Guru Kripa Seva Ashyram, Pune V. Income-Tax Officer, Exemption, Ward 1(2), Pune

ITA 703/PUN/2022

AI Insights

The case involves Guru Kripa Seva Ashram, a charitable trust, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2014-15. The primary issue was the denial of exemption under sections 11 and 12 of the Income Tax Act due to the non-filing of Form 10B, which is required to be filed electronically along with the income tax return. The CIT(A) had rejected the assessee's request for condonation of delay in filing Form 10B, leading to the appeal. The Tribunal dismissed the appeal, agreeing with the CIT(A) that the assessee failed to show reasonable cause for the delay in filing the form.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132841 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-02-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 19-09-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution; Additional evidence; Condonation of delay
• Section: 12; 11; 139; 12A; 10B; 143(1); 139(1); 13

Judgement Text

आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.703/PUN/2022 धििाारण वर्ा / Assessment Year : 2014-15 Guru Kripa Seva Ashram, Plot No. 52/53, Dube Nagar, Kesanand Road, Wagholi, Pune – 412207 PAN : AAATG2160R .......अपीलार्थी / Appellant बिाम / V/s. The Income Tax Officer, Exemption Ward – 1(2), Pune ......प्रत्यर्थी / Respondent Assessee by : N O N E Revenue by : Shri Ramnath P. Murkunde सुनवाई की तारीख / Date of Hearing : 28-02-2023 घोषणा की तारीख / Date of Pronouncement : 02-03-2023 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 21-07-2022 passed by the National Faceless Appeal Centre, Delhi (“NFAC”) for assessment year 2014-15. 2. We find no representation on behalf of the assessee. Thus, the assessee called absent and set ex-parte. Therefore, we proceed to dispose 2 ITA No.703/PUN/2022, A.Y. 2014-15 of the appeal by hearing the ld. DR and perusing the material available on record. 3. We find that this appeal was filed with a delay of 01 day. Upon hearing ld. DR, we condone the said delay. 4. The ground No. 1 raised by the assessee against the order of CIT(A) in not condoning the delay in filing of Form 10B. 5. We note that the assessee is charitable trust and filed belated return of income declaring a total income at Rs.Nil. The said return of income was processed and intimation u/s. 143(1) of the Act was issued determining the total income of Rs.40,93,280/-. The contention of the assessee was that the adjustment made by the CPC under intimation is in the nature of apparent mistakes and the same were not adjudicated u/s. 154 application also. As it appears from the record, the CPC made said adjustment for not filing audit report in Form 10B for the year under consideration. The assessee contended the request was made to the CIT(Exemption) on 20-03-2021 to condone the delay in filing Form 10B. We note that the assessee itself contended that the said delay condonation petition was rejected by the CIT(Exemption) vide its order dated 27-03- 2021 by observing that the assessee has not filed the audit report electronically. In the impugned proceedings, the CIT(A) considering the Circular No. 2/2020 dated 03-01-2020 issued by the CBDT held that the assessee is not entitled for deduction in view of non-filing of Form 10B along with the return of income. The relevant portion of the impugned order from pages 9 to 13 are reproduced for ready reference : “4. Decision: I have carefully considered the facts on record, the intimation order, written submissions of the appellant made and cited case 3 ITA No.703/PUN/2022, A.Y. 2014-15 law by the appellant during appellate proceedings. During the appellate proceedings, the appellant has furnished various documents such as financial statement, statement of income, Form 10B, etc, which were not available with the CPC/AO at the time of processing of return of income. Therefore, these are additional evidences but the appellant didn't make any application for admission of these additional evidences u/r 46A of the Act. Hence, these additional evidences are not admitted for deciding the grounds of the present appeal. Now, the ground-wise decisions are as under:- 4.1 Ground No.1 relates to denial of deduction u/s 11 and 12 of the Act. In this matter, it is an undisputed fact that the appellant failed to furnish the requisite Form No. 10B on or before the filing" of income tax return for the present assessment year. The appellant's main plea is that the provision of section 12A(1)(b) for filing audit report in Form No. 10B alongwith ROI is directory and not mandatory. Further, it is contended that the appellant is entitled to file the audit report before the completion of assessment and can be furnished at appellate stage also. In support of this contention, the appellant relied on several case laws. All these case laws have been perused and observed that the filing of Form No. 10B alongwith return is directory in nature but the appellant has to show the valid reason for non-submission of audit report alongwith income tax return. For streamlining the delay in filing of audit report in Form 10B by the trust and examining the reason for non- filing of Form No. 10B in time, the CBDT has delegated the power for accepting the belated audit report to the Income Tax Officer after recording reasons for accepting a belated audit report These grounds relate to the issue of disallowance of exemption u/s 11 and 12 of the Act. However, the appellant failed to submit complete copy of intimation order wherein the reason for disallowance must