The Delhi Bench Of Income Tax Appellate Tribunal ( ITAT ) ruled that non-filing of Form No. 10B with Income Tax Return ( ITR ) is a procedural omission and cannot be a hindrance in claiming exemption under Section 11 of Income Tax Act, 1961.
Bhagwant Kishore Memorial Educational Society, the appellant-assessee, a charitable society registered under the Societies Registration Act, 1860, had filed its return for assessment year (AY) 2021-22 on 23.12.2021 with NIL income. The return was processed under Section 143(1) on 20.09.2022, determining a total income of Rs. 39,32,700.
The assessee appealed to the Commissioner of Income Tax (Appeals)[CIT(A)] against the order, but the income tax first appellate authority dismissed it, stating that neither the AO nor the CIT(A) could condone the 235-day delay in filing Form 10B. The appellant was advised to seek condonation from the appropriate authorities. The assessee then filed the appeal before the tribunal.
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The counsel for the assessee submitted that the trust, which operates New Vidhya Vihar Model School in Delhi, filed a NIL income return for AY 2021-22. The Centralised Processing Centre (CPC) issued two notices for failing to file Form 10B, which went unnoticed.
After receiving the intimation under Section 143(1), the auditors, who initially believed Form 10B was unnecessary due to the NIL taxable income, corrected their mistake and filed the form on 08.10.2022.
The appellate tribunal noted that the CIT(A) had dismissed the appeal due to lack of jurisdiction, stating neither he nor the AO could condone the delay and also acknowledged that filing the Audit Report in Form 10B is procedural, and a delay should not prevent claiming exemptions under Section 11.
The bench stated that the counsel for the assessee had explained that the auditors mistakenly believed Form 10B was unnecessary due to the NIL income and only filed it on 08.10.2022 after realizing the error.
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The tribunal addressed that a similar matter has been noted in favour of the assessee in Hari Gyan Pracharak Trust vs. DCIT held that the non-filing of the audit report with the return of income is a procedural omission, not a bar to claiming exemptions under Income tax Section 11.
The two-member bench of Sudhir Pareek (Judicial Member) and S Rifaur Rahman (Accountant Member) allowed the appeal, condoning the delay in filing the Audit Report in Form 10B, and restored the matter to the CIT(A) to grant the exemption under Section 11 and pass an order according to the law.
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