TMI Blog2022 (4) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... ),Delhi, relating to the assessment year 2017-18. 2. Facts of the case, in brief, are that the assessee is a registered charitable society. It filed its return of income on 30.03.2018. The return was processed u/s 143(1) on 25.03.2019, wherein the Assessing Officer, CPC determined the total income at ₹ 41,24,865/- against the Nil total income declared by the assessee, by making adjustment of ₹ 20,60,000/- on account of donation received; and of ₹ 20,64,885/- by disallowing claims for deduction of ₹ 20,12,451/- towards the amount applied to charitable or religious purpose; and ₹ 52,414/- towards the amount accumulated or set apart for application to charitable or religious purposes to the extent it does not exceed 15% of income derived from property held in trust/institution u/s 11(1)(a)/11(1)(b). The Assessing Officer while processing the return disallowed both these claims by invoking the provisions of Section 12A(1)(b) on the ground of not furnishing the audit report in form No. 10B along with return of income filed by the assessee. 3. In appeal it was submitted that audit report in form no. 10B was filed belatedly on 27.2.2020 but the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of audit; name of the Auditor; Membership no. of the auditor; name of the audited firm; date of audit report; and date of furnishing of the audit report, which is dated 05.06.2017. He submitted that all these relevant dates clearly indicate that the assessee has filed the audit report within prescribed time and along with the return of income. Referring to decision of Hon ble Delhi High Court in the case of CIT Vs. Web Commerce (India)(P) Ltd. 318 ITR 135, he submitted that the Hon ble Delhi High Court in the same decision has held that provisions of Section 10B(5) are directory and not mandatory. Once the audit report is filed before the framing of the assessment, the requirement of the provisions stands complied. 7. Referring to the decision of the Hon ble Punjab Haryana High Court in the case of National Horticulture Board Vs. CCIT (2009) 319 ITR 74(P H), learned counsel submitted that the Hon ble High Court in the said decision has held that exemption u/s 10(23)(iv) could not be denied solely on the basis of hyper-technical ground that audit report in Form 10BB was not filed along-with return but was filed later. 8. Referring to the decision of Hon ble Calcutta Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b Membership No. of the auditor 502373 c Name of the auditor (proprietorship/firm) ATUL K GUPTA ASSOCIATES D Permanent Account Number (PAN) of the proprietorship/firm AAPFA6853Q E Date of audit report 05/06/2017 f Date of furnishing of the audit report (DD/MM/YYYY). 05/06/2017 N If liable to audit under any Act other than the Income-tax Act, mention the Act, section and date of furnishing the audit report? No 13. A perusal of the above shows that assessee has got its accounts audited by the Audit Firm ATUL K GUPTA ASSOCIATES on 05/06/2017 and the same was furnished along with the return of income. Even otherwise also, the Hon ble Delhi High Court in the case of CIT Vs. Web Commerce (India) (P) Ltd. (supra), has held that provisions of Section 10B(5) are directory and not mandatory and once the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified by filing the report at a later stage before the assessment is completed. We have considered this question in ITR No. 26 of 1990 (CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal) : TC23R.1471, where the judgment was delivered on 22nd April, 1991. There, it was held that, if the audit report is not filed with the return, the return becomes defective and the ITO should give an opportunity to the assessee to submit the audit report to rectify the defect before completion of the assessment. Where an assessee, in compliance with the provisions of the Act, cures the defect in the return by filing the audit report before the completion of the assessment, the Assessing Officer cannot ignore such audit report or the return in completing the assessment. 16. In our view, the result of ignoring such return or the audit report will be denial of exemption to the trust although the income has been spent for charitable or religious purposes. This was not intended by the legislators. If an assessee fails to obtain the audit report in the prescribed form before the assessment is completed, he may not, ordinarily, be entitled to get the benefit of exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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