The Cuttack Bench of Income Tax Appellate Tribunal (ITAT) has held that the Income Tax benefit to trust under Section 11 of the Income Tax Act 1961 could not be denied for mere one day delay in filing an audit report.
Section 11 of the Income Tax Act deals with the exemption provided to the income derived from property held under the trust for religious or charitable purposes.
The revenue has filed an appeal against the order of the CIT(A), National Faceless Appeal Centre (NFAC).
The assessee ,Nab ajuga Educational And Charitable Trust, who had claimed to be a charitable trust filed return on 31.10.2018, for which the due date was 30.09.2018 for the impugned assessment year and the said return did not accompany with the audit report under Form 10B of the Act. It was submitted that the said Form 10B had been filed only on 01.11.2018. Consequently, while passing the intimation u/s.143(1) of the Income Tax Act 1961, the assessee was not given the benefit of exemption u/s.11 of the Act in respect of excess income over expenditure.
M.K.Gautam, on behalf of the revenue submitted that the Commissioner of Income Tax Appeals CIT(A) condoned the delay of one day in filing of the audit report on the ground that the audit report was filed before the completion of the assessment and, therefore, the AO was to take into consideration the Form 10B and grant the assessee the benefit of exemption u/s.11 of the Act.
He further submitted that, It was the submission that the CBDT has issued Circular No.2/2020, dated 03.01.2020, wherein for the assessment year 2018-2019, the power to condone the delay up to 365 days had been granted only to the Commissioner of Income Tax u/s.119(2) of the Act and not to the CIT(A). It was the submission that the order of the CIT(A) was liable to be reversed.
K.C.Jena,on behalf of assessee sparingly relied upon the order of the Commissioner of Income Tax Appeals (CIT(A)).
The Division Bench of George Mathan(Judicial Member) and Arun Khodpia (Accountant Member) dismissed the appeal noticing that the assessee had filed its audit report before the completion of the assessment.
“At the outset, if the return filed on 31.10.2018 was not accompanied by the audit report, then it was incumbent upon the revenue to issue notice u/s.139(9) of the Act to treat the return filed by the assessee as defective. Admittedly, this has not been done. This could be because when intimation was issued the audit report was available on the records. Thus, the delay in filing of the audit report has already been condoned by the revenue and it no more lies in the mouth of the revenue to state that the assessee should be denied the benefit of Section 11 of the Act because the audit report has been filed delayed by one day,” the Bench observed.
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