Indian Association Of The Experiment International Living vs Income Tax Officer

This appeal by the assessee is directed against the order of National Faceless Appeal Centre (NFAC)/ld. Commissioner of Income Tax (Appeals) [hereinafter referred to CIT (Appeals)] dated 19.08.2021 and pertains to Assessment Year 2017-18.

The grounds of appeal are as under:-

“1. On the facts and in the circumstances of the case and in law whether CIT (Appeals) was justified in not allowing deductions u/s. 11 on the ground that audit report in Form No. 10B is filed on 10.10.2017 after filing the return on 30.08.2017 i.e. before due date as judicial pronouncements u/s 12A filing 10B with or before return is filed is not mandatory but directory.

In the past Form No. 10B has been filed after filing the return and deductions under section 11 are allowed. The principle of consistency is violated.

It is prayed to your Honour that in view of the above deductions under section 11 be allowed fully.”

Brief facts of the case are that the assessee is a registered charitable trust and filed its return on income on 30.08.2017 declaring gross total income ‘NIL’. The same was processed by CPC under section 143(1) of the Income Tax Act, 1961 (the Act). It determined the total income at Rs.5,82,963/- after disallowance of deduction under section 11 of the Act.

Before the ld. CIT (Appeals) it was submitted that deduction under section 11 of the Act was not allowed just because Form 10B was not filed with the return but it was filed on 10.10.2017 i.e. before the due date of filing of return of income. Assessee further placed reliance on judicial pronouncements that Form 10B not mandatory but directory and such controversial matter cannot be considered under section 143(1) of the Act. The Ld. CIT (Appeals) considering the above held that since the assessee neither filed Form 10B along with the return of income nor he filed before the due date of filing of return for assessment year 2017-18, hence assessee’s argument is not acceptable. The ld. CIT (Appeals) confirmed the addition made by CPC. Against this order assessee is in appeal before us.

We have heard both the parties and perused the record. The ld. Counsel for the assessee stated that there was extension of date for filing the return for this year. He referred to the order of CPC under section 143(1) of the Act where the due date of filing the return is mentioned as 7.11.2017. Referring to the above details the assessee’s Counsel submitted that assessee has duly filed Form 10B on 10.10.2017, which is within the due date of filing of return of 7.11.2017. Hence the ld. Counsel for the assessee submitted that the ld. CIT (Appeals) has given a totally wrong finding that Form No. 10B was not filed with return of income or before the due date of filing of return for assessment year 2017-18. Further the ld. Counsel referred to the decision of Hon’ble Calcutta High Court in the case of CIT Vs. Hardeodas Agarwalla Trust [(1992) 198 ITR 511 (Cal.)] where filing of Form 10B was held to be directory and not mandatory. It was held that the appellate authority has plenary powers in disposing of an appeal and the scope of his power is coterminous and co-extensive with that of the Assessing Officer. He may, therefore, consider and decide any matter arising out of the proceedings in which the order appealed against is passed. He can do what the Assessing Officer can do and direct him to do what he has failed to do. Held, that, in the instant case, the assessee was not given an opportunity to file the audit report in the prescribed form which was available with the assessee before the assessment was completed. In such a case, the appeal being a continuation of the original proceedings, the appellate authority had the power to accept the audit report and direct the Assessing Officer to redo the assessment. We note that in the present appeal the ld. CIT (Appeals) has given a wrong finding that assessee has not filed Form 10B before the due date of filing of return as is evident from the dates mentioned hereinabove. Moreover the case law from Hon’ble Calcutta High Court also comes to rescue of assessee. Hence the orders of Revenue authorities are set aside and this issue is decided in favour of the assessee.

In the result, the appeal filed by the assessee stands allowed.