9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (5) TMI 1168 - AT - Income TaxDenial of exemption claimed u/s 11 and 12 - non-filing of the audit report in Form 10B electronically along with the return of income was justified - HELD THAT - As observed that the assessee was claiming the benefit u/s 10B(8) of the Act as per the provisions of section 10B and the assessee has to comply certain conditions failing which the assessee will loose the benefit. In the present case the assessee has to file the audit report in Form 10B before the due date as per Rule 12A(1)(b) of the Rules. As observed that the above conditions of filing the Form 10B was relaxed by the CBDT in the earlier assessment years therefore it clearly shows that it is only directory in nature and not mandatory since it is in compliance with Rules framed for availing the benefit under the provisions of Section 11 and it is held that to be directory in nature. We are inclined to allow the claim made by the assessee and accordingly we direct the AO to allow the claim of the assessee u/s 11 and 12. Appeals filed by the assessee are allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal were:
2. ISSUE-WISE DETAILED ANALYSIS Delay in Filing Appeals and Condonation under Section 249(3) of the Act Legal Framework and Precedents: Section 249(3) empowers the appellate authority to condone delay in filing appeals if "sufficient cause" is shown. The limitation period under section 249(2) and the Limitation Act governs the timelines. The Tribunal considered precedents emphasizing that ignorance of law is generally not a sufficient cause but bonafide belief may be considered. Court's Interpretation and Reasoning: The CIT(A) initially rejected the delay condonation, holding that no sufficient cause was demonstrated. The assessee contended a bonafide belief that no appeal lies against an intimation under section 143(1). The Tribunal, however, in the interest of justice, condoned the delay, emphasizing that the delay was not due to malafide intention or gross negligence but a genuine misunderstanding. Application of Law to Facts: The Tribunal noted the affidavits filed by the Trustee and Chartered Accountant supporting the bonafide belief. The delay of 1425 and 1036 days was substantial but given the circumstances, the Tribunal exercised discretion to condone the delay. Conclusions: Delay in filing appeals for both AYs was condoned, and the appeals were admitted for adjudication on merits. Denial of Exemption under Sections 11 and 12 due to Non-filing of Audit Report in Form 10B Legal Framework and Precedents: Sections 11 and 12 provide exemption to trusts and institutions subject to compliance with conditions including filing of audit report in Form 10B as per Rule 12A(1)(b) of the Income Tax Rules. The issue was whether non-filing of Form 10B electronically along with the return is mandatory or merely procedural/directory. The Tribunal relied on authoritative precedents including:
Court's Interpretation and Reasoning: The Tribunal observed that the non-filing of audit report electronically with the return was a procedural omission and not a substantive bar to exemption. The CBDT's earlier relaxation of the filing requirement indicated its directory nature. The Tribunal emphasized that the assessing authority must examine the admissibility of exemption rather than foreclose on technical grounds. Key Evidence and Findings: The assessee had filed the audit report in hard copy before the assessment and produced the Form 10B dated 26.03.2018. The Tribunal accepted the submissions that the audit report was available and relied upon the precedents to hold that exemption cannot be denied solely on this procedural ground. Application of Law to Facts: The Tribunal held that the denial of exemption in the intimation under section 143(1) was not in accordance with law and directed the Assessing Officer to allow the exemption under sections 11 and 12. Treatment of Competing Arguments: The Revenue did not produce any contrary judicial authority or challenge the precedents cited by the assessee. The Tribunal relied on the consistent judicial view favoring substantial compliance. Conclusions: The claim of exemption under sections 11 and 12 was allowed despite procedural non-compliance regarding Form 10B filing. Validity and Jurisdiction of Intimation under Section 143(1) of the Act Legal Framework: Section 143(1) provides for processing of returns and issuance of intimation. The Tribunal considered whether the intimation was vitiated due to lack of jurisdiction, absence of reasons, or denial of opportunity. Court's Interpretation and Reasoning: The Tribunal noted the assessee's contention that the intimation was without jurisdiction and reasons and denied opportunity. However, the Tribunal did not find sufficient grounds to quash the intimation outright but rather focused on the substantive merits of the exemption claim and condonation of delay. Application of Law to Facts: Since the appeals were admitted and exemption allowed on merits, the Tribunal did not annul the intimation but effectively set aside the adjustments made therein. Conclusions: The intimation's adjustments were held to be not sustainable, but the intimation itself was not quashed on jurisdictional grounds. Adjustments Made in Intimation under Section 143(1) and Demand of Tax and Interest Legal Framework: Section 143(1) allows for summary assessment and adjustments. The Tribunal examined whether the adjustments and consequent demand including interest under sections 234A, 234B, and 234C were justified. Court's Interpretation and Reasoning: The adjustments related to denial of exemption and consequent addition to income. Since the exemption was allowed by the Tribunal, the corresponding demand and interest were held to be not tenable. Application of Law to Facts: The Tribunal directed the Assessing Officer to delete the demand and interest raised on the basis of the impugned intimation. Conclusions: Demand and interest raised were quashed as the foundational adjustment was unsustainable. 3. SIGNIFICANT HOLDINGS The Tribunal preserved and relied upon the following crucial legal reasoning: "...when the assessee was entitled to a statutory benefit, it would be incumbent upon the concerned authority to examine the admissibility of the benefit than to foreclose the assessee on technicalities." "The provision regarding furnishing of audit report along with the return has to be treated as a procedural provision. It is directory in nature and its substantial compliance would suffice." Core principles established include:
Final determinations on each issue were:
|
