SOUTH INDIAN FEDERATION OF FISHERMEN SOCIETIES,TRIVANDRUM V. THE INCOME TAX OFFICER, TRIVANDRUM

ITA 266/COCH/2025

AI Insights

The case involves the South Indian Federation of Fishermen Societies, which appealed against the order of the National Faceless Appeal Centre / Commissioner of Income-tax (Appeals) that dismissed their appeal regarding the denial of exemption under section 11 of the Income-tax Act. The exemption was denied because the appellant failed to file the audit report in Form 10B within the prescribed time. The tribunal examined whether the CPC was justified in making an adjustment to the income claimed as exempt under section 11 due to the non-filing of the audit report in the prescribed timeframe. The tribunal referenced a similar case, M/s.Ammini Foundation v. DCIT, to support its decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314222 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2021-2022
• Other Referred Cases: M/s.Ammini Foundation v. DCIT in ITA No.695/Coch/2022
• Laws Referred To: Income-tax Act, 1965
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL; SENIOR
• Assessee Lawyers: R. KRISHNAN
• Section: 10B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member ITA No.266/Coch/2025 : Asst.Year 2021-2022 South Indian Federation of Fishermen Societies TC-20/1936, Karamana PO Trivandrum – 695 002. PAN : AACTS0090G. v. The Deputy Director of Income-tax, CPC Bangalore. (Appellant) (Respondent) Appellant by : Sri.R.Krishnan, CA Respondent by : Smt.Leena Lal, Senior AR Date of Hearing : 05.05.2025 Date of Pronouncement : 08.05.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre / Commissioner of Income-tax (Appeals) [hereinafter “the CIT(A)”] dated 06.02.2025 for the assessment year 2021-2022. 2. Briefly, the facts of the case are that the appellant is a society formed with the object of running welfare / assistance to fishermen, covering the coastal area of Karnataka State, Tamil Nadu State and the Kerala State. The appellant is duly registered u/s.12A of the Income-tax Act, 1965 (hereinafter “the Act”). The return of income for the assessment year 2021-2022 was filed on 15th March, 2022 disclosing Nil income. The said return of income was processed by the CPC vide intimation u/s.143(1) of the Act, on 25.11.2022 by making adjustment denying the exemption u/s.11 of the Act on the ground that the ITA No.266/Coch/2025. South Indian Federation of Fishermen Societies. 2 appellant had not filed the audit report in Form 10B one month prior to the due date prescribed for filing the return of income u/s.139(1) of the Act. 3. Being aggrieved by the said intimation, a petition u/s.154 of the Act was filed on 23.12.2022, which came to be rejected vide order dated 24th January, 2023. 4. Being aggrieved by the above order, an appeal was filed before the CIT(A), who vide the impugned order held that filing of the audit report within the prescribed time is mandatory and only the CIT alone is empowered to condone the delay in terms of CBDT Circular No.2/2020, and proceed to hold that the appeal is not maintainable. Accordingly, the appeal filed by the assessee is dismissed. 5. Being aggrieved, the appellant is in appeal before me in the present appeal. It is 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. 6. 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. 7. I heard the 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 ITA No.266/Coch/2025. South Indian Federation of Fishermen Societies. 3 exempt u/s.11 of the Act for the reason that the appellant 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, an 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. 8. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 8th day of May, 2025. Sd/- (Inturi Rama Rao) ACCOUNTANT MEMBER Cochin; Dated : 08th May, 2025. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "