COMMISSIONER OF INCOME TAX V. SANKALP WELFARE SOCIETY

ITA/89/2007

AI Insights

The case revolves around the appeal by the Commissioner of Income Tax, Faridabad against Sankalp Welfare Society, Gurgaon, concerning the exemption under section 11 of the Income Tax Act, 1961 for the assessment year 2002-03. The primary legal contention was whether the Tribunal was correct in allowing the exemption despite the assessee's failure to file the audit report in Form No.10B as required by section 12A(b). The Revenue argued that the Tribunal's reliance on previous judgments, which suggested that the audit report could be submitted at a later stage, was incorrect. However, the court referenced a Full Bench judgment and a Division Bench decision from the Madras High Court, which supported the assessee's position that the non-filing of the audit report at the time of the return does not automatically disqualify the assessee from claiming exemptions under section 11.

• Counselvise Citation: [2007] 140 COUNSELVISE.COM (IT) 684366 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 14-08-2007
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Punjab Financial Corporation, Commissioner of Income tax v. Print Systems and Products, Commissioner of Income Tax v. Devradhan Mahavlal Genda Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: RAJIV SHARMA
• Assessee Lawyers: YOGESH PUTNEY
• Keywords: Audit report; Exemption; Form No. 10B; Income Tax; Section 11; Section 12A(b); Section 32AB
• Section: 11; 12A(b); 32AB; 32AB(5)

Judgement Text

"ITA 89 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 89 of 2007 Date of decision 14 .8 .2007 The Commissioner of Income Tax, Faridabad ..appellant Versus Sankalp Welfare Society, Gurgaon .. Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE AJAY KUMAR MITTAL PRESENT: Mr. Yogesh Putney, Advocate for the Revenue. Mr. Rajiv Sharma, Advocate for the assessee. M.M.Kumar, J. The revenue has approached this Court claiming that the following substantial question of law would emerge from order dated 9.6.2006 passed in ITA No 546/DEL/2006 by the Income Tax Appellate Tribunal Delhi “D” Bench SMC New Delhi in respect of assessment year 2002-03. “ 1. On the facts and in the circumstances of the case, whether the Hon'ble Tribunal was right in allowing the exemption of section 11 of the assessee even though it had failed to fulfill the statutory requirement of filing audit report in Form No.10B as provided by section 12A(b) of the Income Tax Act,1961; 2.Without prejudice to the ground at serial no.1 above, and on the facts and circumstances of the case, whether the Hon'ble ITAT was right in relying on the decision in the case of Commissioner of Income Tax v. Punjab Financial Corporation ITA 89 of 2007 2 (254 ITR 6 (P&H), when there is no mandatory requirement in Section 32AB of the Income Tax Act,1961 to submit the audit report alongwith the return of income. c) Without prejudice to the ground at Sr. No. 1 and 2 above, whether the Hon'ble ITAT was right in relying on the decision in the case of Commissioner of Income Tax v. Devradhan Mahavlal Genda Trust (230 ITR 714) although the audit report was not filed during the assessment proceedings, but during the appellate proceedings.”? At the outset Mr.Rajiv Sharma, learned counsel for the assessee, has submitted that the controversy raised in this case stands settled by a Full Bench judgement of this Court in the case of CIT v. Punjab Financial Corporation (2002) 254 ITR 6 wherein it has been held that the provisions of Section 32 AB(5) of the Act are not mandatory and the Assessing Officer has the discretion to entertain the audit report even though the same was not filed alongwith the return for grant of benefit of deduction to the assessee in terms of Section 32AB(1) of the Act. He has also submitted that the view taken by the Full Bench of this Court in the case of Punjab Financial Corporation (supra) has been followed and applied by a Division Bench of Madras High Court in the case of Commissioner of Income tax v. Print Systems and Products (2006) 284 ITR 260. Learned counsel for the revenue could not controvert the aforesaid submission nor he could point out any distinguishing feature which may warrant a different view. In view of the above and for the reasons given in the judgements afore-mentioned , the questions claimed by the Revenue are ITA 89 of 2007 3 answered in favour of the assessee and against the revenue. The appeal is disposed of accordingly. (M.M.Kumar) Judge (Ajay Kumar Mittal) 14.8.2007 Judge okg "