MB EDUCATIONAL SOCIETY,KOTA V. CPC BANGALORE, ITO, WARD EXEMPTION, UDAIPUR, UDAIPUR

ITA 219/JODH/2024

AI Insights

MB Educational Society appealed against the order of the Addl. CIT(A)-2, Vadodara, which upheld the action of CPC in denying exemption under section 11 of the IT Act on the grounds of late filing of the audit report in Form 10B. The Society argued that the report was filed before the specified date but was e-verified due to a technical error. The Tribunal considered various judicial precedents and the procedural nature of the requirement to file the audit report, ultimately deciding in favor of the Society by directing the Assessing Officer to consider the audit report and assess the income accordingly.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31830 (ITAT-JODHPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2022-2023
• Other Referred Cases: Navbharat Charitable Trust Vs. ITO, JCIT(OSD)(E) Vs. Gujarat Energy Development Agency, Shri Namiyun Parswanath Jain Swetamber Manidhari Trust Vs. ITO(E), Kund Kund Kahan Digamber Jain Mumokshu Ashram Vs. ITO(E), Shri Krishna Mandir Trust Vs. ACIT, Saroj Gopal Educational Society Vs. ITO(E), CIT Vs. G.M. Knitting Industries Pvt. Ltd. & Anr., Raghavan Nair Vs. ACIT & Anr., Ascharajlal Ram Parkash Vs. CIT, Rajesh RasikLal Shah VS DCIT, Double Dot Finance Ltd. Vs. ACIT, S. Nagaraj vs. State of Karnataka
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN
• Assessee Lawyers: P.C. PARWAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Revised return; Reasonable cause; Depreciation; Capital Gains; Charitable institution; Benefit of exemption; Procedural lapse
• Section: 143(3); 201; 154; 143(1); 32; 11; 12AA; 12A; 13; 12; 119(2)(b); 10B; 10(23C)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 219/Jodh/2024 Assessment Year: 2022-23 MB Educational Society 4-C-16, Talwandi, Kota-324005 [PAN: AABTM1020F] (Appellant) Vs. CPC Bangalore/ITO, Ward Exemption, Udaipur. Appellant by Sh. P.C. Parwal, C.A. Respondent by Shri Karni Dan, Addl. CIT Date of Hearing 21.10.2024 Date of Pronouncement 26.12.2024 ORDER Per:DR. S. Seethalakshmi, JM: This appeal filed by assessee is arising out of the order of the ld. ADDL.CIT(A)-2, Vadodara dated 13.03.2024 for assessment year 2022-23. 2. In this appeal, the assessee has raised following grounds: - “ 1. The Ld. CIT(A) has erred on facts and in law in upholding the action of CPC in denying exemption u/s 11 of the IT Act on the ground that assessee has not filed the audit report in Form 10B in time and that power to condone the delay in filing that audit report in form 10B rest only with CIT(E) u/s 119(2)(b) of the Act by not considering the fact that audit report has been filed before specified date, i.e. 21.09.2022 but the same has been e-verified on 18.10.2022 due to technical error. 2. That Ld. CIT(A) has erred on facts and in law in upholding the action of CPC in treating the gross receipts of Rs. 1,64,92,424/- as total income of assessee without I.T.A. No. 219/Jodh/2024 MB Educational Society 2 allowing deduction for the expenditure of Rs. 1,14,52,385/- incurred by the assessee to earn such receipt. 3. Brief fact of the case are that the assessee trust is registered with Registrar of Society on 07.01.1989 with the main object of imparting education. It is approved u/s 10(23C)(vi) of IT Act, 1961 vide order dated 22.02.2012 from AY 2011-12 and onwards. It is also registered u/s 12A(1)(ac)(i) of IT Act, 1961 vide order dated 10.03.2022 for AY 2022-23 to 2026-27. The assessee filed its return of income on 18.10.2022 at Nil income after claiming exemption u/s 11 of the Act at Rs.1,64,92,424/-. For claiming the exemption, as required by section 12A(1)(b), it obtained and filed the audit report in Form No.10B on 21.09.2022 , i.e. one month before the specified date but due to some technical error the same was e-verified by the assessee on 18.10.2022. The AO(CPC) processed the return of assessee and issued intimation u/s 143(1) dated 31.03.2023 assessing the total income at Rs.1,64,92,424/- by denying exemption u/s 11 for the reason that assessee has not filed the audit report in time. 4. Against the intimation, assessee filed appeal before Ld. Addl. CIT(A), NFAC who dismissed the appeal by holding that assessee has not filed the audit report in Form 10B in time and that power to condone the delay in filing the audit report in Form 10B rest only with ld. CIT(E) u/s 119(2)(b) of the Act. The relevant para No. 6.3 of the ld. CIT(A) is reproduced as under:- I.T.A. No. 219/Jodh/2024 MB Educational Society 3 ‘’6.3 It is noticed by the appellant’s own submission and otherwise that the audit report has been filed belatedly. Therefore, there is no dispute regarding this fact of the case. Now the appellant in its submission has pleaded that ‘’Due to some technical reason of the site, it could not be E-verified on the date of the submission of the Audit Report duly signed by the Chartered Accountant but it has been verified on the date of submission of the Income Tax Return on 18-10- 2022. Further, at this point it is to be made clear tgat teh right to condone any delay in respect of filing of Audit Report u/s 10B rests solely with the CIT(Exemption) u/s 119(2)(b) of the Act. The appellant has not placed any submission on record to prove that the delay in filing Form 10B has been condoned by the CIT(Exemption). Therefore, the exemption u/s 11 & 12 of the Act, claimed by the appellant cannot be allowed at this stage. In view of the above, the adjustment made by the CPC, Bengaluru stands confirmed. The appeal on these grounds is dismissed. 7. In the result, the appeal is dismissed.’’ 5. As the assessee did not receive any favour from the appeal filed before Ld. Addl. CIT(A), NFAC, therefore the assessee trust has filed the following written submission with the prayer that the AO may be directed to allow exemption u/s 11/10(23C)(iiia) of the Act ‘’Submission:- 1. It is submitted that there is no dispute as to the fact that assessee has obtained the audit report in Form No.10B on 21.09.2022 and the CA also uploaded it on the e-portal on same date, i.e. 21.09.2022 (PB 8-11). Thus in substance assessee complied with the provisions of clause (b) of section 12A(1) of the Act.However, this report could not be e- verified by the assessee due to some technical errorand therefore it was e-verified by the assessee on 18.10.2022(PB 12)when the return was filed.Hence when the audit report in the prescribed form has been obtained and was available on the e-portal before the specified date, there is no delay in furnishing the audit report before the specified date.Therefore rejection of the appeal of assessee on the ground that power to condone the delay in filing the audit report u/s 10B rest solely with CIT(E) is misplaced.Thus AO be directed to allow exemption u/s 11 of the IT Act to the assessee. 2. Otherwise also, in various cases it has been held that obtaining the audit report to claim exemption u/s 11 is a mandatory requirement but filing of the same is a procedural requirement and therefore even when such report is filed before the completion of I.T.A. No. 219/Jodh/2024 MB Educational Society 4 assessment, requirement of the section as to the filing of the report should be taken as complied with. For this proposition reliance is placed on the following cases:- Navbharat Charitable Trust Vs. ITO (2023) 200 ITD 812 (Surat) (Trib.)(PB 13-22) The head note of this decision is as under:- Charitable trust—Exemption under s. 11—Rejection on account of belated filing of audit report—Undisputedly the assessee is a public charitable trust engaged in imparting education has substantially satisfied all the conditions for availing the benefit of exemption under s. 11/12 and except for filing audit report in Form 10B, which was filed belatedly, no other fault found—Therefore the benefit of exemption should not be denied merely on account of delay in furnishing the audit report and it is permissible for the assessee to produce the audit report at a later stage either before the AO or before the appellate authority by assigning sufficient cause—On facts matter restored back to the file of AO to verify the contents of Form 10 for all the assessment years and grant necessary exemptions by passing the order in accordance with law JCIT(OSD)(E) Vs. Gujarat Energy Development Agency (2023) 202 ITD 733 (Ahd.) (Trib.)(PB 23-26) The relevant Para 7 & 8 of the decision is reproduced as under:- 7. We have heard both the parties, and we do not find any infirmity in the order of the learned CIT(A) on the issue. The issue before us is related to denial of deduction under ss. 11 and 12 of the Act on the ground that the assessee had failed to furnish audit report in Form No. 10B along with return of income filed. We find, this issue has been discussed and appreciated by the learned CIT(A) in impugned order in the light of various judicial decisions, and allowed the claim of the assessee, by observing that the assessee did file the audit report and the same was available both during assessment and appellate proceedings, and thereby the assessee has substantially complied with relevant provisions of the Act. The relevant findings of the learned CIT(A) are as under : \"(g) In the instant case the appellant/assessee is a charitable trust registered under s. 12A on 29th Jan., 1980. Thus it is engaged in charitable activities for over 40 years. The audit report in Form 10B was e-filed on 6th Oct., 2018 and was available before the AO when he passed the assessment order under s. 143(3) on 6th April, 2021. The audit report is also available before the CIT(A) during the appellate proceedings. It has been unambiguously held by the jurisdictional Gujarat High Court [CIT