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TMI Blog2022 (11) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... s.!2A(l)(b) of the Act only if audited accounts and Form 10B are filed along with Return of Income. Such conditional grant of benefit of S.ll claim is against the true spirit and intent of granting such benefits under the scheme of the Act. 3. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 3. At the outset, we note that there was a delay in filing the appeal by the assessee for 252 days. It was explained by the assessee that it was very hopeful of getting the relief by the AO in pursuance to the directions provided by the learned CIT-A. Therefore, the assessee was waiting for the consequential/ appeal giving effect order of the AO after the order of the learned CIT-A. Therefore, the assessee chose not to file any appeal against the order of the learned CIT-A. However, upon receiving the appeal effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This Court, in an unreported decision in case of Vinay Chandulal Satia v. N.O. Parekh, CIT [Spl. Civil Application No. 622 of 1981 dated 20-8-1981], has laid down the approach that the authorities must adopt in such matters in the following terms: "The Supreme Court has observed in numerous decisions, including Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361, State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749 and Babutmal Raichand Oswal v. Laxmibai R. Tarte AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt." 5.1 From the above it is revealed that the income of the assessee should not be over assessed even there is a mistake on the part of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income. 5.2 We also note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee by holding that the claim of exemption under section 11 of the Act was not made in the return of income. Therefore, as per the provision of the Act and ratio laid down by the Hon'ble Supreme court in the case of Goetze (India) Ltd vs. CIT, the office of AO is not empowered to admit any claim which is not made in return of income. 8. On appeal by the assessee, the learned CIT(A) allowed the appeal of the assessee for statistical purpose with the following direction: A.O is directed to verify whether appellant has its audited and has filed Form 10B alongwith return of income as per the details mentioned in section 12A(1)(b) of the Act. In cash the said condition has not been fulfilled by the appellant, then appellant would not be eligible to claim benefit of section 11 & 12 of the Act even though it is registered entity u/s.12AA of the Act. Subject to these remark and directions, if appellant has filed Audit Report alongwith Return of income, then it would be treated as exempt entity otherwise the income assessed by the A.O at Rs.15,26,210/- would be valid assessed income. The ground of appeal is allowed for statistical purpose subject to verification by A.O the above remarks. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the audit report duly signed by the qualified chartered accountant is a procedural requirement and the courts have held that the assessee cannot be denied the benefit for which it is entitled in the event of any procedural contravention specified under the provisions of the Act. In holding so we draw support and guidance from the judgment of Hon'ble Gujarat High Court in case of CIT vs. Gujarat Oil & Allied Industries reported in 201 ITR 325, the relevant extract of the judgment is reproduced as under: In our view, the aforesaid reasoning of the Allahabad High Court and the Patna High Court would squarely apply to the facts of the present case. The provision about furnishing of the auditors' report along with the return has to be treated as a procedural provision, directory in nature, and its substantial compliance should suffice, meaning thereby that such report should be made available by the assessee to the Assessing Officer latest when the question of framing of assessment is taken up by the Income-tax Officer and when he applies his mind to the claim of the assessee and if by that time, the assessee has put his house in order and has furnished the report of the audito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessment has not reached to the finality and therefore principle laid down by the Hon'ble High Court of Gujarat in the case of CIT vs. Gujarat Oil & Allied Industries (Supra), that the requirement for filing the audit report is a procedural requirement, can be applied in the given facts and circumstances. Therefore, the benefit for which the assessee is entitled cannot be denied. 12.4 Before parting, the above finding given by us is dehors that there was some reasonable cause which prevented the assessee in filing the prescribed audit report within the time permitted under the provisions of law. The onus lies upon the assessee to justify the reasonable cause for delayed filing the audit report. In this regard, we note that the assessee despite being eligible for the exemption under section 11 of the Act, has paid the taxes of Rs. 3,79,027.00 only. Thus, from the fact of making the payment of tax, it is transpired that the assessee was not properly guided by the tax consultant and this contention was duly raised by the assessee before the learned CIT-A. The relevant extract of the contention of the assessee before the learned CIT-A is reproduced as under: Assessee has fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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