M/s Trilok Singh Bhandari Charitable Trust vs Income Tax Officer

“1.

That the learned Commissioner of Income Tax (Appeals), AddI/JCIT (A)-2, Coimbatore has erred both in law and on facts in upholding the determination of the income of the appellant trust at Rs. 12,99,869/- in an order dated 11.12.2019 u/s 154 of the Act as against declared Nil income u/s 143(1) of the Act was illegal, invalid and without jurisdiction and deserved to be quashed as such.

2.

That the order made by the learned Commissioner of Income Tax (Appeals) by dismissing the appeal on the ground that "Accordingly, this appellate authority has no power under section 250 of any other provision of the Income Tax Act to condone the delay in filing Form No. 10B. The appellant, if so advised, may make an application for condonation of delay before the jurisdictional Commissioner of Income Tax (Exemptions) in accordance with the said CBDT Circulars and accordingly the instant appeal is dismissed on fact" is misconceived, misplaced and, untenable.

3.

That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the denial of claim of exemption of Rs. 12,99,869/- u/s 11 and 12 of the Act.

3.1

That furthermore the learned Commissioner of Income Tax (Appeals) has failed to appreciate that delay in Form 10B could not be a ground to deny the claim of exemption u/s 11 and 12 of the Act

4.

That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the income computed of the appellant trust by the learned Assessing Officer at Rs. 12,99,869/- without allowing application of income on revenue account of Rs. 11,18,408/- towards the objects of the trust.

5.

That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the denial of claim of exemption of Rs. 1,81,461/- on account of amount accumulated or set apart for application to charitable or religious purposes or for the stated objects of the trust/institution to the extent it does not exceed 15 per cent of income derived from property held in trust/institution u/s 11(1)(a)/11(1)(b) of the Act.

6.

That in any case and without prejudice the learned Commissioner of Income Tax (Appeals) has failed to appreciate that had the expenditure incurred alongwith depreciation been allowed as such, income computed is excessive; and thus not in accordance with law.

7.

That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the demand aggregating income tax liability at Rs. 1,78,316/-, interest at Rs. 1,443/- u/s 234A of the Act, Rs. 20,202/-u/s 234B of the Act and Rs. 7,288/- u/s 234C of the Act and Rs 5,000/-u/s 234F of the Act as against declared income tax liability of Rs. 2,08,535/-is contrary to facts on record.

8.

That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the adjustment so made in an order dated 11.12.2019 /s 154 of the Act was debatable and contentious issue and in any case, beyond the scope and ambit of provisions contained in section 154 of the Act and, thus without jurisdiction.

9.

That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that order dated 11.12.2019 u/s 154 of the Act without reasons is otherwise a nullity.

10.

That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that order dated 11.12.2019 u/s 154 of the Act was made without granting opportunity much less fair meaningful and effective opportunity and therefore such an intimation is otherwise vitiated.

Prayer

It is therefore, prayed that, it be held that adjustment made is without jurisdiction. It be further held that claim of exemption u/s 11 and 12 of the Act may kindly be allowed and disallowance made and sustained by the learned Commissioner of Income Tax (Appeals) may kindly be deleted and demand raised alongwith interest may kindly be held to be not tenable and not in accordance with law and appeal of the appeal of the appellant trust be allowed. In any case and without prejudice had the expenditure incurred alongwith depreciation been allowed as such, income computed was excessive; and thus not in accordance with law.”

“11.

Considered the rival submissions and material placed on record. I observed that the assessee was claiming the benefit u/s 10B(8) of the Act as per the provisions of section 10B and the assessee has to comply certain conditions failing which the assessee will loose the benefit. In the present case, the assessee has to file the audit report in Form 10B before the due date as per Rule 12A(1)(b) of the Rules. I observed that the above conditions of filing the Form 10B was relaxed by the CBDT in the earlier assessment years, therefore, it clearly shows that it is only directory in nature and not mandatory, since, it is in compliance with Rules framed for availing the benefit under the provisions of Section 11 and it is held that to be directory in nature. I noticed that assessee relied on the decision of Hon’ble Madras High Court in the case of Shri Chandraprabhuji Maharaj Jain Juna Mandir Trust (supra), wherein it is held as under:

“8.

As noted by us earlier, the assessee filed the return of income for the assessment year under consideration on 02.04.2009, which was processed and intimation under Section 143(1) of the Act was issued on 21.01.2011. Thus, there was no assessment under Section 143(3) of the Act. The assessee, while filing the petition under Section 154 of the Act, on 22.03.2011, pointed out that the assessee filed the Form No.10 along with the Board Resolution along with the covering letter dated 01.04.2019. However, the mistake done by the assessee was to file hard copies before the Assessing Officer, and not filing the same along with the return of income, which they filed on 02.04.2019. Thus, on the date when the return was taken up for assessment, there was record to show that the assessee had intimated the department about the resolution passed by the Board of the assessee Trust and the statutory Form No. 10. Admittedly, the assessment was not completed under Section 143(3) of the Act and therefore, there would have been no error had the assessing officer taken up the copy of the Board Resolution and Form No.10. Thus, on the date when the return was filed, the assessee had separately filed Form No. 10 along with the Board Resolution along with a covering letter dated 01.04.2009. Thus, in our considered opinion, when the assessee was entitled to a statutory benefit, it would be incumbent upon the concerned authority to examine the admissibility of the benefit than to foreclose the assessee on technicalities.”

12.

Further ld. AR relied on the decision of the Hon’ble Gujrat High Court in the case of CIT-IV vs. Xavier Kelavani Mandal (P.) Ltd. (supra), wherein it is held as under:

“4.

The question whether it is permissible to the assessee to produce the audit report at the appellate stage, has already been answered by this court in CIT v. Gujarat Oil & Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report along with the return has to be treated as a procedural provision, It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income, but produced before completion of the assessment. The Punjab and Haryana High Court in CIT v. Shahzadanand Charity Trust [1997] 228 ITR 292 has reiterated the same principle holding that the benefit of exemption should not be denied merely on account of delay in furnishing the same, and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by showing a sufficient cause. This decision of Punjab & Haryana High Court has been relied on by the Tribunal.

5.

In the above view, the Tribunal is eminently justified both in law and on facts in observing and holding as under.-

"In this case, it is not in dispute that the audit report in prescribed form was obtained prior to filling of the return on 20/12/2006; therefore, there was no reason for the assessee to keep the audit report with it in order to loose the exemption. The assessee in the earlier as well as in the subsequent assessment years filed the audit report and got the exemption. The conduct of the assessee in earlier year and subsequent years would prove that due to the facts stated above there was delay in filing the audit report and the contention of the assessee was supported by the affidavit of Mohmad Iqbal Vohra (PB-4). The learned CIT(A) on proper appreciation of the facts and material on record in the light of the decisions of the Hon'ble Punjab & Haryana High Court and the Hon'ble Calcutta High Court rightly directed the AO to accept the audit report of the assessee and grant exemption u/s. 11 of the IT Act."

13.

Respectfully following the aforesaid decisions, I am inclined to allow the claim made by the assessee and, accordingly, I direct the Assessing Officer to allow the claim of the assessee u/s 11 and 12 of the Act.”