Gowda Saraswath Samaj, Bangalore V. Income Tax Officer (Exemptions), Ward-1, Bangalore

ITA 486/BANG/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5767 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 28-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHINI BESAGANNI
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Application of stay; Condonation of delay; Set aside
• Section: 11; 12A; 143(1); 139(1); 44AB

Judgement Text

ITA No.1234/Bang/2017 IN THE INCOME TAX APPELLATE TRIBUNAL “C’’BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA No.486/Bang/2021 AssessmentYear: 2018-19 Gowda Saraswati Samaj, No.50, Dwarakanath Bhavan K.R. Road, Basvangudi Bangalore 560 004 PAN NO :AAAAG0703H Vs. ITO (Exemptions) Ward-1 Bangalore APPELLANT RESPONDENT S.P. No.114/Bang/2021 (Arising out of ITA No.486/Bang/2021) Assessment Year: 2018-19 Gowda SaraswatiSamaj, No.50, Dwarakanath Bhavan K.R. Road, Basvangudi Bangalore 560 004 Vs. ITO (Exemptions) Ward-1 Bangalore APPELLANT RESPONDENT Appellant by : Shri Padam Chand Khincha, A.R. Respondent by : Smt. Priyadarshini Besaganni, D.R. Date of Hearing : 17.12.2021 Date of Pronouncement : 23.12.2021 O R D E R PERB.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this stay application seeking stay of outstanding demand in assessment year 2018-19. ITA No.1234/Bang/2017 Page 2 of 7 2. The Ld. A.R. submitted that the assessee is a Charitable Trust registered u/s 12A of the Income-tax Act,1961 ['the Act' for short]. It filed its return of income for assessment year under consideration on 28.10.2018. However, the audit report in Form No.10B was uploaded separately on 29.10.2018,even though the audit report had been obtained on 27.10.2018. He submitted that both the return of income and audit report have been filed before the due date for filing return of income u/s 139(1) of the Act for AY 2018-19. The Ld. A.R. submitted that the original due date was 30.9.2018 u/s 139(1) of the Act and the same was extended to 15.10.2018 by CBDT and then further extended to 31.10.2018. 3. The Ld. A.R. submitted that the return filed by the assessee was processed u/s 143(1) of the Act rejecting the claim for exemption u/s 11 of the Act, apparently for the reason that the audit report was not filed along with the return of income. He submitted that the Ld. CIT(A) also confirmed rejection of claim for exemption u/s 11 of the Act. Hence, the assessee has filed this stay application seeking stay of outstanding demand. The Ld. A.R. submitted that the assessee has got fair chances of winning in the appeal and accordingly prayed for stay of outstanding demand. 4. Upon considering the facts available in this case and the issue contested, the bench took up the appeal of the assessee itself, with the concurrence of both the parties, for adjudication. 5. We heard the parties on merits and perused the record. The only issue contested by the assessee is about the rejection of exemption u/s 11 of the Act for non-filing of Audit report in Form No.10B along with the return of income. The facts relating to the dispute have been noted by us in the earlier paragraph. We notice that the Ld. CIT(A) has upheld the rejection of claim for exemption u/s 11 of the Act for the following reasons: ITA No.1234/Bang/2017 Page 3 of 7 a) The return of income filed by the assessee on 28.10.2018 was beyond the due date for filing return of income, which is 30.9.2018. b) The circular no.10/2018 issued by CBDT grant exemption for the failure to furnish the audit report along with return of income filed for assessment year 2016-17 & 2017-18. c) The assessee has not submitted any proof that form No.10B was filed electronically. 6. The Ld. A.R. submitted that the due date prescribed for filing return of income for assessees whose accounts are required to be audited u/s 139(1)of the Act and also due date for furnishing audit reports is 30-09-2018 for the year under consideration. However, the due date was extended from 30.09.2018 to 15.10.2018 by CBDT and there after further extended to 31.10.2018. Accordingly, the Ld. A.R. submitted that both the returns of income and audit report have been filed by the assessee before the due date prescribed for assessment year 2018-19. Accordingly, he submitted that the Ld. CIT(A) was not correct in law in holding that the assessee has not filed return of income and audit report beyond the due date. 7. Since the due date for filing return of income and audit reports have been extended by CBDT for AY 2018-19 and since the assessee has furnished both the return of income and audit report in Form No.10B, we are of the view that the first reasoning given by Ld CIT(A) would fail. 8. The second reasoning given by Ld. CIT(A) is that the CBDT circular No.10/2018, which condoned the delay in filing audit report, is applicable to only assessment years 2016-17 & 2017-18. However, it was brought to our notice by Ld A.R that the CBDT has issued another Circular No.2/2020 dated 3.1.2020, wherein it has ITA No.1234/Bang/2017 Page 4 of 7 authorized the Commissioners of Income Tax to admit belated application for condonation of delay for a period up to 365 days in filing form No.10B for assessment year 2018-19. The Ld. A.R. however, submitted that there is no delay in filing audit report in the case of the assessee, since it has been filed before the due date prescribed under the Act. The only reasoning given by the tax authorities is that the same was not filed along with the return of income. The Ld. A.R. submitted that the provisions of section 12A(1)(b) of the Act specifies that the accounts of the Trust should be audited by an accountant before the specified date referred to in section 44AB of the Act and the assessee should furnish the report by that date in the prescribed form duly signed by the accountant. He submitted that the Act nowhere specifies that the audit report should be filed along with return of income. 