The Amritsar bench of the Income Tax Appellate Tribunal ( ITAT ) while allowing the exemption to trust observed that the assessee rectified the defects and filed the audit report before completion of the assessment.
Assessee Shyam Charan Seva Trust after filing a return of income claimed a deduction under section 11 Income Tax Act, 1961 which was disallowed by the CPC, further total addition was made Rs. 11, 46,800.
Thereafter it found that the assessee had not filed the audit report in Form No. 10B with the return under section 139 Income Tax Act, 1961. Accordingly, the return was treated as defective under section 139(9) Income Tax Act, 1961.
After filing rectification, the assessing officer passes an order without considering the submission of the assessee. Against the order of the AO, the assessee filed an appeal before the ITAT.
Jai Gopal Bansal, counsel for the assessee placed that due to unavoidable reason the audit report in Form No. 10B was not filed with the return.
AO allowed 30 days’ time for recovering the deficiency. Within 30 days Form No. 10B was filed therefore assessee is eligible for deduction under section 11 of the Income Tax Act 1961.
Ravinder Mittal, Counsel for the revenue supported the decision of the lower authorities.
After considering the contentions of both parties the division bench of the ITAT comprising Dr M. L. Meena, (Accountant Member) and Anikesh Banerjee, (Judicial Member) allowed the appeal filed by the assessee and observed that,
The assessee had rectified the defect within the stipulated time and the procedure for filing Audit Report was completed. Hence assessee is eligible for deduction under section 11 of Income Tax Act 1961. The addition made by the AO is liable to be quashed.
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