Case Law Details
Rajdhani Maitri Club Foundation Vs ITO (ITAT Delhi)
The case of Rajdhani Maitri Club Foundation Vs ITO involved an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi, for the assessment year 2022-23. The appellant challenged the decision of the National Faceless Appeal Centre (NFAC), which upheld the disallowance of exemption under Section 11 of the Income Tax Act, 1961. The NFAC’s order was based on the assessee’s delayed filing of the audit report in Form 10B, required under the Act for claiming exemption. Despite being called twice, the assessee did not appear, and the case was decided ex parte.
The primary issue pertained to the denial of Section 11 exemption due to the filing of Form 10B beyond the due date for return submission under Section 139(1). The Revenue argued that the submission of this audit report is a mandatory compliance requirement for claiming the exemption. The assessee contended that the audit report was available at the time of assessment and should not have been ignored. Additionally, the assessee opposed the taxation of gross receipts without considering expenses incurred for its activities.
The ITAT referred to the precedent set by the Gujarat High Court in ACIT v. Xavier Kelvani Mandal Pvt. Ltd., which held that a belated audit report could be accepted during appellate proceedings. Based on this precedent, the tribunal directed the NFAC to reconsider the matter on merits. The reassessment was to be completed within three effective opportunities, placing the responsibility on the assessee to present relevant facts and evidence during the proceedings.
Ultimately, the ITAT allowed the appeal for statistical purposes, emphasizing that the NFAC must address the merits of the case in compliance with the law.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal for assessment year 2022-23 arises against National Faceless Appeal Centre (NFAC), Delhi’s DIN and order no. ITBA/APL/S/250/2023-24/1058355572(1), dated 30.11.2023, in case no. NFAC/2021-22/10245385 in proceedings u/s 250 of the Income-tax Act, 1961 (in short the “Act”).
Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex parte.
2. The assessee pleads the following substantive grounds in the instant appeal:
“On the facts and in the circumstances of the case and in law the ADDL/JCIT(A)-5.
Mumbail erred in-
1. confirming the following actions of DDIT, CPC, Bengaluru –
a. determining taxable incorne at 14,90,811/-against NIL return:
b. not allowing exemption claimed u/s 11 of the LT. Act, 1961 on the ground that Audit Report in Form 108 dated 22.09.2022 was filed on 07.11.2022 with the return of income:
c. ignoring the Audit Report in Form 108 even though the same was available at the time of passing order u/s 143(1) of the Act;
d. taxing the gross receipts of Rs. 14,90,811/- without allowing revenue expenduture Incurred in a sum of Rs. 14,75.974/- on the activities of the Assessee;
The above actions being arbitrary, fallacious, unwarranted and illegal must be quashed with directions for appropriate relief.”
3. Suffice to say, the substantive issue between the parties herein appears to be that of correctness of learned lower authorities’ action in disallowing the assessee section 11 exemption claim on the ground that it had belatedly filed its form 10B audit report dated 22.09.2022 than the due date of filing return u/s 139(1) of the Act. The Revenue’s case is that this tax audit report compliance is a mandatory provision for an assessee who claims section 11 exemption.
4. We note in this factual backdrop that the instant issue is no more res-integra in light of ACIT v. Xavier Kelvani Mandal Pvt. Ltd. (Gujarat), wherein their lordships have already settled the same at rest in assessee’s favour and against the department that such a compliance could be even made in first appellate proceedings before the CIT(A)/NFAC. I thus accept the assessee’s instant sole substantive grievance in principle and direct the learned CIT(A)/NFAC to re- adjudicate the lower appeal on merits as per law preferably within three effective opportunities subject to a rider that it shall be the taxpayer’s risk and responsibility only to plead and prove all the relevant facts within three effective opportunities in consequential proceedings. Ordered accordingly.
5. This assessee’s appeal is allowed for statistical purpose in above terms.
Order pronounced in open court on 21.11.2024.
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