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TMI Blog2024 (6) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... dy for the assessee which could not be said to be compulsorily resorted to, by the assessee. The circular No. 7/18 dated 20.12.2018 issued u/s 119 of the Act could not be, therefore, said to have taken away the appellate remedy. Assessee ought to have appealed against the intimation u/s 143(1) and not against rectification-order u/s 154 - A similar dispute was decided by ITAT, Jodhpur in Akbar Mohammad [ 2022 (2) TMI 479 - ITAT JODHPUR] as held it is a case in point that the assessee did not file any appeal against the intimations passed us 143(1) of the Act and the Ld. Sr. DR is right to the extent that the assessee cannot be given relief for that reason. However, it is also a settled law that the assessee cannot be taxed on an amount on which tax is not legally imposable. Although, the assessee might have chosen a wrong channel for redressal of his grievance, all the same, it is incumbent upon the Tax authorities to burden the assessee only with correct amount of tax and not to unjustly benefit at the cost of tax payer. Therefore, we find that in present case, the assessee cannot be denied benefit of exemption u/s 11/12 as claimed in return for mere delay in filing of audit repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in any previous year, the accounts of the Trust/Institution for that year have to be audited by an Accountant. The Audit Reports of such Trusts/Institutions has to be furnished electronically in Form No.10B as per Rule 17B of the IT Rules, 1962. This is mandatory to claim the benefit given in statute. In the present case, the Audit Report in Form No.10B was not filed by the appellant when they filed the return of income on 31.08.2018. Hence, while processing the return u/s 143(1) of the Act dated 26.09.2019, the CPC determined the taxable income at Rs. 1,35,70,404/-. From the facts available on record, it is evident that the appellant filed Form No.10B only on 15.06.2023 after the appellant s rectification applications have been rejected vide orders u/s 154 of the Act dated 12.02.2020, 5.2 From the facts available on record, neither intimation u/s 143(1) issued nor dismissal of rectification application vide orders u/s 154 dated 12.02.2020 and 17.05.2023 cannot be faulted. Every return, being filed with a claim of exemption or deduction, the provisions given in the statute should be strictly followed and there is no scope given by any authority including CPC to apply discretio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have challenged the intimation u/s 143(1). 7. Ld. AR submitted that the assessee is engaged in charitable activities and the registration granted to it by tax authorities u/s 12A was in force. The assessee filed return of income on 31.08.2018 and prior to filing of return, the accounts were duly audited on 14.08.2018, a copy of the audited accounts in the shape of audited Balance-Sheet, Income Exp. A/c and Schedules, duly signed and sealed by M/s Ujjawal Bhorkar Associates, Chartered Accountants, is placed at Page No. 15-18 of Paper-Book. However, the auditors of assessee failed to e-file/upload audit-report (Form No. 10B) alongwith return of income. But subsequently, on 15.06.2023, the assessee has filed audit-report (Form No. 10B) which is evident from the acknowledgement downloaded from web portal of Income-tax Department, filed at Page No. 10-14 of Paper-Book. Ld. AR submitted that the AO has denied exemption u/s 11/12 claimed by assessee in the return for a technical defect that the audit-report (Form No. 10B) was not filed alongwith return of income. Ld. AR submitted that except such technical defect, there is no other reason to deny the benefit of section 11/12 to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving deduction of expenses incurred for earning income. Therefore, the entire assessment done by AO is not in accordance with law. 9. Per contra, Ld. DR vehemently defended the orders of lower authorities and submitted that furnishing of audit-report alongwith return of income is a pre-condition for allowability of exemption u/s 11/12. Since the assessee has not fulfilled such condition, the lower-authorities have rightly denied assessee s claim of exemption u/s 11/12 and there is no infirmity in the action of lower-authorities. Ld. DR strongly relied upon the order of CIT(A). 