vs. Gujarat Oil & Allied Industries Ltd. (1993) 109 CTR (Guj) 272 : (1993) 201 ITR 325 (Guj)] that provisions regarding furnishing of audit report with the return have to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. The Hon'ble Court also took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the audit report and it is permissible for the assessee to produce the audit report at a later stage, either before the AO or the appellate authority. This view has been reiterated by the Hon'ble Court in its recent judgement in Sarvodaya Charitable Trust vs. ITO (Exemption) (2021) 125 taxmann.com 75 (Guj). Respectfully following the ratio given by the Hon'ble Gujarat High Court (which is jurisdictional High Court), I am of the view that the CPC Bangalore erred in not allowing deduction to the appellant/assessee for the amount applied for the I.T.A. No. 219/Jodh/2024 MB Educational Society 5 charitable purpose on revenue account as well as capital account. It was merely a procedural lapse on part of assessee to not file Form 10B along with return of income. The appellant/assessee uploaded the audit report within a week of filing return of income. It cannot be denied the benefit of exemption under s. 11 merely on account of delay in furnishing audit report. Thus the addition made by CPC Bangalore in its order under s. 143(1) of the IT Act, 1961, dt. 17th March, 2020 in respect of voluntary contribution other than the corpus received by the appellant trust amounting to Rs. 1,52,03,71,381 is ordered to be deleted.\" 8. The appellate proceedings being the continuation of assessment proceedings merely because the assessee has not furnished at the threshold i.e. furnishing the audit report along with return of income, but filed during the assessment proceedings, and available even during the appellate proceedings, it cannot be stated that the assessee has failed to comply with the provisions so as to deny substantial justice by way of granting exemption. The Hon'ble jurisdictional High Court in a recent decision in Social Security Scheme of GICE (supra) in the matter of exemption provisions contained in s. 11/12 of the Act, requiring filing of Form 10B along with return of income for claiming exemption, held the requirement of furnishing of report to be a mandatory requirement while that of filing the report alongwith return of income to be a procedural requirement. Conclusion made by the Hon'ble jurisdictional High Court is as under: \"5. Having heard learned advocates for the respective parties and having gone through the material on record, the only question which falls for consideration is whether respondent committed an error in passing the order by not condoning the delay in filing Form No. 10B along with the return filed. In the decision of this Court in Sarvodaya Charitable Trust (supra) this Court has observed that furnishing of audit report along with return filed is to be treated as a procedural requirement. It is though mandatory in nature the substantial compliance is required to be made. In the case of Sarvodaya Charitable Trust (supra) the assessee had produced the audit report after processing the return under s. 143(1). This Court in the said order has observed that the approach of the authority in these type of cases should be equitable, balancing and judicious. Technically speaking, respondent No. 2 might be justified in denying the exemption under s. 11 of the Act by rejecting such condonation application, but an assessee, which is a public charitable trust for past 30 years which substantially satisfies the conditions for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay. Applying the said principle, the petition is allowed. The impugned order passed by respondent dt. 12th March, 2021 is quashed and aside. The impugned order of rectification under s. 154 of the Act, dt. 25th Jan., 2019 is also quashed and set aside. The application for condonation of delay filed by the petitioner before the respondent is allowed.\" The issue before us being identical to that as dealt with by the Hon'ble jurisdictional High Court the decision rendered therein will squarely apply to the present case. Following the same, we have no hesitation in holding that the learned CIT(A) has rightly held the denial of exemption under s. 11 of the Act for non-filing of requisite form along with return of income, to be not as per law, noting the fact that the assessee did file the requisite form during regular assessment proceedings and appellate proceedings before I.T.A. No. 219/Jodh/2024 MB Educational Society 6 him. We, therefore, uphold order of the learned CIT(A) and reject the grounds of appeal of the Revenue. ShriNamiyunParswanath Jain SwetamberManidhari Trust Vs. ITO(E) (2023) 203 ITD 433 (Jabalpur) (Trib.)