Bangalore Fruit Commission Agents Association Vs ACIT (ITAT Bangalore)
Summary: The Income Tax Appellate Tribunal, Bangalore Bench ‘C’, in The Bangalore Fruit Commission Agents Association Vs ACIT, CPC, Bangalore, ITA No. 417/Bang/2024, decided on 16 April 2024, held that rejection of exemption under Sections 11 and 12 of the Income-tax Act, 1961 could not be sustained on the reasoning adopted by the appellate authority where the assessee had inadvertently furnished Form No. 10BB instead of the prescribed audit report in Form No. 10B and subsequently corrected the error. The Tribunal set aside the rejection of the exemption claim and restored the matter to the Assessing Officer for verification of Form No. 10B and allowance of exemption under Section 11 in accordance with law.
The assessee, an association registered under the Companies Act and holding registration under Section 12A, filed its income-tax return for assessment year 2020-21 on 6 November 2020. Along with the return, its auditor mistakenly uploaded Form No. 10BB instead of Form No. 10B. The Centralized Processing Centre issued an intimation under Section 143(1) on 30 November 2021 denying deductions under Sections 11 and 12 because the prescribed audit report had not accompanied the return. The assessee subsequently furnished the correct Form No. 10B. The order records two different dates for this correction: 9 March 2023 in paragraph 2 and 9 August 2023 in paragraph 3.
The National Faceless Appeal Centre, by order dated 8 February 2024, confirmed the denial of exemption. It relied upon the Ahmedabad Bench decision in Association of Indian Panel Board Manufacturers Vs DCIT, reported at (2022) 143 taxmann.com 418, for the requirement to file Form No. 10B with the return. It also sustained interest under Sections 234B and 234C, treating the levy as consequential and mandatory in view of the Supreme Court judgment in M.H. Ghaswala, reported at (2001) 252 ITR 1 (SC).
Before the Tribunal, the assessee argued that the incorrect audit form had been uploaded inadvertently and the mistake was later rectified. It further submitted that the Ahmedabad Tribunal decision relied upon by the NFAC had already been reversed by the Gujarat High Court on 21 March 2023 in Tax Appeal No. 655 of 2022, well before the NFAC passed its order. The Bangalore Bench accepted that the appellate authority’s reliance on the reversed Tribunal decision could not support the disallowance and held that dismissal of the assessee’s appeal on that basis was incorrect.
The Tribunal accordingly remitted the exemption issue to the Assessing Officer to verify the subsequently furnished Form No. 10B and allow the benefit under Section 11 as per law. Ground No. 4 was treated as general, while Grounds Nos. 5 and 6 were held consequential. The assessee’s appeal was partly allowed. The order did not grant an unconditional final exemption or separately cancel the interest; the relief remained subject to verification and consequential treatment.
Cases Discussed
- Association of Indian Panel Board Manufacturers Vs DCIT, (2022) 143 taxmann.com 418 (ITAT Ahmedabad) — Relied upon by the NFAC to deny exemption for non-filing of Form No. 10B with the return; subsequently reversed by the Gujarat High Court.
- Association of Indian Panel Board Manufacturers, Tax Appeal No. 655 of 2022, decided on 21/03/2023 (Gujarat High Court) — The Tribunal noted that this judgment had reversed the Ahmedabad Bench decision before the NFAC passed its order.
- M.H. Ghaswala, (2001) 252 ITR 1 (Supreme Court) — Cited by the NFAC regarding the mandatory and consequential character of interest under Sections 234B and 234C.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed against the order passed by the NFAC u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2020-21 dated 8.2.2024 which has been filed against the assessment made u/s 143(1) of the Act by which an intimation was issued on 30.11.2021, wherein the deduction claimed u/s 11 & 12 of the Act were not allowed for the reason that the assessee had not filed the statutory audit report in form 10B along with return of income filed u/s 139(1) of the Act.
2. The assessee is a company registered under the Companies Act and obtained registration u/s 12A of the Act. For the assessment year 2020-21, the assessee filed the return of income on 6.11.2020 and the audit report in form 10BB instead of in form 10B was filed along with return. The case of the assessee is that the auditor had filed form 10BB instead of filing form 10B. The assessee found out the mistake and rectified the same by filing the report in form 10B on 09.03.2023 and prayed to allow the deductions u/s 11 & 12 of the Act. The assessee also challenged the levy of interest u/s 234B of the Act for not paying the advance tax and the interest u/s 234C of the Act for the deferment of advance tax.
2.1. The appellate authority, NFAC in respect of deductions disallowed u/s 11 & 12 of the Act, had held that Form 10B is the statutory form and it is mandatory on the part of the assessee to file the report in form 10B along with return of income and following the order of ITAT Ahmedabad Bench reported in (2022) 143 taxmann.com 418 in the case of Association of Indian Panel Board Manufacturers Vs. DCIT had confirmed the rejection of deductions. Similarly, the Appellate Authority had confirmed the interest levied u/s 234B & 234C of the Act by observing that the same are consequential and mandatory in nature by relying on the judgement of Hon’ble Supreme Court in the case of M.H. Gaswalla reported in (2001) 252 ITR 1 (SC).
2.2. The assessee now challenged the above said order of Appellate Authority by contending that the assessee is eligible for deduction u/s 11 & 12 of the Act since there was an inadvertent mistake in filing the report in form 10B, which was also rectified later on. The assessee further contended that the order of the Ahmedabad Tribunal, relied on by the Appellate authority in rejecting the claim of deduction was reversed by the Hon’ble High Court of Gujarat in its judgement dated 21.3.2023 in Tax Appeal No.655 of 2022. The assessee also produced the copy of judgement of Gujarat High Court in support of his argument.
3. We have heard the rival submissions and perused the materials available on record. Admittedly, in this case, the report in form 10BB was inadvertently filed by the auditor of the assessee along with return of income, which was later on rectified on 09.08.2023 by filing the correct report in form 10B. Further, the ITAT Ahmedabad order relied on by the appellate authority was also reversed by the Hon’ble High court of Gujarat in Tax Appeal No.655 of 2022 on 21.3.2023 well before passing the Appeal order dated 08.02.2024 and therefore, the order of the appellate authority in respect of the issue relating to the disallowance of deduction u/s 11 & 12 of the Act is no longer valid and therefore, the dismissal of the appeal by the CIT(A) is not coorect. However, we restore this issue to the file of AO for verification of Audit Report filed by the assessee in Form 10B. and allow the exemption u/s. 11 of the Act as per law.
4. Ground No.4 is only general in nature, which do not require any adjudication.
5. Ground Nos.5 & 6 are consequential in nature.
6. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 16th Apr, 2024