10. We have heard rival contentions of both sides and examined the present case in the light of judicial decisions. We would like to adjudicate all points involved in present case one by one as under: (i) So far as allowability of exemption u/s 11/12 in a situation where the assessee has not filed audit-report before filing return of income or even upto the processing of intimation u/s 143(1) but filed subsequently before submitting first-appeal, the issue is settled in favour of assessee by ITAT, Indore in Indore Contract Bridge Association Vs. CPC, Bangalore in ITA No. 403/Ind/2022 order dated 18.04.2023 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic and satisfying all conditions prescribed in income-tax law for being entitled to exemption. Ld. AR submitted that if the audit-report obtained by assessee on 08.06.2017 but filed on 03.04.2019 / 04.05.2019 is accepted, the assessee would be entitled to the benefit of exemption. Ld. AR placed a heavy reliance on the latest decision of ITAT in Savitri Foundation Vs. ITO, ITA No. 1925/Mum/2021 (AY 2018-19) order dated 01.08.2022 wherein the AO made processing of return u/s 143(1) denying exemption u/s 11 to assessee for the very same reason of non-uploading of audit report before filing of return but subsequently the assessee uploaded audit-report during the course of first-appeal; when the matter reached ITAT, the Mumbai Bench has allowed exemption to assessee. Ld. AR submitted that the decision taken by ITAT is directly applicable to assessee. Ld. AR also submitted that the decision of Hon ble Supreme Court in Wipro Ltd. 446 ITR 1 relied upon by Ld. CIT(A) is quite distinguishable for the reasons that (i) the said decision involved deduction u/s section 10B whereas the present-appeal is concerned with exemption u/s 11/12; and (ii) the said decision involved interpretation of sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the assessee at the time of filing of Return of Income and was not filed due to bonafide reasons the benefit of exemption under section 11 cannot be denied if otherwise assessee is eligible to claim the same. 6. The Hon'ble Bombay High Court in the case of CIT vs. Mumbai Metropolitan Regional Iron Steel Market Committee (supra) has held that late filing of required documents would not disentitle the assessee from availing benefit of section 11 of the Act. Thus, in the facts of the case and in the light of decision of Hon'ble Bombay High Court, I deem it appropriate to restore the file back to Assessing Officer for de novo assessment after considering the audit report field by the assessee, in accordance with law. 7. In the result, impugned order is set aside and appeal by assessee is allowed for statistical purposes. 13. We also gainfully refer another recent decision of ITAT, Ahmedabad Bench in the case of M/s Shardaben Education Trust, Gandhinagar Vs. ITO, Ahmedabad, ITA No. 2312/Ahd/2018, order dated 16.11.2022 where a similar controversy has been decided in favour of assessee, after following the decisions of Hon ble Gujrat High Court in CIT vs. Gujarat Oil Allied In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 auditor for supporting the return, he can be said to have satisfied the requirement of section 80J(6A) of the Act. 12.2 In view of the above we hold that the assessee cannot be denied the benefit of exemption for which it is entitled merely on the lapse of procedural requirement i.e. delay in filing the audit report in the prescribed form. In the judgment cited above, it was provided that the audit report was filed by the assessee before the completion of the assessment. In other words, the compliance of the law was made by the assessee when the assessment proceedings was pending before the AO whereas in the case on hand the assessee complied the requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter back to the file of AO for a fresh assessment after considering the audit-report filed by assessee, in accordance with law. These grounds are accordingly allowed. Other decisions relied by Ld. AR have also taken a view that non-filing of audit report with the return of income is a mere procedural irregularity for which the exemption u/s 11/12 cannot be denied. (ii) The second point taken into account by CIT(A) is such that the CBDT Circular No. 10/2019 dated 22.05.2019 empowers the Commissioner of Income-tax for condoning delay in the matter of filing audit report (Form No. 10B) but the assessee has not filed any condonation-petition before Commissioner of Income-tax. This point is also rejected by Hon ble Gujrat High Court in Para 5.6 of their judgement in Indian Panel Board Manufacturer Vs. DCIT Tax Appeal No. 655 of 2022 dated 21.03.2023. For clarity, we may mention that the Circular referred in the judgement is 7/18 dated 20.12.2018 which was a previous circular but it will not make any difference. The relevant para of the judgement is as under: 5.6 The tribunal further committed an error in appreciating the import of Section 119(2)(b) of the Act in as much as the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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