9. We heard Ld. D.R. and perused the record. As submitted by Ld. A.R., we notice that the provisions of sec. 12A(1)(b) of the Act state that the assessee is required to get its accounts audited and it should befurnished by the specified date referred to in section 44AB of the Act. In the instant case, there is no dispute with regard to fact that the audit report was obtained prior to the extended due date and the assessee has also furnished the audit report in Form 10B before the extended due date. The only deficiency pointed out by Ld. CIT(A) is that it was not filed along with the return of income. However, a perusal of provisions of section 12A(1)(b) of the Act would show that there is no such condition prescribed that the audit report should be filed along with the return of income. Hence, we are of the view that filing of audit report by the assessee before the due date prescribed u/s 44AB of the Act would meet the requirements of section 12A(1)(b) of the Act. Accordingly, this reasoning of the Ld. CIT(A) would also fail. ITA No.1234/Bang/2017 Page 5 of 7 10. The next reasoning given by Ld. CIT(A) is that the assessee has not furnished any proof that the audit report was filed electronically. The Ld. A.R. submitted that the Ld. CIT(A) did not ask for the same during the course of appellate proceedings and in any case, there is no allegation that the assessee has not filed the audit report on 29.10.2018 electronically. The Ld. A.R. also furnished a copy of acknowledgement issued by e-filing portal before us. A perusal of the same shows that form No.10B for assessment year 2018-19 was filed on 29.10.2018 with e- acknowledgement No.353621061291018. Hence, we are of the view that the above said observation of Ld. CIT(A) has been made by him on surmises and conjectures only. In any case, the same is against the facts available on record. 11. In effect, all the reasons given by Ld CIT(A) would fail. Accordingly, we find no reason for denying exemption u/s 11 of the Act. 12. There was a delay of 89 days in filing the appeal before Ld CIT(A). Even though, the assessee had filed petition before Ld CIT(A) requesting him to condone the delay, he refused to condone the delay. However, Ld CIT(A) proceeded to decide the issues on merits also. The Hon’ble Madras High Court considered an issue relating to condonation of delay in the case of Vijayeswari Textiles Ltd vs. CIT (2003)(131 Taxman 833) on identical circumstances, i.e., in the case before Hon’ble Madras High Court also, the Tribunal had refused to condone the delay, but disposed the appeal on merits also. The Hon’ble Madras High Court observed as under:- “7. Matters relating to condonation of delay are indeed discretionary and are normally left to the Tribunal and this court will not ordinarily interfere with the discretion. In this case, as we have already pointed out, the Tribunal did not stop with the order declining to condone the delay, but considered the matter on merits and has practically treated the appeal as being properly before it and has answered the question brought before it with reference to the material placed on record. It is in the circumstances, ITA No.1234/Bang/2017 Page 6 of 7 we hold that the Tribunal was in error in not condoning the delay. The question regarding the correctness of the Tribunal’s holding that the delay is not to be condoned is therefore answered in favour of the assessee and against the Revenue....” According to the ratio of the above said decision, if the appeal is adjudicated on merits, then refusing to condone the delay is an error. Further the assessee has given reasons for the delay, viz., there was change of auditors. Considering the above said legal position and also the reasoning given in the petition filed before Ld CIT(A), we are of the view that the Ld CIT(A) should have condoned the delay. 13. In view of the foregoing discussions, we set aside the order passed by Ld. CIT(A) and direct the A.O. to grant exemption u/s 11 of the Act in AY 2018-19. 14. Since we have disposed of appeal itself, stay application filed by the assessee shall become infructuous. 15. In the result, the appeal filed by the assessee is allowed and the stay application is dismissed. Order pronounced in the open court on 23 rd Dec, 2021. Sd/- (N.V. Vasudevan) Vice President Sd/- (B.R. Baskaran) Accountant Member Bangalore, Dated 23 rd Dec, 2021. VG/SPS ITA No.1234/Bang/2017 Page 7 of 7 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.