The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ), granted exemption under Section 11 of the Income Tax Act, 1961 to educational trust on lack of guidance by tax professionals.
The effective issue raised by the assessee is that the CIT(A) erred in holding that the assessee, M/s. Shardaben Education Trustis not eligible for exemption under section 11 of the Income Tax Act if audit report in Form 10B was not furnished along with the return of income.
The assessee is a charitable trust and also registered under section 12AA of the Income Tax Act. The assessee before the AO submitted that despite being eligible for deduction under section 11 of the Income Tax Act, but it was omitted to claim the exemption under section 11 of the Income Tax Act in the return of income due to error and lack of proper guidance from consultant.
However, the AO rejected the claim of the assessee by holding that the claim of exemption under section 11 of the Income Tax Act was not made in the return of income.
The Counsel for the assessee submitted that all the conditions specified under the provisions of section 11 of the Income Tax Act have been duly complied with by the assessee except the procedural requirement of filing the audit report along with the return of income despite such audit report was obtained from the qualified chartered accountant much before the date of filing of return of income.
As per the provisions of section 12A(1)(b) of the Income Tax Act, it is necessary for the assessee in order to claim exemption under section 11 of the Income Tax Act to get the accounts audited as well as obtain the audit report in the prescribed form from the qualified chartered accountant which is to be filed along with the return of income.
The Tribunal of Waseem Ahmed, Accountant Member observed that “Thus, the cumulative effect from the reading of the above facts reveals that there was lack of guidance on the part of the assessee by the tax professionals. Thus, in the event of any disallowance of the benefits available to the assessee, it will cause undue hardship to it in the given facts and circumstances.”
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