E-Filing Of “Audit Report” Beyond The Date, Violative Of CBDT Circular: ITAT Denies Section 11 Exemption to Trust

The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) refused to grant the exemption under Section 11 of the Income Tax Act on the grounds that the trust e-filed the "audit report" in Form 10B beyond the date.

The bench of Ravish Sood (a judicial member) has observed that the assessee trust had e-filed or uploaded the "audit report" in Form 10B as of June 21, 2019, which was much beyond the date specified under Section 139. Therefore, its case would clearly fall beyond the scope and gamut of Paragraph 4(i) of CBDT Circular No. 10 dated May 22, 2019. The case of the assessee would not fall within the meaning of Paragraph 4(i) of the CBDT Circular.

The appellant/assessee trust is a religious-cum-charitable trust registered under Section 12AA(1)(b)(i) with the CIT (Exemption), Bhopal. The registration granted to the assessee trust was effective as of April 1, 2015. The assessee trust had e-filed its return of income, declaring nil income (after claiming exemption under Section 11 of the Act).

An indication was issued by the DCIT, CPC, Bangalore, in which the assessee’s claim for exemption was declined for the reason that it was to be allowed only if Form 10B along with the return of income were furnished electronically within the "due date".

The assessee, on receipt of the intimation, filed an appeal before the CIT (Appeals) and also moved an application for rectification of a mistake with the A.O. The application for rectification of the mistake was rejected. In the meantime, the assessee uploaded Form 10B electronically on June 21, 2019.

The CIT (Appeals) observed that the assessee trust had filed Form 10B r.w.r. 12(2) of the Income Tax Rules, 1962, on June 21, 2019, i.e., much after the "due date" for filing its return of income u/s. 139 of the Income Tax Act.

The department contended that the assessee-trust was obligated to e-file or upload its "audit report" u/s. 12A(b) in Form 10B a/w its return of income, which it had failed to do. Therefore, its entitlement for exemption was rightly declined by the DCIT, CPC, vide intimation u/s. 143(1)(a) of the Act, which order was thereafter sustained by the CIT (Appeals).

The ITAT noted that the A.O., after treating the assessee as an unregistered trust, was obligated to have considered its claim for deduction of expenses as they were raised in the income and expenditure account.

The ITAT upheld the decline of the assessee’s claim for exemption under Section 11, but at the same time restored the matter to the file of the A.O. with a direction to consider the assessee’s claim for deduction of expenses as debited in the income and expenditure account.

Case Title: Shri Jain Shwetamber Murtipujak Sangh Versus ITO (Exemption)

Case No.: ITA Nos. 15 & 16/RPR/2022

Date: 22.05.2023

Counsel For Appellant: Sunil Kumar Agrawal, Madhu Sudan Sawdia

Counsel For Respondent: Piyush Tripathi

Click Here To Read The Order