(PB 27-29) The relevant Para 5&6 of the decision is reproduced as under:- 5. We heard the rival submissions and perused the material on record. The sole matrix of the disputed issue envisaged by the learned Authorised Representative that the CIT(A) has erred in not considering the facts of hardship and the reasonable cause for delay in uploading the audit report in Form No. 10B. Further the learned Authorised Representative explained that the delay is not an wanton act and the assessee has obtained audit report prior to filing of the return of income but was uploaded belatedly. Whereas the audit report in Form No. 10B was signed by the C.A. on 20th June, 2018 and the C.A. was added in the e-filling portal for uploading Form No. 10B on 3rd Aug., 2018 and the assessee has filed the return of income on 6th Aug., 2018 and also filed the revised return of income on 30th March, 2018. Further the audit report in Form No. 10B was uploaded by the C.A. on 26th Feb., 2020 and the assessee was dependent on the C.A. and there is a delay in filling/uploading the Audit report and thus caused hardship beyond the control of the assessee and reasons are genuine and it is a curable defect. We find the Hon'ble Tribunal on the similar issue where there was delay in filling the Form No. 10B and it treated as procedural defect and is curable and was restored to the lower authorities in the case of Savitri Foundation vs. ITO National Faceless Appeal Centre [IT Appeal No. 1925/Mum/2021, dt. 1st Aug., 2022 asst. yr. 2018-19] has observed at paras 4 to 7 of the order read as under: \"4. Submissions made by rival sides heard, orders of authorities below examined and the case law on which the learned Authorized Representative of the assessee placed reliance considered. The assessee is a charitable trust registered under s. 12AA of the Act and has been purportedly enjoying the benefits of s. 11 since 2011. In the impugned assessment year the benefit of exemption under s. 11 of the Act has been denied to the assessee for the reason that assessee has failed to furnish audit report along with return of income. The contention of the learned Authorized Representative of the assessee is that the audit report was available with the assessee at the time of filing of return of income however due to inadvertent error the assessee failed to upload audit report in Form 10B along with e-filing of return of income. Non-filing of audit report is a bona fide error. The assessee has placed on record audit report dt.19th Oct., 2018 in the prescribed Form 10B at p. 15 of the paper book. The assessee after receiving the intimation under s. 143(1) of the Act uploaded the audit report on 18th April, 2020 in first appellate proceedings. 5. In my considered view non-filing of audit report in Form 10B along with return of income is merely a procedural defect which is rectifiable. If the audit report was available with the assessee at the time of filing of return of income and was not filed due to bona fide reasons the benefit of exemption under s. 11 cannot be denied if otherwise assessee is eligible to claim the same. I.T.A. No. 219/Jodh/2024 MB Educational Society 7 6. The Hon'ble Bombay High Court in the case of CIT vs. Mumbai Metropolitan Regional Iron & Steel Market Committee (supra) has held that late filing of required documents would not disentitle the assessee from availing benefit of s. 11 of the Act. Thus, in the facts of the case and in the light of decision Hon'ble Bombay High Court, I deem it appropriate to restore the file back to AO for de novo assessment after considering the audit report field by the assessee, in accordance with law. 7. In the result, impugned order is set aside and appeal by assessee is allowed for statistical purposes\" 6. We find the facts of the present case are similar and identical. Hence considering the submissions, findings of the authorities, judicial precedence and the ratio of the judicial decision discussed above and on the similar directions the disputed issue is restored to the file of the AO to adjudicate afresh after considering the Audit report and the assessee should be provided adequate opportunity of hearing and shall co-operate in submitting the information for early disposal of the appeal. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes. CIT Vs. G.M. Knitting Industries Pvt. Ltd. &Anr. (2015) 376ITR 456 (SC) Assessee is entitled to deduction u/s 80-IB even though it has not filed the audit report in Form No.10CCB along with the return but has filed the same before the completion of assessment. 