have been mentioned. Further the appellant also failed to respond to notices for granting the opportunity of being heard. This shows that the appellant does not want to pursue its own appeal. Now coming to the merits of the case, it is an undisputed fact that the appellant failed to raise a point that it furnished the requisite Form No. 10B on or before the filing of income tax return for the present assessment year. The imperative condition for availing exemption u/s 11 and 12 of the Act is due submission of form 10B along with the return of income filed u/s 139(1) of the Act. In fact, the CBDT has issued circular/instruction form time-to-time for streamlining the delay in filing of audit report in Form 10B by the trust and examining the reason for non-filing of Form No. 10B in time wherein the CBDT has delegated the power for accepting the belated audit report to the Income Tax Officer after recording reasons for accepting a belated audit report vide CBDT Instruction F. NO. 267/482/77-IT(PART), Dated 9-2-1978, which is reproduced as under:- 1. The Board have considered whether the requirement under section 12A(b) of filing audit report 'along with the return of income' is mandatory so as to disentitle the trust from claiming exemption under sections 11 and 12 in case of omission to furnish such report in the prescribed form along with the return. 2. Normally, it should be possible for a charitable or religious trust or institution to file the auditor's report along with the return of total income, where such trust or institution claims exemption under sections 11 and 12. However, in cases where for reasons beyond the control of the assessee some delay has occurred in filing the said report the exemption as available to such trust under sections 11 and 12 may not be denied merely on account of delay in furnishing the auditor's report and the Income-tax Officer should record reasons for accepting a belated audit report. It is pertinent to mention here that the CBDT once again issued a circular no. 10/2019 dated 22.05.2019 which specifies the process of condonation of the delay in filing Form No. 10B. The same is reproduced as herewith: 4 ITA No.703/PUN/2022, A.Y. 2014-15 Under the provisions of section 12A of Income-tax Act, 1961 (hereafter 'Act') where the total income of-a trust or 'institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have to be audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and selling forth such particulars as may be prescribed. 2. As per Rule 17B of the Income-tax Rules, 1962 (hereafter 'Rules, the audit report of the accounts of such a trust or institution is to be furnished in Form no. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed form along with the return of income results in disentitlement of the trust from claiming exemption under sections 11 and 12 of the Act. 3. Representations have been received by the Board/field authorities stating that Form no. 10B could not be filed along with the return of income for AY 2016· 17 and AY 2017- 18, It has been requested that the delay in filing of Form no: 10B may be condoned. Previously, vide instruction in F.No. 267 /- 82f77- IT(part) dated 09.02.1978, the CBDT had authorized the ITO to accept a belated audit report after recording reasons in cases where some delay has occurred for reasons beyond the control of the assessee. 4. Accordingly, in supersession of earlier Circular/Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trusts or institutions for condoning the delay in filing Form no. 10B and in exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes hereby directs that: (i) The delay in filing of Form no. 10B for AY 2016-17 and AY 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned. (ii) In all other cases of belated applications in filing Form no. I 013 for years prior to AY 20 I 8- 19, the Commissioners of Income-tax arc authorized to admit such applications for condonation of delay u/s. I 19(2)(b) of the Act. The Commissioners will while entertaining such belated applications in filing Form no. 10B shall satisfy themselves that the assessee prevented by reasonable cause from filing such application within the stipulated time. Further, all such" applications shall be disposed off by 30.09.2019. It is pertinent to mention here that after the decisions of various Hon'ble Courts on the issue, the CBDT once again issued a circular no. 2/2020 dated 03.01.2020 which empowers the CIT to condone the delay in filing Form No. 10B. The latest CBDT's Circular is reproduced herewith: CIRCULAR NO. 2/2020 [F. NO. 197/55/2018-ITA-I], DATED 3-1-2020 Under the provision of section 12A of Income-tax Act, 1961 (hereafter 'Act') where the total income of a trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income tax in any previous year, the accounts of the trust or institution for that year have to be audited by any accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in 5 ITA No.703/PUN/2022, A.Y. 2014-15 the prescribed from duly signed and verified by such accountant and setting forth such particulars as may be prescribed. 2. As per Rule 17B of the Income-tax Rules, 1962 (hereafter 'Rules') the audit report of the accounts of such a trust or institution is to be furnished in Form No. 108. