claiming deduction u/s 11 of the Act, the A.O vide his order passed u/s 143(3), dated 29-12-2006 declined the assessee s claim for exemption of ₹ 3,36,61,937/- u/s 11 of the Act and assessed its income at ₹ 4,59,71,420/-. 3. Aggrieved, the assessee carried the matter in appeal before the CIT (A). During the course of the proceedings before the CIT(A), it was submitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite audit report in Form No. 10B could not be produced before the A.O due to genuine difficulties, therefore, the same be admitted in the course of appellate proceedings. Alternatively, it was submitted by the assessee before the CIT(A), that as a consequence of the denial of benefit u/s 11 of the Act, the A.O had also not permitted application of ₹ 1,62,81,709 towards its capital expenditure, as well as had denied the benefit of accumulation of ₹ 2,09,00,000 towards the objects of the trust. However, the aforesaid submissions of the assessee did not find favour with the CIT(A), inter alia, for two-fold reasons, viz. (i) that as the assessee had neither in the course of appellate proceedings nor before the A.O produced any evidence which could impart any strength to the veracity of its explanation, the same, thus, did not merit acceptance; and (ii) that as per the mandate of Section 12A(b) of the Act, the provisions of Sec. 11 and Sec. 12 shall not apply in relation to the income of any trust or institution unless the assessee furnishes along with its return of income for the relevant year the report of such auditor in the prescribed form duly signed and verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 28-3-2013 endorsed the observations of the CIT(A); and concluded, that as the assessee had failed to obtain the audit report and file the same along with its return of income, therefore, it was not entitled for exemption u/s 11 of the Act. In so far the judicial pronouncements that were relied upon by the assessee were concerned, it was observed by the A.O that unlike the case of the assessee before him wherein the return of income was filed only pursuant to the Notice u/s 148 of the Act, in all the case laws that were relied upon by him the respective assessee s had voluntarily filed their returns of income within the prescribed time limit contemplated u/s 139 of the Act. Accordingly, the A.O vide his order passed u/s 143(3) r.w.s 254, dated 28-3-2013 assessed the income of the assessee trust at ₹ 3,36,61,937. 6. On further appeal, the CIT(A) found favour with the claim of the assessee that the A.O was not justified in assessing its total income without allowing the benefit of exemption u/s 11 of the Act. Observing, that though the assessee had admittedly not submitted the audit report in Form No. 10B during the course of the assessment proceedings before the A.O, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved by the CIT(A) that there was no violation of the provisions of Sec. 13(1)(d) r.w.s. 11(5) of the Act by the assessee-trust. Backed by his aforesaid observations, the CIT(A) was of the view that the A.O was not justified in declining the assessee s claim for exemption u/s 11 of the Act for late filing of the audit report in Form No. 10B in compliance with the provisions of sec. 12A(b) of the Act, more so, when the said Form No. 10B was available with him during the course of the set-aside proceedings u/s 143(3) r.w.s. 254 of the Act and no defects therein could be detected by the A.O. In the backdrop of his aforesaid deliberations the CIT(A) directed the A.O to allow the benefit of exemption u/s 11 of the Act to the assessee trust i.e after accepting the audit report in Form No. 10B that was available on record and recompute its income by allowing the application of income under the said provisions as per law. 7. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We have heard the learned Authorised Representatives of both the patties, perused the orders of the lower authorities and the material available on record, as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that though the assessee had filed the requisite audit report at the appellate stage, however, the same was not entertained by the CIT(A) inspite of the fact that the reasons for non-filing of the same at the relevant point of time were given in the course of the proceedings before him. Being of the view that the CIT(A) had not judicially appreciated the reasons leading to non-filing of the audit report at the relevant point of time, the Tribunal, thus, had restored the issue to the file of the A.O, with a direction to decide the same as per fact and law after providing an adequate opportunity of hearing to the assessee. However, the Tribunal had refrained from commenting on the merits of the issue at hand. 10. As observed by us hereinabove, the A.O had thereafter in the course of the set-aside proceedings merely harped on the fact that as the assessee trust which was obligated u/s 12A r.w Rule 17B to have obtained the audit report in Form No. 10B and enclosed the same alongwith its return of income, having failed to do so, was thus not entitled to exemption u/ss. 11/12 of the Act. 11. On further appeal, as observed by us hereinabove, the CIT(A) had found favour w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving effect to [the provisions of sec. 11 and sec. 12 exceeds the maximum amount which is not chargeable to income tax in any previous year] the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation before sub-section (2) of sec. 288 and the person in respect of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed]. 13. Admittedly, as per the mandate of Sec.12A(1)(b) of the Act, a trust or an institution in order to trigger the provisions of Sec. 11 and Sec. 12 of the Act are, inter alia, required to, viz. (i) get its accounts audited by an accountant as defined in the Explanation below sub-section 2 to Sec. 288 of the Act; and (ii) to furnish along with its return of income for the relevant assessment year the report of such audit in the prescribed form, duly signed and verified by such accountant and to set forth such particulars as may be prescribed. We find that the aforesaid requirement of law had been looked into by vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the exemption available to a trust u/s 11 may not be denied merely on account of delay in furnishing the auditor s report. 14. In the backdrop of the aforesaid settled position of law, we are of the considered view, that as the A.O in the course of the set-aside proceedings had before him the audit report of the assessee in Form No. 10B, therefore, he had erred in not taking cognizance of the same, and in fact summarily brushing aside the same. At this stage, we may also observe, that the Tribunal while restoring the matter to the file of the A.O had categorically observed that there was no justification on the part of the CIT(A) in not entertaining the audit report in Form No. 10B that was filed by the assessee before him i.e without judicially appreciating the reasons that had led to the non-filing of the same at the relevant point of time. In our considered view, the Tribunal had though impliedly approved the filing of the audit report by the assessee in the course of proceedings before the CIT(A), but had in all fairness restored the issue to the file of the A.O to decide the same as per the facts and law after providing adequate opportunity of being heard to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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