Calcutta HC Upholds ITAT’s Decision Granting Relief to Trust Despite Late Audit Report Submission

Commissioner of Income Tax (Exemptions) Vs Camellia Educare Trust (Calcutta High Court)

Calcutta High Court dismissed an appeal by the revenue department against the Income Tax Appellate Tribunal (ITAT) ruling in favor of Camellia Educare Trust, which had filed its audit report late for the assessment year 2020-21. The revenue questioned whether the ITAT was correct in allowing the trust’s cross-objection despite the late submission of the audit report in Form 10B, beyond the due date prescribed under Section 139(4) of the Income Tax Act, 1961. The ITAT had relied on Circulars issued by the Central Board of Direct Taxes (CBDT), including Circular No. 8 of 2021, which permitted the filing of belated returns due to the COVID-19 pandemic. The High Court agreed with the ITAT’s application of these Circulars, noting that they provided the necessary relief for delayed submissions, and concluded that no substantial question of law arose from the case. Consequently, the High Court upheld the ITAT’s decision, dismissed the revenue’s appeal, and rejected the related stay application.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

The Court : This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated 30^th May, 2023 passed by the Income Tax Appellant Tribunal, “B” Bench, Kolkata (Tribunal) in ITA No. 646/Kol/2022 and C.O. No.7/Kol/2023 for the assessment year 2020-21.

The revenue has raised the following substantial questions of law for consideration :

i) Whether on the facts and in circumstances of the case, the Learned Income Tax Appellate Tribunal is justified in dismissing the appeal of the Revenue and allowing the Cross Objection of the Assessee despite the fact that the respondent assessee failed to furnish audit report in Form 10B before due date as prescribed under Section 139(4) of the Income Tax Act, 1961 and notified by the CBDT and further failed to file any application for condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961 ?

ii) Whether the Learned Income Tax Appellate Tribunal has committed substantial error in law in ignoring the fact that non-issuance of intimation under Section 143(1) of the Income Tax Act, 1961 does not make the assessee entitled to claim exemption under Section 11 of the said Act when the assessee failed to furnish audit report in Form 10B before due date as prescribed under Section 139(4) of the Income Tax Act, 1961 and notified by the CBDT ?

We have heard Mr. Amit Sharma, learned standing counsel appearing for the appellant and Mr. J.P. Khaitan, learned senior counsel for the respondent.

The short issue which falls for consideration is whether the Tribunal was right in holding that the return filed by the assessee was to be treated as within time. The factual matrix has been elaborately set out by the learned Tribunal, which need not be repeated for a decision in this appeal. All that is required to note is that the Central Board of Direct Taxes issued Circular F. No.173/193/2019-ITA-I, dated 23.4.2019. This pertains to Section 12A of the Act relating to charitable or religious trust – registration of – clarification with regard to time allowed for filing of return of income subsequent to insertion of Clause (ba) in Sub-section (1) of Section 12A. The Circular refers to various representations received on the subject while processing the income tax returns for the assessment year 2018-19 in respect of belated income tax returns filed under Section 139(4) of the Act. Ultimately, the Board directed that for a trust registered under Section 12AA of the Act to avail the benefit of exemption under Section 11 shall, inter alia, file its return of income within the time allowed under Section 139 of the Act. Accordingly, orders under Section 143(1)(a) in those cases in which demand has been raised on this issue was directed to be rectified. Apart from that, another Circular was issued by the Board being Circular No. 8 of 2021, dated 30.4.2021 and in clause (d) of the said Circular, filing of belated return under sub-section (4) and revised return under sub­section (5) of Section 139 of the Act for the assessment year 2020-21, which was required to be filed before 31^st March, 2021 may be filed on or before 31^st May, 2021.

The learned Tribunal rightly applied the Circulars and granted relief to the assessee and thus we find no questions of law, much less substantial question of law, arising for consideration in this appeal.

Therefore, the appeal fails and stands dismissed.

The stay application IA No: GA/2/2024 is also dismissed.