The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench held that deduction under Section 11 of Income Tax Act, 1961 should not be denied, if an audit report filed along with return of income is available during assessment proceedings. Therefore the bench upheld the decision of Commissioner of Income Tax (Appeals) [CIT(A)].
Assessee, Gujarat Energy Development Agency is a registered charitable trust under section 12A of the Act and engaged in charitable activities for over 40 years. Assessee filed its return of income for the assessment year 2018-19 along with showing business income and voluntary contribution.
While processing the return, the CPC, Bangalore disallowed claim of exemption under section 11 of the Act, as audit report in Form No.10B was not e-filed along with return of income.
Accordingly, in the intimation made under Section 143(1) of the Act the income was assessed by making certain additions.
This intimation was challenged by the assessee before the CIT(A), who allowed claim of the assessee by observing that the audit report was e-filed to AO in regular assessment proceedings and was available before the AO when he passed the assessment order under section 143(3) of Income Tax Act on 6.4.2021. Therefore the CIT(A) deleted the addition made by the assessing officer.
Aggrieved by the order, the revenue filed an appeal before the tribunal.
Before the bench ,Saumya Pandey Jain, counsel for the revenue submitted that the provisions of Section 11 and 12 shall not apply in relation to the income of any trust or institution unless the person in receipt of income furnishes along with the return of income for the relevant assessment year the audit report in the prescribed form.
Therefore, the assessee, having failed to fulfill the conditions provided in Section 12A(1)(b) of the Income Tax Act, the assessee could not claim benefit under section 11 and 12 Income Tax Act.
Sanjay R. Shah, Counsel for the assessee submitted that the provision of the audit report at a later time, either before the AO during the assessment proceedings or before the CIT(A) in the appellate proceedings, would be sufficient compliance and would not result in the denial of the benefit of exemption under sections 11 and 12 of Income Tax Act.
It was observed by the tribunal that assessee did file the audit report and the same was available both during assessment and appellate proceedings, and thereby the assessee has substantially complied with relevant provisions of the Income Tax Act
After carefully analysing the material facts the two member bench of Madhumita Roy, (Judicial Member) and Annapurna Gupta, (Accountant Member) held that Assessee did not furnish the audit report along with return of income, but filed during the assessment proceedings, and available even during the appellate proceedings, it could not be stated that the assessee has failed to comply with the provisions so as to deny substantial justice by way of granting exemption. Therefore, the bench dismissed the appeal filed by the revenue.
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