ISA VISWA PRAJNANA TRUST,TRIVANDRUM V. DCIT, EXEMPTION WARD, TRIVANDRUM

ITA 177/COCH/2025

AI Insights

The case involves the Isa Viswa Prajnana Trust, a charitable trust, which appealed against the order of the Addl./Joint Commissioner of Income-tax (Appeals)-9. The appeal was directed against the intimation under section 143(1) of the Income-tax Act, 1961, which disallowed income applied for charitable purposes amounting to Rs.20,20,174, denying exemption under section 11 of the Act. The primary contention was the non-filing of the audit report in Form 10B within the prescribed due date, attributed to the death of the concerned Chartered Accountant. The Tribunal considered precedents and rulings that supported the view that procedural lapses in filing audit reports should not affect the substantive claims of exemption under section 11.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312647 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: M/s.Ammini Foundation v. DCIT, Association of Indian Panel Board Manufacturer v. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL; SENIOR
• Assessee Lawyers: V.P.NARAYANAN
• Keywords: Charitable institution
• Section: 10B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member ITA No.177/Coch/2025 : Asst.Year 2017-2018 Isa Viswa Prajnana Trust Anayara P.O. Trivandrum – 695 029. PAN : AAATI3065P. v. The Deputy Commissioner of Income-tax (Exemption) Thiruvananthapuram. (Appellant) (Respondent) Appellant by : Sri.V.P.Narayanan, Advocate Respondent by : Smt.Leena Lal, Senior AR Date of Hearing : 13.03.2025 Date of Pronouncement : 29.04.2025 O R D E R This appeal filed by the assessee-trust is directed against the order of the Addl./Joint Commissioner of Income-tax (Appeals)-9 dated 27.12.2024 passed u/s.143(1) of the Income-tax Act, 1961 (“the Act”) for the assessment year 2017-2018. 2. Briefly the facts of the case are that the appellant is a charitable trust, duly registered under the Trust Act. It is formed with the object of running a society in the field of social and economic development, education, environment and other avenues, etc. The appellant trust also duly registered u/s.12AA of the Income-tax Act, 1961 (“the Act”) on 26th March, 2001. The return of income for the assessment year 2017- 2018 was filed on 31st July, 2017. The said return of income was processed by the CPC u/s.143(1) of the Act vide intimation dated 25.11.2019 after making adjustment by disallowing income applied for ITA No.177/Coch/2025. Isa Viswa Prajnana Trust. 2 charitable purposes of Rs.20,20,174, by denying exemption u/s.11 of the Act. 3. Being aggrieved by the said intimation, an appeal was filed before the CIT(A), who vide the impugned order held that since audit report was filed after processing of the return of income u/s.143(1) of the Act and the audit report in Form 10B was filed only in the year 2023, the CPC was justified in making the adjustment to the income claimed exemption u/s.11 of the Act. 4. Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. It is submitted that the audit report in Form 10B could not be submitted within the prescribed due date for filing the return of income u/s.139(1) of the Act, as the concerned Chartered Accountant was passed away and its audit report was furnished during the course of proceedings before the CIT(A). It is further submitted that making an adjustment u/s.143(1) of the Act for non-furnishing of audit report in Form 10B is beyond the scope of the power u/s.143(1) as filing of the audit report is only procedural in nature and mere failure to file the audit report does not constitute incorrect claim. In support of this, the learned Counsel placed reliance on the decision of the Co- ordinate Bench of the ITAT in the case of M/s.Ammini Foundation v. DCIT in ITA No.695/Coch/2022 (order dated 28.10.2022) and the judgment of the Hon’ble Gujarat High Court in the case of Association of Indian Panel Board Manufacturer v. DCIT in Tax Appeal No.655 of 2022 (dated 21.03.2023), etc. ITA No.177/Coch/2025. Isa Viswa Prajnana Trust. 3 5. On the other hand, the learned Senior DR submits that filing of audit report in Form 10B is mandatory as per Rule 12(2) of the Income- tax Rules, 1962 from assessment year 2016-2017. 6. I heard rival submissions and perused the material available on record. The only issue that arises for my consideration is whether the CPC was justified in making adjustment of income claimed to be exempt u/s.11 of the Act for the reason that the appellant-trust had not filed audit report in Form 10B within the due date prescribed u/s.139(1) of the Act nor filed before the processing of the return by the CPC. The scope of adjustment u/s.143(1) of the Act was defined there under. On a mere reading of the provisions of sec.143(1) of the Act, adjustment can be made where incorrect claim is made in the return of income based on the information contained in the return of income. The said provision nowhere stipulates that the mere non-filing of audit report would amount to incorrect claim. Therefore, respectfully following the decision of the Co-ordinate Bench of the ITAT in the case of M/s.Ammini Foundation v. DCIT in ITA No.695/Coch/2022 (order dated 28.10.2022), I am of the considered view that the adjustment made by the CPC is not valid in law and accordingly I direct the CPC to amend the intimation. 7. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 29th day of April, 2025. Sd/- (Inturi Rama Rao) ACCOUNTANT MEMBER Cochin; Dated : 29th April, 2025. Devadas G* ITA No.177/Coch/2025. Isa Viswa Prajnana Trust. 4 Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "