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TMI Blog2024 (3) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) TMI 61 - SUPREME COURT] as the assessee is prevented by sufficient cause and the appeal of the assessee taken up for deciding on the merits of the case. Exemption u/s 11 - assessee had belatedly e-filed the Audit Report in Form 10B along with the return of income filed under sub section (1) of section 139 - whether the assessee denied the benefit of exemption as a trust merely on the reason that the audit report in Form no. 10 B filed belated? - HELD THAT:- For delay in filling the audit report in form no. 10 B we note that the assessee has filed the said audit report on 13.03.2024. Assessee placed on record that even the CBDT vide F.No. 225/358/2018/ITA.II dated 08.10.2018 wherein the due date extended upto 31.10.2018 and the assessee in this case e-filed the form no. 10B on 13.03.2024. This issue is decided in the case of Sarvodaya Charitable Trust Vs. ITO(E) [ 2021 (1) TMI 214 - GUJARAT HIGH COURT] where assessee, a public charitable trust registered u/s 12A, had substantially satisfied condition for availing benefit of exemption as a trust, it could not be denied exemption merely on bar of limitation in furnishing audit report in Form No.10B especially when the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bonafide belief that the CIT(A) was pass rectification order but in the meantime lot of time had already lapsed, and in these circumstances without awaiting any further for the same the appellant had filed the present appeal, and the delay so occurred may kindly be condoned. A affidavit of the partner confirming the above facts is also enclosed, to confirm the above facts. We hope the delay so occurred would be condoned and appeal would be admitted. 2.1 During the course of hearing, the ld. DR fairly not objected to assessee s application for condonation of delay and prayed that Court may decide the issue as deem fit in the interest of justice. 2.2 We have heard both the parties and perused the materials available on record. The Bench Noted that the assessee for condonation of delay of 37 days has merit and we concur with the submission of the assessee and see that there were reasonable cause for the delay and thus, the delay of 37 days in filing the appeal by the assessee is condoned in view of the decision of Hon ble Supreme Court in the case of Collector, land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC) as the assessee is prevented by sufficient cause. First we take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is seen that assessee has shown total receipts and expenses of Rs. 96,28,573/- and Rs. 81,87,058/- respectively and claimed Rs. 14,41,515/- as exemption u/s 11 12 of the Act which is less than 15% of total receipts. 4.3 On verifying the details of the assessee on internet which is available in public domain, it has been noticed that the assessee is engaged in charitable work by serving Gaushala. Prima facie, the assessee's activity seems to be genuine. However, during scrutiny proceeding, the assessee was repeatedly requested to furnish the documentary evidences of the expenses incurred to verify your claim of charitable activity. However, the assessee has not furnished documentary evidences of expenses. In want of documentary evidences, expenses remained unverified and therefore, the ld AO completed the assessment proceeding as barred by limitation. 5. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: 5.1. I have carefully considered the penalty order and the submission filed by the appellant. In the instant case, penalty of Rs. 40,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision he has read the fact considering that the appeal is related to the levy of penalty u/s 271(1)(b) of the Act and there is no finding of the ld. CIT(A) on the grounds which are raised on the merits of the case. Therefore, considering that aspect of the matter, we set aside the appeal of the assessee to the file of ld. CIT(A) without commenting upon the merits of the case and the assessee is directed to participate in the remand proceeding before the ld. CIT(A) and should not ask adjournment of the flimsy grounds. In terms of these observations the appeal of the assessee in in ITA no. 13/Jodh/2023 is allowed for statistical purposes. ITA No. 14/Jodh/2023 for A.Y 2018-19 9. Now we take up the appeal of the assessee in ITA no. 14/Jdoh/2024 for A. Y. 2018-19wherein the assessee has taken the following grounds of appeal. 1. a. The Id. CIT(A) has erred in treating the appeal as not filed in due time and alternatively had also erred in not condoning the delay in submission of appeal. The order so passed is contrary to the principles of natural justice and is also bad in law and bad on facts. The appellant had filed appeal within due time of intimation of the order coming to his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26/08/2023 for A.Y. 2018-19 it is seen that at Sr. No. 2(b) you have mentioned the date of order u/s 143(1) as 17/8 / 2023 date of service of order as 17/8 / 2023 You have mentioned at Sr. No. 14 that there was no delay in filing of appeal and the grounds of condonation of delay has been kept blank. However, on perusal of the order u/s 143(1) it is seen that the order is dated 26/9 / 2019 which was sent at the email id. [email protected]. You are therefore, requested to submit your clarification in the matter . The appellant has submitted its written submission dated 6/12 / 2023 which is reproduced below: The appellant respectfully begs to submit following facts and details for your honor's kind consideration In reference to your notice dated 4.12.2023, it is submitted that the date of order in Column 2(b) is inadvertently mentioned as 17.8.2023, while the correct date of order is 26.9.2019 which is rightly observed by your honour in the aforesaid notice. It is submitted that the intimation of the said order was received by the appellant on 17.8.2023, and therefore the date of receipt of the order was inadvertently mentioned in the column of date of order. It is submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate plea that the email address given does not belong to the appellant but was that of the consultant and it had recently changed it and therefore the delay in filing appeal should be condoned. This statement of the appellant itself shows that the appellant had not taken due care to update its email in its income tax records since A.Y. 2018-19 till 2023 and the onus of this lapse is solely on the applicant. The submission of the appellant also shows that the appellant had not kept any tract of the communication sent to it from the Department via e-mail since A.Y.2018-19. In view of the foregoing facts it is seen that the appellant has not given any convincing reason for delay in filing appeal by 1065 days. (c). There are various judicial pronouncements which laid down the principle for condonation of delay. The basic essence of all the judgment says that delay should not be malafide and there should not be any negligence on the part of the appellant. Some of the decisions are relied upon are as under: 1. If the appellant has acted diligently then normally the delay gets condoned. However if the delay is caused due to negligence on the part of the appellant, it become difficult to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to condonation of delay, still held that there must be some way or attempt to explain the cause for such delay and as there was no whisper to explain what legal problems occurred in filing the Special Leave Petition, the application for condonation of delay was dismissed. 9. Similarly, in the case of Collector of Central Excise, Madras v. A.MD. Bilal amp;Co., [1999 (108) Excise Law Times 331 (SC)], the Supreme Court declined to condone the delay of 502 days in filing the appeal because there was no satisfactory or reasonable explanation rendered for condonation of delay. 10. In the case of Joint Commissioner of Income-tax*, Special Range L Chennai v. Tractors Farm Equipments Ltd. [2007] 104 ITD 149 (CHENNAI) (TM) IN THE ITAT CHENNAI BENCH 'B' (THIRD MEMBER) on AUGUST 11, 2006 held that 8. In the present case I find that the assessee justified the delay only with reference to the affidavit of Shri M.L.S. Rao, Director of the company. In the said affidavit M_{r} Rao stated that the Commissioner (Appeals)'s order was misplaced and forgotten. It was found while sorting out the unwanted papers. Thereafter steps were taken for the preparation of the appeal. Consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erits of the case as under. a. The only ground of appeal relates to disallowance of exemption claimed under the provisions of section 11 and 12 of the Income Tax Act. The appellant in its written submission has claimed that the original Return of Income Tax was filed on 15/10/2018 and the revised Return of Income was filed on 31/10/2018. However, on perusal of the ITBA system it is seen that the original Return of Income was filed on 17/09/2018 which was processed vide intimation order 143(1) dated 26/09/2019 The appellant in its entire reply has not clarified whether the Audit Report in Form 10B was filed on the se filing portal and the date of filing it. The copy of Audit Report in Form 10B attached by the appellant along with the written submission shows the date as -08/2018 and does not have the Income Tax Department Logo in the background which indicates that it is not a copy of the uploaded report. On perusal of the ITBA System no Form 10B is available for AY 2018-19 which indicates that Form 108 was not uploaded by the appellant on the portal either with the Return of Income or thereafter. The brief facts as narrated earlier is that the appellant is a registered trust and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant assessment year ie A.Y 2018-19, the due date for filing of return was 30/09/2018. The appellant has not filed Form 10B within the specified date along with the return of income and therefore the CPC, Bengaluru had disallowed exemption us 11 12 under the Act. In fact the appellant has not given any details as to whether the Form no. 10B was filed electronically and if so on what date. At this stage it will be appropriate to mention that appellant has not made any application u/s 119(2)(b) before the Competent Authority i.e. Pr.CIT for condonation of delay. Such provisions of condonation of delay are found in section 119(2)(b) which enables an assessee to approach the Board for seeking relief in such case. The provisions of section 119(2)(b) are reproduced below: Section 119: Instructions to subordinate authorities. (b) The Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class, by general or special order, authorize (any income tax authority, not being [*] Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after expiry of period specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x for condoning delay in filing Form B and claiming benefit of section 11. It was noted that assessee was well aware that there was a delay in filing Form 108, however assessee seemed to have not made any application for condonation of delay in filing Form 10B before concerned Pr. Commissioner/Commissioner/Director of Income-tax as provided under section 119(2)(b). Whether there was no infirmity in order passed by Commissioner (Appeals)-Held, Yes (paras 6.2 and 6.3) [In favour of revenue] e. Further it is seen that as per the provisions of section 143(1)(a)(ii) adjustment can be made for any incorrect claim, if such incorrect claim is apparent from any information in the return. The appellant has not filed the form 10B within the specified date and therefore the appellant is not eligible for exemption under section 11 12 of the Act. f. At this point of time, it is pertinent to discuss the decision of the Hon'ble Apex Court in the case of CC v. Dilip Kumar Company [2018] 95 taxmann.com 327/69 GST 239, wherein the Hon'ble Court has laid down following principles: (i) Exemption notification/provisions should be interpreted strictly, the burden of proving applicability would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of any discretionary power neither the