Income Tax Exemption to Trust u/s 11 cannot be Denied Merely due to Delay in furnishing of Audit Report in Form 10B: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the exemption to Trusts under section 11 of the Income Tax Act, 1961 cannot be denied merely due to the delay in furnishing of the audit report in form 10B.

M/s. GangjiShamjiChedda (Princewala) Charitable Trust, the assessee trust, has claimed exemption of Rs.34,00,000/- under section 11 and 12 of the Act on the ground that the correct income derived during the year has been fully applied to the charitable or religious purpose. However, assessee has not annexed form 10B which was to be filed electronically. So the Assessing Officer (AO)/CPC has disallowed the total deduction claimed by the assessee and thereby raised the demand. Being aggrieved, the assesseefiled an appeal before the ITAT.

Shri Kuldip Singh, Judicial Member relied on a catena of decisions wherein it washeld that filing of audit report in form 10B during the course of assessment proceedings is sufficient compliance of section 12A(b) which has to be considered.

“So the exemption otherwise available to the assessee trust under section 11 cannot be denied merely on account of delay in furnishing of audit report in form 10B as required under section12A(b) of the Act. So in the present case audit report having been filed by the assessee trust well prior to the last date of filing of return is a sufficient compliance of section 12A(b) of the Act,” the ITAT held.

The Single Member ITAT further held that the proviso to section 143(1)(a) of the Act specifically provides that no adjustment shall be made unless (as specified in clause (a) to section 143(1) of the Act) intimation is given to the assessee trust of such adjustment either in writing or in electronic mode and in case response is not received within 30 days the adjustment can be made. So in this case no notice whatsoever has been given to the assessee.

Concluding the order in favour of the assessee, the ITAT held that “In view of what has been discussed above, I am of the considered view that the order passed by the Ld. CIT(A) is not sustainable in the eyes of law, hence set aside. The AO is directed to grant the deduction claimed by the assessee trust under section 11 of the Act, by considering audit report in form 10B after due verification. Resultantly, appeal filed by the assessee is allowed.”

To Read the full text of the Order CLICK HERE

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