Director of Income Tax (Exemption) vs Divyajyot Foundation

Heard learned Counsel for the appellant.

The following common substantial question of law is proposed for admission of these three appeals.

Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income Tax (Appeals) in deleting the addition of Rs. 2,12,35,583 while the asses-see has not submitted its accounts in Form No. 10AA on or before June 30, 2004, to the DGIT(E), New Delhi as required u/s 80G(5C)(v) of the Income Tax Act, 1961 read with Rule 18AAAA of the Income Tax Rules, 1962, whereas Section 12(3) of the Income Tax Act, 1961 specifically mentioned about the accounts, which have not been rendered before the prescribed authority in given time?

The Tribunal has considered the issue raised in the question as under:

I have gone through the decision of the Gujarat High Court in the case of Commissioner of Income Tax Vs. Gujarat Oil and Allied Industries, , relied upon by the assessee cited above. In that case, the hon''ble court took the view that for claiming deduction u/s 80J, an assessee, a newly established industrial undertaking has to furnish audit report along with the return. In that case, such audit report was not filed along with the return but submitted before the Assessing Officer, before the completion of assessment. The court had held that filing of audited report is not mandatory and filing the same before the Assessing Officer during the assessment proceedings is sufficient compliance with the provisions of the Act. The court has observed that while considering the assessee''s claim care has to be taken to see that the relevant purpose underlying Section 80J is augmented and fortified and not frustrated by the construction put up on the said provisions.

6.1 In the light of the observations of the High Court cited above, it can be fairly interpreted that the purpose of filing of audit report in Form No. 10AA, the DGIT is to ensure that the amount of donation received for providing relief to the earthquake victims is spent for such purpose. Once, it is found that such purpose has been fulfilled and the assessee has filed Form No. 10AA before the Assessing Officer, before completion of assessment, it should be treated as sufficient compliance with Sub-section (5C) of Section 80G of the Act. Thus, to sum up, the assessee has fulfilled the condition laid down under the provisions of Section 80G(5C) of the Act and hence, there is no case for invoking Section 12(3) of the Act and bringing to tax the entire receipts or any amount, as the entire donation received was spent within the time allowed under the Act. The Assessing Officer''s interpretation that the entire receipt is taxable, is also without any rationale and logic.

I find no infirmity in the order of Commissioner of Income Tax (Appeals) who has followed the hon''ble High Court judgment, which has clearly held that filing of audit report is directory and not mandatory in nature. Filing of audit report for Section 80G or in other statutory compliance assumes character.

Respectfully following the aforesaid decisions, we allow the claim of the assessee by dismissing the appeal of the Revenue.

The learned Departmental representative, however, relied on the order of the Assessing Officer.

We have heard the learned representatives of the parties and perused the record. The facts and circumstances being same and respectfully following the above Tribunal''s order, we dismiss the appeal of the Revenue.

The Commissioner of Income Tax (Appeals) as well as the Tribunal both found that though the assessee has not submitted its accounts in Form No. 10AA before the prescribed authority in given time, but that does not justify the addition and disallowance of the claim of the assessee. Considering the concurrent findings, we see no merit in these three appeals.

All the three appeals stand dismissed at the admission stage.