3. It may be noted that the total receipt of the assessee is Rs.1,64,92,424/- (PB 7). The assessee is solely engaged in imparting education. As per section 10(23C)(iiiad) any income received by any person on behalf of any educational institution existing solely for educational purpose and not for the purpose of profit is exempt if the aggregate annual receipt of the person from such educational institutions do not exceed Rs.5 crores. Thus the entire income of assessee is otherwise exempt u/s 10(23C)(iiiad) of the Act. It is submitted that though the assessee has not claimed exemption u/s 10(23C)(iiiad) but it is a settled proposition of law that even if assessee has not claimed the exemption while filing the return but if it is otherwise eligible for such exemption, the same should be allowed to him. CBDT in Circular No. 14(XL-35) of 1955 dt. 11.04.1955 has also clarified the role of the tax officer in assisting the tax payers in following words:- “3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should:- (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; I.T.A. No. 219/Jodh/2024 MB Educational Society 8 (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs.” Reliance in this connection is further placed on the following cases:- Raghavan Nair Vs. ACIT &Anr. (2018) 162 DTR 353 (Kerala) (HC)(PB 30-35) In a case where it is apparent on the face of the record that the assessee has included in his return an income which is exempted from payment of income tax on account of ignorance or by mistake, the AO is bound to take into account the said fact in proceedings u/s 143. If the capital gains on a transaction is exempted from payment of tax, the AO has duty to refrain from levying tax on the said capital gains and the AO cannot in such cases refuse to grant relief u/s 143 to the assessee on the technical plea that the assessee has not filed a revised return. Ascharajlal Ram ParkashVs. CIT (1973) 90 ITR 477 (All.) (HC)(PB 36-37) Though the assessee in his return did not claim depreciation for a truck purchased in the previous year nor gave the necessary particulars in the form of return, the ITO, if in the course of assessment proceedings, he comes to know of the relevant particulars necessary for the grant of deduction for depreciation, was bound to give effect to it and allow depreciation, as the ITO was bound to arrive at the true figure of profits and gains of the business of the assessee. It cannot be contended that merely because the assessee did not file the necessary particulars in the return the ITO did not have jurisdiction to grant the depreciation allowance. Rajesh RasikLal Shah VS DCIT (2010) 35 DTR 388 (Mum.)(Trib.) Even though there is mistake on part of assessee in offering capital gains, which is not taxable under the Act, but in respect of which, all the details including the detail of STT paid was shown in the return of income, the same should have been excluded by the AO as the entire information was available on record and it should not come under the technicalities of not filing the revised return. Double Dot Finance Ltd. Vs. ACIT (2010) 38 DTR 220 (Mum.)(Trib.) Mere admission of income by the assessee does not give authority to the AO to tax the amount unless it comes within the purview of taxable income. Even if the assessee has inadvertently included a particular amount as income, the AO is supposed to determine the correct income by excluding the same- it is the basic function of the AO to find out the correct tax liability under the provisions of law that can be imposed and collected from the assessee. Thus, mere inclusion of the said amount in the return was of no consequence. Hon’ble Supreme Court in case of S. Nagaraj vs. State of Karnataka Suppl. (4) SCC 595 explained as under: “Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to any one. Rule of stare decisions is adhered to for consistency but it is not as inflexible as Administrative Law as in Public Law. Even the law bends before justice. I.T.A. No. 219/Jodh/2024 MB Educational Society 9 Entire concept of writ jurisdiction exercised by the higher Courts is founded on equity and fairness. If the Court find that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice, then it cannot on any principle be precluded fro rectifying the error. Mistake is accepted as valid reason to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustices. It is either statutory or inherent. The latter is available where the mistake is of the Court. In Administrative law, the scope is still wider. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order.” 4. It is submitted that the lower authorities have assessed the gross receipt as income ignoring the expenditure incurred by the assessee. From the Income & Expenditure A/c placed at PB 7,it can be noted that against the gross receipt of Rs.1,64,92,424/- received by way of fees & other receipts, expenditure incurred for earning such receipt isRs.1,14,52,385/-. Thus surplus without depreciation is only Rs.50,40,039/-. Therefore, if the income of assessee is to be computed on commercial basis,what can be taxedis onlythe surplus after allowing depreciation u/s 32 of the Act. Hence taxingthe gross receipts is apparently erroneous. For this purpose reliance is placed on the following decisions:- KundKundKahanDigamber Jain Mumokshu Ashram Vs. ITO(E) ITA No.165/JP/19 to 168/JP/19 order dt. 29.05.2019(Jaipur) (Trib.)