assessing authority nor the appellate authority can relax the provisions of the Statute. Therefore, this is a clearly inadmissible claim as defined under sub-clause (ii) of clause (a) of section 143(1), the CPC was justified in denying the claim for exemption u/s 11, while processing the return of income u/s 143(1) of the Act. Therefore, we do not find any merits in the appeal filed by the assessee. i. It is evident that the appellant had not filed Form 10B within the specified date in violation of Rule 12A(1)(b) of Income Tax Rules, 1962. It is a trite law that if a thing is said to be done in a particular manner, it shall be done in that manner and its performance in any other mode or fashion shall be of no consequence. The appellant cannot get benefit by claiming that default has been committed by the auditor. Therefore, in application of the above decisions of the apex court and also the mandated provisions of the statute, the Assessing Officer has rightly disallowed the exemption claimed and made addition of the same to the total income of the appellant as per the provisions of section 143(1)(a)(ii) Accordingly, I am not inclined to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of appeal from the date of intimation of the order is within due time, and it is therefore submitted that there was no delay in submission of appeal and therefore condonation of delay was kept blank. It is submitted that in case your honour considers the same as being filed belatedly, we pray that the delay may kindly be condoned, as the same was on account of bonafide and genuine reasons. There was no intimation of the said order to the appellant. The email address does not relates to the appellant and it appears to be the email address of one consultant was looking after the audit of the appellant earlier. Even now he is not the consultant of the appellant. Recently the mobile details and email details of the present trustees have been updated and now the notices are being received on the new email address, and all compliances of the notices is being regularly made. In view of above facts it is submitted that the appeal may kindly been entertained. The submissions made on merits of the case are also enclosed herewith with a prayer that the same may kindly be considered . The ld. AR of the assessee submitted that the ld. CIT(A) has not considered the alleged delay in fillin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered society that runs tample with object of charitable nature AO while processing the return under s. 143(1) disallowed entire expenditure subjecting to tax at maximum marginal rate without giving effect to any thresold limit AO held assessee as AOP (trust) CIT(A) confirmed the action of the AO Assessee has neither applied nor granted registration under s. 12A It filed income under the head 'income from other sources' other deducting application of income from goes receipt Assessee contended that action of lower authorities is company to s. 143(1) It is also his contention that in case of charitable society, even if benefit under ss. 11 and 12 is denied and its income was brought to tax as income from other sources , all relevant expenditures are also to be allowed under s. 57(iii) As per provisions of s. 43(1) the adjustment made by the CPC, does not fall under any of the limb prescribed under s. 143(1) Further, the submission that no such adjustment was made in earlier assessment years and there is no change in the facts during the year under consideration, also could not be controverted by the Department Even otherwise in case of a charitable society even if benefit un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal as well as the Hon'ble High Court by holding that even if the Form was filed during the course of assessment proceedings, it amounted to sufficient compliance. The Hon'ble Supreme Court, taking note of the judgment in CIT Vs. Shivanand Electronics (1994) 209 ITR 63 (Bom), approved the view of the Hon'ble High Court having the effect that the requirement of filing Form 3AA was a necessary ingredient for claiming additional depreciation, but the timing of filing the Form was a directory requirement, which was fulfilled on filing it even during the course of assessment proceedings. The ITA No.182/NAG/2019 Krushi Vibhag Karmchari Vrund Sah Pat Sanstha Maryadit Hon'ble Bombay High Court in Shivanand Electronics (supra) dealt with the requirement of filing audit report for the purpose of claiming deduction u/s 80J, which required that the report should be filed along with return of income'' under s. 80J(6A). It held that such requirement of filing the audit report along with the return of income was not mandatory, but directory in the sense that if assessee complied with the same before completion of assessment, deduction under s. 80J, on the basis of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he requisite audit report in Form No. 56F along with that, assessee's claim is allowable 1.6. It is also submitted that the gross income cannot be taxed as income, and only the net income can be considered. The expenses which had been incurred 13. To support this contention reliance was placed on the following evidences: S. No. Particulars Page No. 1 Submission before ld. CIT(A), NFAC, Delhi 1-9 2 Audit Report and Financial Statements for AY 2018-19 10-17 3 CBDT Circular No. 225/358/2018 ITA. II for Due date extension 18 14. The ld DR is heard who has relied on the findings of the lower authorities and admitted that since the delay in filling the audit report is not under the purview of the ld. CIT(A) he has rightly rejected the appeal of the assessee on that ground that the audit report has not been filed in time. 15. We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee has explained the reasons that in fact there is no delay and the date of intimation was inadvertently left blank. Even the date of intimation and service there was an email id of the consultant who was now not looking to the affairs of the trust and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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