The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has deletes the addition after the Revenue rejected a plea for re-submission Form 10B audit report which was obstructed due to technical glitches.
The assessee is an Educational Trust registered under Section 12AA of the Income Tax Act 1961. The Assessee had filed its Income Tax Return mentioning its 12AA registration and claiming charitable status by claiming application of income for charitable purposes under Section 11 and 12 of the Income Tax Act.
The ITR has been processed under Section 143(1) of the Income Tax Act by the CPC without verification of registration under Section 12AA of the Income Tax Act resulting in non-allowance of application of income for charitable purpose
After receiving intimation under Section 143(1) of the Income Tax Act, assessee filed a rectification application under Section 154 of the Income Tax Act for reprocessing of Income Tax Return for considering deductions for application of income for charitable purposes under relevant Section 11 and 12 of the Act. Order under Section 154 of the Income Tax Act was passed on 07/06/2019 by denying the application of income for charitable purposes and demanding the tax considering the gross receipt of the trust as its income.
Mr. Pratiyush Jain representing the assessee submitted that the CIT(A) has grossly erred in confirming the order made by the CPC without considering the factum of non-adherence to the conditions of Section 143 (1) of the Act. He stated that the appellant’s trust has already complied with the filing of Audit Report in Form No. 10B in terms of Circular No. 10/2019 dated 22.05.2019 modified with the Circular No. 7/2021 dated 26.03.2021 and the time limit for the passing of order of condonation in filing of the Audit Report by the PCIT (Exemption) had already expired
Per contra, Mr. Vivek Kumar Upadhyay, representing the revenue submitted that the order of the CIT (A) requires no interference as the delay in filing Form 10B has not been condoned by the competent authority, therefore by relying on the order of the CIT(A), sought for dismissal of the Appeal filed by the Assessee.
The bench observed that assessee had uploaded in its Audit Report dated 29/09/2017 in Form No. 10B through its auditor, due to some technical mistake in the software the Audit Report uploaded was neither accepted by the system nor was it rejected immediately and no intimation either through e-mail or any post from the Department has given to the Assessee on this regard. It is seen from the record that the Form No. 10B was ready as on 29/09/2017 i.e. before filing Return of Income under Section 139 of the Income Tax Act
Additionally, after coming to know about not uploading the Audit Report, the Assessee filed a letter for condonation of delay uploading the Form 10B along with certificate from auditors explaining the reason for delay and hard copy of Form No. 10B was sent through registered post to the Jurisdictional Commissioner of Income Tax (Exemptions).
Further it was observed that Revenue has rejected the plea of the Assessee based on mere technicalities and it is not the case of the Revenue that the Audit Report was not ready as on the date of filing of the return or Assessee is not eligible for any other reason for claiming charitable status by claiming application of income for charitable purpose under Section 11 & 12 of the Income Tax Act.
Therefore, the ITAT considered the opinion that the Revenue Authorities should have allowed the benefit of exemption to the Assessee. The tribunal consisting M.Balaganesh (Accountant member) and Yogesh Kumar U.S (Judicial member) allowed the Grounds of appeal of the Assessee by deleting the addition of Rs. 3, 34, 32,351/- made by the A.O, which has been confirmed by the CIT (A). Accordingly, the Appeal filed by the Assessee was allowed.
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