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TMI Blog2025 (1) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... in filing the required audit reports for both the year under consideration. As decided in Shree Jain Swetamber Murtipujak Tapagachha Sangh [ 2024 (3) TMI 1327 - BOMBAY HIGH COURT] and Al Jamia Mohammediyah Education Society [ 2024 (4) TMI 939 - BOMBAY HIGH COURT] held that the error on the part of auditor cannot be rejected but should be accepted as a reasonable cause shown by the trust management. In that case alike the present case, assessee did not suo-motto even realize its mistake of non-filing of audit report along-with return until the intimation was served u/s 143(1) of the Act. Revenue was not justified in denying the benefit of exemption u/s 11 of the Act in pleno to the appellant trust. Remand matters back to the files Ld. AO with a direction to (a) take on record both the audit reports filed for the respective assessment years (b) treat them as filed in compliance with the provisions of section 12A(1)(b) of the Act and (c) then assess the total income of the appellant trust after giving effect to the provision of section 11 and section 12 of the Act in the light of applicable provisions of the Act. - Hon ble Shri Pavan Kumar Gadale, Judicial Member And Shri G. D. Padm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case and in law the learned CIT(A) erred in confirming the disallowance of exemption u/s 11 for the delay in filing Form No 10 dated dd.mm.yyyy filed on dd.mm.yyyy 2. Delay in filing Form No. 10B electronically was due to genuine reason as the appellant came to know at a later stage that even through books are audited and audit report is issued Chartered Accountant has not uploaded Form No 10 3. The CIT(A) failed to appreciate that, It has been held by various Courts that the requirement of filing Form 10/10B is merely directory in nature and failure to furnish Form 10/10B before due date prescribed u/s 139(1) cannot be so fatal so as to deny the claim of exemption u/s 11. 4. During the course of physical hearing, the Ld. AR Mr Vaidya adverting to the assessment records reiterated appellant s submissions as were made before Ld. CIT(A) and contended that, subsequent to filing of ITR, the trust for both the years has suo-motto furnished respective audit reports in Form No. 10B. There is no dispute about the fact that in both years under consideration required audit report was filed belatedly. However insofar as the AY 2017-18 is concerned the delay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12A(1)(b) of the Act given that, before proceeding to adjudicate former solitary issue, we deem it apt to reproduce here then applicable provision in verbatim as; 12A Conditions for applicability of section 11 and 12 (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely: (a). . . . . . . (aa). . . . . . . (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 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 below sub-section (2) of section 288 and the person in receipt 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. (Emphasis supplied) 6. A plain reading former provision uncloudedly unveils that, for the purpose of claim of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cates procedural lapses. The former lapses since made good much after the processing of respective ITR, therefore such post belated compliance would in no derails the summary assessment which were processed in the absence of audit reports. 9. The denial of claim for exemption for AY 2017-18 was for twofold reasons (a) ITR was not filed within the due date prescribed 139(1) of the Act but u/s 139(4) of the Act and (b) audit report was neither filed within former due date nor it was accompanied with ITR. Insofar as the AY 2018-19 is concerned, the denial is based non filing of audit report along-with ITR. 10. It remained an undisputed fact that, the respective audit reports in Form No. 10B (r.w.r. 17B) were furnished by the appellant subsequent to filing of its respective ITR and much after they were summarily processed. Nota bene, may it be assessment or re-assessment, the taxable income of every Person as defined by 2(31) of the Act, has to be computed in accordance with the provisions of the Act and in the present case, as is abundantly evident from the orders of tax authorities below that, the appellant assessee is a registered trust u/s 12A of the Act and is engaged in activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow however tried to read a condition of clause (b) of section 12A(1) into section 139(4A) to hold that such audit report in Form No. 10B vis- -vis return of income could have been filed before the due date of filing for claiming benefit of section 11 and 12 of the Act, which we do not subscribe. All that clause (b) of section 12A(1) mandates that, the provision of section 11 12 shall not apply unless the accounts are audited and audit report thereof is filed along-with a return. Thus, what the provision envisages is that as and when the income of the trust is to be assessed these former conditions need to be complied by the assessee in its true spirit, so as enable the Revenue to assess the total income effectively in accordance with provisions of section 11 12 of the Act. 12. We find that similar view has been adopted by various co-ordinate bench and more specifically in Susila Education Trust Vs ITO(E) [2024, 167 taxmann.com 326], ITO(E) Vs Takshshila Foundation (NGO [2024 165 com 735 ] ITO Vs P K Krishnan Educational Trust [2024, 162 taxmann.com 899]. The said condition of filing audit report has been held by Hon ble Courts to be merely procedural and therefore directory in na ..... X X X X Extracts X X X X X X X X Extracts X X X X
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