(PB 38-44) The relevant Para 8 of the decision is reproduced as under:- 8. We have heard the rival contentions and perused the material available on record. We find that where the exemption claimed under section 11 and 12 has been denied by the Assessing officer, what can be brought to tax is the net income in the hands of the assessee trust and not the gross receipts. In all these years, we find that while denying the exemption under section 11 and 12 for want of registration under section 12AA, the Assessing officer has brought gross receipts to tax which is against the basic tenets of law where only the real income which is determined after deducting expenses from gross receipts can be brought to tax. We therefore agree with the alternate contention so advanced by the ld AR and without going into merit of the other contention which is left open, the matter is set-aside to the file of the Assessing officer to examine the claim of the expenditure so claimed by the assessee trust against the gross receipts for each of the relevant years and where the Assessing officer determines the net receipts as not exceeding the maximum amount not chargeable to tax, allow the necessary relief to the assessee trust. Following the decision of KundKundKahanDigamber Jain Mumokshu Ashram,Hon’ble ITAT, Jaipur Bench in case of Shri Krishna Mandir Trust Vs. ACIT ITA No.255/JP/2022 order dt. 31.08.2022(PB 45-51)has again held that gross receipt cannot be taxed as income and what can be taxed as income is only the surplus. SarojGopal Educational Society Vs. ITO(E) (2023) 203 ITD 62(Raipur)(Trib.)(PB 52-54) I.T.A. No. 219/Jodh/2024 MB Educational Society 10 The relevant Para 12 & 13 of the decision is reproduced as under:- 12. Before proceeding any further, we may herein observe that the declining of the assessee's claim for exemption under ss. 11 and 12 of the Act, per se would not justify assessing its gross receipt as its income for the year under consideration. Even though the assessee society may not be entitled to exemption under ss. 11 and 12 of the Act, its income under any circumstance must be deduced per commercial principles, i.e., after considering its claim of expenses per extant law. Our view above is fortified by the order passed by the Tribunal, \"SMC\" Bench, Raipur, in the case of Jain ShwetamberMurtipujakSangh (supra), wherein involving identical facts, though declining of the assessee's claim for exemption under ss. 11 and 12 of the Act for delayed filing of \"Form 10\" was upheld by the Tribunal but its alternative claim that the AO was obligated to have considered its claim for deduction of expenses raised in the income and expenditure account was accepted. The matter was restored to the file of the AO to consider the assessee's claim for deduction of expenses as debited in the income and expenditure account under the provisions of the Act. For the sake of clarity, the relevant observations of the Tribunal in the case above is culled out as under : \"15. Be that as it may, as the assessee-trust does not cumulatively satisfy the set of conditions specified in para 4(i) of the CBDT Circular No. 10 (supra), and also had not filed any application for condonation of delay under s. 119(2)(b) of the Act as provided in para 4(ii) of the said circular, therefore, there remains no occasion for condoning the delay involved in filing of Form 10B by the assessee beyond the stipulated time period. I, thus, on the basis of my aforesaid observations, find no infirmity in the view taken by the lower authorities who had rightly declined the assessee's claim for exemption under s. 11 of the Act. However, I may herein observe that the AO after declining the assessee's claim for exemption under s. 11 of the Act could not have summarily held its gross receipts of Rs. 24,83,562 as its income. In sum and substance, the AO after treating the assessee as an unregistered trust was obligated to have considered its claim for deduction of expenses as were raised in the income and expenditure account. Accordingly, on the basis of my aforesaid deliberations, I though uphold the declining of the assessee's claim for exemption under s. 11 of the Act, but at the same time, restore the matter to the file of the AO with a direction to consider the assessee's claim for deduction of expenses as debited in the income and expenditure account, i.e. to the extent the same are allowable under the Act. Needless to say, the AO shall grant a reasonable opportunity of being heard to the assessee in the course of set-aside proceedings.