Case Law Details
St. Anthonys Education Trust Vs ITO (ITAT Mumbai)
In the case of St. Anthonys Education Trust vs. ITO, the Income Tax Appellate Tribunal (ITAT) Mumbai deleted an income addition imposed on the trust for delayed submission of Form 10B, an audit report essential for tax exemption under Section 11 of the Income Tax Act, 1961. The case concerns the assessment year (AY) 2022-23, where the trust initially declared an income of Rs. 12,538 but was later assessed at Rs. 62,56,517 due to the denial of tax exemption based on the deemed late filing of Form 10B. The Centralized Processing Center (CPC) assessed the higher amount, citing that the trust had not filed the required audit report within the specified deadline, raising a tax demand of Rs. 22,78,210. However, the trust argued that the filing occurred within the extended due date set by a CBDT circular.
The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the trust’s appeal, suggesting that the trust should file a condonation application under Section 119(2) for the delayed audit report. During the ITAT proceedings, the trust presented that both the return of income and Form 10B were submitted by November 5, 2022, which fell within the extended deadline provided by CBDT Circular No. 20/2022. This circular extended the filing deadline for AY 2022-23 to November 7, 2022, instead of October 31, 2022.
The ITAT found the appeal valid, as the filing complied with the revised deadline. The tribunal observed that the CIT(A)’s dismissal was unjustified under the circumstances and directed the CIT(A) to reassess the case, considering the CBDT’s extension. As a result, the tribunal allowed the appeal for statistical purposes and restored the case for a new evaluation in alignment with the extended filing provisions. The judgment underscores ITAT’s acknowledgment of deadline extensions by CBDT in procedural compliance for tax-exempt entities.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal of the assessee for the assessment year 2022-23 is directed against the order u/s 250 of the Income-tax Act, 1961 dated 19.06.2024 passed by the ld. Commissioner of Income-tax (Appeal), Mysore.
2. Facts in brief are that the assessee e-filed the return of income for the AY 2022-23 on 5th November, 2022 declaring the total income of Rs. 12,538/- and claimed TDS refund of Rs.2,888. The CPC has processed the return of income and, vide intimation u/s 143(1) of the Act dated 8th March, 2023, assessed the total income at Rs.62,56,517/- as against the taxable income of Rs. 12,538/- shown by the assessee in the return of income. An addition of Rs.62,43,979/- was made by disallowing the entire amount of expenditure claimed as incurred/amount set aside and claimed as deduction u/s 11 of the Act amounting to Rs.47,43,979/- and also by adding Rs. 15 lakhs being the amount deemed to have been applied during the previous year as per Clause (2) of Explanation to Section 11(1) of the Act on the ground that the assessee has not e-filed the Form No. 10B being the Audit Report u/s 12A(1)(b) of the Act within the due date as specified and raised a tax demand of Rs.22,78,2 10/- after adjusting TDS refund of Rs.2,888/-.
3. The ld.CIT(A) has dismissed the appeal of the assessee after referring the Circular issued by the CBDT No.2/2022 dated 3rd January, 2020 stating that for delay in filing Form No. 10B, the assessee has to file condonation application u/s 119(2) before the concerned CIT with the reason for belated filing of auditor’s report. The ld. CIT(A) also stated that the condonation application filed by the assessee was before the ld.CIT (E), Mumbai for adjudication, therefore, at this juncture, he cannot intervene in the proceedings of the concerned authority. Therefore, the appeal of the assessee was dismissed.
4. Heard both the sides and perused the material on record. The assessee has claimed the tax exemption u/s 11(12) of the Act of Rs.62,43,979/-. However, the claim of exemption has not been considered by the CPC due to belated filing of Form No.10 and the CIT(A) has also dismissed the appeal of the assessee for the same reason. During the appellate proceedings before us, the ld. Counsel submitted the audit report in Form No. 10B had been filed on 5th November, 2022 along with the return of income. The ld. Counsel also submitted that the return of income had been filed within the extended due date as per the CBDT Circular No.20/2022 dated 26th October, 2022 by which the due date stands extended from 31st October, 2022 to 7th November, 2022. In this regard, the assessee has also filed copy of the CBDT Circular No.20/2022 regarding extension of due date for furnishing return of income for AY 2022-23. The relevant extract of the Circular is reproduced as under:-
“In consequence to extension of due date for various reports of audit in the case of assessees referred in clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act to 07th October 2022 by Circular No. 19/2022 dated 30.09.2022, Central Board of Direct Taxes (CBDT), in exercise of its powers under Section 119 of the Income-tax Act, 1961 (Act), extends the due date of furnishing of Return of Income under sub-section (1) of section 139 of the Act for the Assessment Year 2022-23, which is 31st October 2022 in the case of assessees referred in clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act, to 07th November, 2022.”
5. We find that the assessee has also brought this fact before the ld. First Appellate Authority that the CBDT has extended the due date of filing the return of income to 7th November, 2022 and the assessee has filed the return of income along with Form No. 10B on 5th November, 2022 which was well within the due date. We consider that since the CBDT has extended the date of furnishing of return of income under sub-section (1) of section 139 of the Act for AY 2022-23 from 31st October, 2022 to 07th
November, 2022 and the assessee has filed the Form No. 10B before the date specified u/s 139 of the Act, therefore, the decision of the First Appellate Authority holding that the assessee has filed the audit report belatedly is not justified. Therefore, we restore this case to the file of the ld.CIT(A) for deciding denovo on merit after considering the Circular No.20/2022 of the CBDT, and submissions and documents filed by the assessee.
6. In the result, the appeal of the assessee is allowed for statistical purposes only.
Order pronounced in the open court on 17.10.2024.
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