The Delhi Bench of Income Tax Appellate Tribunal (ITAT) directed re-adjudication of the appeal, concerning the disallowance of section 11 of Income Tax Act, 1961 exemption due to the late filing of the Form 10B audit report
Rajdhani Maitri Club Foundation,appellant-assessee, challenged the order dated 30.11.2023, against National Faceless Appeal Centre (NFAC),for assessment year 2022-23.The assessee raised several grounds in the appeal (ITA No. 302/Del/2024), challenging the actions of the Additional/Joint Commissioner of Income Tax(JCIT)(A)-5, Mumbai, who agreed with the decisions of Deputy Director of Income Tax(DDIT), Centralized Processing Centre(CPC), Bengaluru. First, the taxable income was set at Rs. 14,90,811/- despite a NIL return.
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Second, the exemption under section 11 of the Act was denied because the Audit Report in Form 10B, dated 22.09.2022, was filed later, on 07.11.2022, with the return. Third, the Audit Report in Form 10B was ignored, even though it was available when the order under section 143(1) was passed. Finally, the assessee disputed the taxation of gross receipts of Rs. 14,90,811/- without considering the revenue expenditure of Rs. 14,75,974/- incurred on its activities.
The main issue between the parties was whether the lower authorities were correct in denying the assessee’s section 11 exemption claim because it filed its Form 10B audit report, dated 22.09.2022, after the due date for filing the return under section 139(1) of the Act. The Revenue argued that filing the tax audit report on time is mandatory for an assessee claiming section 11 exemption.
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A single member bench comprising Satbeer Singh Godara (JudiciaL Member) noted that the issue was already settled in the assessee’s favor in ACIT v. Xavier Kelvani Mandal Pvt. Ltd. (Gujarat), where it was decided that such compliance could be made during first appellate proceedings before the Commissioner of Income Tax(Appeals)[CIT(A)].
The tribunal accepted the assessee’s grievance and directed the CIT(A)/NFAC to review the appeal on merits, ideally within three opportunities. It also stated that it was the taxpayer’s responsibility to present and prove all relevant facts during these opportunities.
In short,the appeal was allowed for statistical purposes.
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