\" 13. Adopting a similar view, we herein, on similar lines, restore the case of the assessee appellant to the file of the AO with a direction to consider its claim for deduction of expenses as debited in the income and expenditure account, i.e., to the extent the same was allowable under the Act. In view of above, AO be directed to allow exemption u/s 11/10(23C)(iiiad) of the Act.” It may be noted that the ld. AR of the assessee has filed the following paper book to support his grounds of appeal (supra):- I.T.A. No. 219/Jodh/2024 MB Educational Society 11 S. No. Particulars Pg. No. Filed before AO/CIT(A) 1. Copy of order dt. 22.02.2012 granting approval to assessee u/s 10(23C) (vi) of the IT Act, 1961 1-2 Reference 2. Copy of acknowledgement of return along with computation of total income 3-5 Both 3. Copy of consolidated financial statement for FY 2021-22 6-7 Both 4. Copy of Form No.10B uploaded on the e-portal on 21.09.2022 8-11 Both 5. Copy of acknowledgment of Form No.10B e-verified by the assessee on 18.10.2022 12 Both 6. Copy of decision of Hon'ble ITAT, Surat Bench in case of Navbharat Charitable Trust Vs. ITO (2023) 200 ITD 812 13-22 Reference 7. Copy of decision of Hon'ble ITAT, Ahmedabad Bench in case of JCIT(OSD)(E) Vs. Gujarat Energy Development Agency (2023) 202 ITD 733 23-26 Reference 8. Copy of decision of Hon'ble ITAT, Jabalpur Bench in case of Shri Namiyun Parswanath Jain Swetamber Manidhari Trust Vs. ITO(E) (2023) 203 ITD 433 27-29 Reference 9. Copy of decision of Hon'ble Kerala High Court in case of Raghavan Nair Vs. ACIT & Anr. (2018) 162 DTR 353 30-35 Reference 10. Copy of decision of Hon'ble Allahabad High Court in case of Ascharajlal Ram Parkash Vs. CIT (1973) 90 ITR 477 36-37 Reference 11. Copy of decision of Hon'ble ITAT, Jaipur Bench in case of Kund Kund Kahan Digamber Jain Mumokshu Ashram Vs. ITO(E) ITA No.165/JP/19 to 168/JP/19 order dt. 29.05.2019 38-44 Reference 12. Copy of decision of Hon'ble ITAT, Jaipur Bench in case of Shri Krishna Mandir Trust Vs. ACIT ITA No.255/JP/2022 order dt. 31.08.2022 45-51 Reference 13. Copy of decision of Hon'ble ITAT, Raipur Bench in case of Saroj Gopal Educational Society Vs. ITO(E) (2023) 203 ITD 62 52-54 Reference 6. Per contra, ld. DR supported the order of the ld. CIT(A). 7. We have heard both the parties and perused the materials available on record. We note that audit report in Form No.10B was obtained on 21.09.2022 which was uploaded on the e-portal on the same date by the CA but it was e- verified by the assessee on 18.10.2022 when the return was filed. Thus technically the audit report was not e-verified one month before the due date of I.T.A. No. 219/Jodh/2024 MB Educational Society 12 filing of return which was 31.10.2022. However, as held in various cases cited by the Ld. AR of assessee, obtaining the audit report to claim exemption u/s 11 is a mandatory requirement but filing of the same is a procedural requirement and therefore even when such report is filed before the completion of assessment, requirement of the section as to the filing of the report should be taken as complied with. To this effect, we draw strength from the order of ITAT, Ahemdabad Bench in the case of JCIT vs Gujarat Energy Development Agency, (ITA No. 209/Ahd./2022 dated 02-08-2023) wherein at para 8 of the order by relying on decision of Hon’ble Gujarat High Court in the case of Social Security Scheme of GICEA vs CIT (Exemption) (2023) 147 Taxman.com 283, it is held that the requirement of furnishing of report to be a mandatory requirement while that of filing of the report alongwith return of income to be procedural requirement. Therefore, once audit report in Form 10B was before the AO CPC, taxing the gross receipt is not as per law and the AO is directed to assess the income after considering that the Audit Report in Form 10B was filed before him. Thus Ground No. 1 of the assessee is allowed. 8. As regards the Ground No. 2, we note that CPC has considered the gross receipt of Rs.1,64,92,424/- as total income without considering the fact that assessee is engaged solely in providing education and therefore its income is otherwise exempt u/s 10(23C)(iiiad) of the Act. Further against the gross receipt of Rs.1,64,92,424/-, the expenditure incurred is Rs.1,14,52,385/-. Thus the I.T.A. No. 219/Jodh/2024 MB Educational Society 13 surplus without depreciation is only Rs.50,40,039/-. If the income of assessee is to be computed on commercial basis, what can be taxed is only the surplus after allowing depreciation u/s 32 of the Act and therefore also taxing the gross receipts is not as per law. However, since we have directed the AO to assess the total income by considering that Audit Report in Form 10B has been filed before him, this ground No. 2 raised by the assessee is infructous. 9. In the result, appeal is partly allowed as indicated hereinabove Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Rathod Kamlesh Jayantbhai) (DR. S. Seethalakshmi) Accountant Member Judicial Member Dated 26/12/2024 Santosh Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order "