ITO Vs Chinchwad Shikshan Prasarak Mandal (ITAT Pune)
Once Form 10B Delay Is Condoned, Exemption u/s 11 Cannot Remain Confiscated: ₹5.30 Crore CPC Adjustment Deleted
Background
The assessee was a charitable trust which electronically filed its return of income for AY 2018-19 declaring nil income after claiming exemption u/s 11.
The return was processed by the Centralised Processing Centre. Since the Trust had not filed its audit report in Form No. 10B within the prescribed time, the CPC issued an intimation u/s 143(1)(a) proposing an adjustment of ₹5,30,10,522. The adjustment principally arose from the denial of exemption u/s 11 due to the delayed filing of the audit report.
The case was subsequently selected for limited scrutiny through CASS. The specific scrutiny issue was described as “Transaction of Trust with Specified Persons”, particularly large payments by way of salary, rent, interest or similar amounts to persons covered by the specified-person provisions.
Statutory notices were validly served upon the Trust. However, it failed to participate in the assessment proceedings or furnish the information called for by the AO.
AO Accepts CPC Computation
The AO observed that the CPC had already denied the exemption claimed u/s 11 because of the delayed filing of Form 10B. According to him, the resulting adjustment also subsumed the issue for which the case had been selected for limited scrutiny.