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed from along with the return of income results in disentitlement of the trust or institution from claiming exemption under sections 11 and 12 of the Act. 3. Representations have been received by the Board/field authorities stating that Form No. 10B could not be filed along with the return of income for AY. 2016-17 and AY. 2017-18. It has been requested that the delay in filing of Form No. 10B may be condoned. Previously, vide instruction in F.No. 267/482/77-IT(part) dated 9-2-1978, the CBDT had authorized the ITO to accept a belated audit report after recording reasons in cases where some delay has occurred for reasons beyond the control of the assessee. 4. Accordingly, the CBDT issued Circular No. 10/2019 circulated through F.No. 197/55/2018-ITA-1 in supersession of earlier circular/Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trust or institution for condoning the delay in filing Form No. 10B and in the exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes vide Circular No. 10/2019 dated 23rd May, 2019 and Circular No. 28/2019 dated 27 th September, 2019 both issued vide F.No. 197/55/2018-ITA-1 has directed that:- (i) The delay in filing of Form No. 10B for AY. 2016-17 and AY. 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned. (ii) In all other cases of belated applications in filing Form No. 10B for years prior to AY. 2018-19, The commissioner of income-tax are authorized to admit and dispose off by 31-3-2020 such applications for condonation, of delay u/s 119(2)(b) of the Act. The Commissioner will while entertaining such belated applications in filing Form No. 10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. 5. In addition to the above, it has also been decided by the CBDT that where there is delay of upto 365 days in filing Form No. 10B for Assessment Year 2018-19 or for any subsequent Assessment Years, the Commissioners of Income-tax are hereby authorized to admit such belated applications of condonation of delay under section 119(2) of the IT Act and decide on merits. 6. The Commissioners of Income-tax shall, while entertaining such belated applications in filing Form No. 10B, satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. Perusal of the above CBDTs Circulars reveal that there is no blanket condonation of delay in filing tax audit in Form No. 10B for claim of exemption u/s 11 and 12 of the Act. In fact, certain procedures/conditions have to be followed/fulfilled before allowing the condonation of delay by the AO or Commissioner of Income Tax. As can be seen from the above discussion that the appellant has to filed an application before the CIT for condonation of delay in filing Form 10B, From the submission, it transpires that the appellant, in the present case, had furnished a petition before the CIT for condonation for filing, which is still 6 ITA No.703/PUN/2022, A.Y. 2014-15 pending with the CIT. Further, there is no power vested with CIT(A) for condonation of delay in filing Form 1 DB. Since there is no order of CIT(E) condoning the delay in filing Form No. 10B, the appellant is still to be treated as non-compliant of section 12A(1)(b) of the Income Tax Act read with rule 17B of the Income Tax Rule. In view of these facts, I am of the opinion that the appellant is not entitled for the said deduction and accordingly, the denial of exemption u/s 11 of the Act is hereby confirmed. Thus, the ground of appeal is dismissed.” 6. In the light of the above as reasons recorded by the CIT(A), we note that for non-compliance of filing Form 10B along with return of income electronically, the assessee failed to show reasonable cause which prevented to file the same along with the return of income. Therefore, we find no infirmity in the order of CIT(A) and it is justified. Thus, ground No. 1 raised by the assessee is dismissed. 7. Ground No. 2 raised by the assessee regarding an amount of Rs.32,91,450/- as income chargeable to tax u/s. 11(1B) of the Act. 8. We note that there is no dispute with regard to showing the said amount as chargeable to tax by the assessee in the return of income and also for non-filing of Form 10B electronically along with return of income. The said amount was treated as income by the CPC as well as by CIT(A). Having no submissions rebutting the findings of CIT(A) in this regard, we deem it proper to uphold the order of CIT(A) in holding an amount of Rs.32,91,450/- as income chargeable to tax u/s. 11(1B) of the Act. Therefore, we agree with the reasons recorded by the CIT(A) in para 4.2 of the impugned order and it is justified. Thus, ground No. 2 raised by the assessee is dismissed. 9. Ground No. 3 raised by the assessee challenging the action of CIT(A) in not treating the amount of Rs.59,85,081/- as application of money. 7 ITA No.703/PUN/2022, A.Y. 2014-15 10. On perusal of para 4.3 of the impugned order, we agree with the observation of CIT(A) that the claim of application of income as claimed by the assessee is consequential, to filing of Form 10B electronically along with the return of income. In the aforementioned paragraphs, we upheld the order of CIT(A) in dismissing ground No. 1 that no Form 10B was filed by the assessee. In the view of the same, the assessee is not entitled to claim amount in this regard as application of money. Thus, the order of CIT(A) is justified and ground No. 3 raised by the assessee is dismissed. 11. In the result, the appeal of assessee is dismissed. Order pronounced in the open court on 02 nd March, 2023. Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 02 nd March, 2023. रदव आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The concerned CIT, Pune. 4. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गार्ड फ़ाइल / Guard File. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER, वररष्ठ दनजी सदचव / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune