Exception u/s 11 & 12 of Income Tax Act cannot be denied merely on Account of Delay in furnishing Audit Report: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the exception under Sections 11 and 12 of the Income Tax Act, 1961 cannot be denied merely on account of delay in furnishing of the audit report.

The assessee is a registered charitable trust under Section 12A of the Income Tax Act and engaged in charitable activities for over 40 years. In the return of income, the assessee declared total income at Rs.13,54,46,670/-. And showed a business income of Rs.13,54,46,670/- and a voluntary contribution of Rs.1,52,03,71,381/-.

The Centralized Processing Centre (CPC), Bangalore disallowed a claim of exemption under Section 11 of the Income Tax Act, as the audit report in Form No.10B was not e-filed along with the return of income. Accordingly, an intimation made under Section 143(1) of the Income Tax Act the income was assessed at Rs.1,65,58,18,047/- by making an addition of Rs.1,52,03,71,381/- to the declared income.

The Departmental Representative contended that provisions of Sections 11 and 12 of the Income Tax Act 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.

The counsel supported the order of the Commissioner of Income Tax (Appeal) [CIT(A)]. He further submitted that the law in this regard is settled that benefit of exemption under Sections 11 and 12 should not be denied merely on account of delay in furnishing the audit report, and it would be sufficient compliance, if the audit report is furnished at a later stage either before the Assessing Officer during the assessment proceedings or before the CIT(A) in the appellate proceedings.

The Two-member bench comprising of Annapurna Gupta (Accountant member) and Madhumita Roy (Judicial member) held that there is no hesitation in holding that the CIT(A) has rightly held the denial of exemption under Section 11 of the Income Tax Act for non-filing of requisite form along with return of income, to be not as per law, noting the fact that the assessee did file the requisite form during regular assessment proceedings and appellate proceedings before him. Thus, the appeal of the Revenue was dismissed.

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