Salt Lake Sanskritik Sansad Vs Deputy Director of Income Tax (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has ruled in favor of Salt Lake Sanskritik Sansad, a Public Charitable Society, stating that the benefit of income tax exemption cannot be denied merely due to a delay in filing the audit report in Form 10BB. This decision provides significant relief to charitable trusts facing similar issues.
The assessee-Society, registered under Section 12A of the Income Tax Act, 1961, and engaged in charitable activities including relief of the poor, education, and medical relief, filed its return of income for Assessment Year 2023-24 on September 1, 2023, declaring ‘NIL’ income. It also submitted Form 10, indicating accumulation of income, and Form 10BB (statutory audit report) on October 31, 2023. However, the assessment was completed under Section 143(1) with an assessed income of Rs. 25,58,626/-, disallowing accumulated income due to the alleged belated filing of Form 10BB. The Additional/Joint Commissioner of Income Tax (Appeals) upheld this disallowance, citing that the power to condone such delays lies with the Income Tax Officer under Section 119(2) of the Act.
Judicial Precedents Support Assessee
Before the ITAT, the assessee argued that the tax audit report was filed well before the assessment order was passed. They relied on key judicial precedents:
- Sarvodaya Charitable Trust -vs.- ITO (Exemption) [(2021) 125 taxmann.com 75] (Gujarat High Court): This ruling explicitly held that the benefit of exemption should not be denied solely because of a delay in filing the audit report.
- CIT -vs.- Rai Bahadur Bissesswarlal Motilal Malwasie Trust [(1992) 195 ITR 825] (Jurisdictional High Court, i.e., Calcutta High Court): This judgment categorically stated that filing Form 10B one month prior to the due date of filing the return is not a mandatory requirement for claiming exemptions under Sections 11 & 12 of the Act, and even a later filing entitles the assessee to the exemption.
The Departmental Representative, conversely, argued that the assessee should have sought condonation of delay from revenue authorities under Section 119(2)(b) of the Act, as per CBDT Circular No. 16/2024 dated November 18, 2024.
