Case Law Details

Case Name : ITO Vs Society for Education Conscietisation Awareness & Training (ITAT Jodhpur)
Appeal Number : ITA No. 461/Jodh/2018
Date of Judgement/Order : 06/05/2019
Related Assessment Year : 2014-15

ITO Vs Society for Education Conscietisation Awareness & Training (ITAT Jodhpur)

We note that the assessee obtained the copy of the audit report in Form 10B on 13.08.2014 and the return of income was filed by the assessee on 30.09.2014. It was also brought to our notice that the assessee had suo-moto uploaded the audit report in Form 10B on 15.06.2015 which was successfully uploaded and the CPC, Bangalore has processed the return of income of the assessee only on 16.03.2016. Thus, the requirement of law that the assessee shall have its account audited has been complied within the time prescribed by the statute since the assessee has obtained the audit report in Form 10B on 13.08.2014 before the return of income was filed thereafter only on 30.09.2014. We note that the assessee has audited its account as per law and obtained copy of the audit report in Form 10B and also taking note the Hon’ble jurisdictional High Court High Courts held that the filing of furnishing the audit report along with the return of income is directory and not mandatory.

Respectfully relying on the ratio decidendi by the Hon’ble jurisdictional High Court and other Hon’ble High Courts and taking note that Ld. CIT(A) has also relied on the order of the Hon’ble Jurisdictional High Court, we confirm the order of the Ld. CIT(A) and dismiss the appeal of the revenue.

FULL TEXT OF THE ITAT JUDGEMENT

This is an appeal preferred by the Revenue against the order of Ld. Commissioner of Income Tax (Appeals), Ajmer dated 04.07.2018 for AY 2014-15 on the following sole ground of appeal.

“1. On the facts and the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the disallowance made by AO of the claim for exemption of Rs.94,98,048/- made by the assessee u/s. 11 o the I. T. Act, 1961 despite the fact that the assessee failed to file audit
report in form 10B alongwith return of income as per the provisions of section 12(1)(b) of the Act.”

2. Brief facts of the case as noted by the Ld. CIT(A) are that the assessee society for education has filed its return of income on 13.09.2014 declaring total income as ‘nil’ after claiming the exemption of Rs.14,98,048/- u/s. 11 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”). Along with the return of income the audit report in the form 10B was not filed on line (electronically updated) as required u/s. 12A(b) read with Rule 17B of the Income Tax Rules, 1962 (hereinafter referred to as the “Rules”). Therefore, while processing the return of income u/s. 143(3), the AO vide intimation dated 16.03.2016 issued u/s. 143(1) of the Act disallowed the claim of the assessee for exemption of Rs.94,98,048/- claimed by the assessee u/s. 11 of the Act. The assessee after having learned about the disallowance of the exemption, filed an application u/s. 154 of the Act on-line on 09.09.2017 with CPC, Banglore requesting the AO to allow the exemption as claimed by the assessee in return of income filed by it. The AO (DCIT, CPC., Banglore) rejected the request for rectification filed by the assessee vide order dated 15.09.2017 by observing as under:

“Subject: Rejection of request for Rectification, under section154 of the Income Tax Act,1961 – reg.

Please refer to the rectification request filed by you for the Assessment Year 2014-15 in respect of abovementioned order and received at Centralised Processing Centre on 09.09.2017.

On Verification, it is seen that there is no prima facie error in the order which you have sought to be rectified. Therefore, your application for Rectification under sec. 154 is rejected, for the following reasons (if any).

As seen from the Return of Income filed, the Assessee has claimed exemption u/s. 11 of Income Tax Act,1961 but Form 10B in Audit Report is E-filed after the date of filing the return. Hence, Deduction/exemption u/s. 11 is not allowed.

In view of the above, this rectification request is rejected and Return stands transferred to the Assessing Officer.

Kindly contact our jurisdictional Assessing Officer for further details.”

3. Aggrieved by the aforesaid action of the DCIT, CPC, Banglore the assessee preferred and appeal before the Ld. CIT(A), who gave relief to the assessee taking note that the assessee had obtained the audit report in Form 10B on 13.08.2014 and return of income was filed by the assessee on 30.09.2014. Thus, according to Ld. CIT(A), at the time of making the claim of exemption u/s. 11 of the Act in the return of income filed by the assessee, the compliance as required by the law i.e. of obtaining the audit report at the time of claiming exemption u/s. 11 has been complied with by the assessee. Therefore, the Ld. CIT(A) relying on the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. Dr. Sh. L. M. Singhvi (2007) 289 ITR 425 (Raj.) was pleased to give relief to the assessee. Aggrieved, the revenue is before us.

4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee obtained the copy of the audit report in Form 10B on 13.08.2014 and the return of income was filed by the assessee on 30.09.2014. It was also brought to our notice that the assessee had suo-moto uploaded the audit report in Form 10B on 15.06.2015 which was successfully uploaded and the CPC, Bangalore has processed the return of income of the assessee only on 16.03.2016. Thus, the requirement of law that the assessee shall have its account audited has been complied within the time prescribed by the statute since the assessee has obtained the audit report in Form 10B on 13.08.2014 before the return of income was filed thereafter only on 30.09.2014. We note that the assessee has audited its account as per law and obtained copy of the audit report in Form 10B and also taking note the Hon’ble jurisdictional High Court High Courts held that the filing of furnishing the audit report along with the return of income is directory and not mandatory in the following cases:

(i) CIT Vs. Garment Exporters Association of Rajasthan (2016 386 ITR 20 (Raj.),

ii) CIT Vs. Bhawani Plywood (P) Ltd. (2010) 1 taxmann.com 250 (P&H),

iii) ITO Vs. Smt. Mandira D. Vakharia (2001) 250 ITR 432 (Kar.),

iv) CIT Vs. Krishi Upaj Mandi Samity, Ajmer, ITA No. 168/2018 DOJ 0-7.01.2019 (Raj.).

Respectfully relying on the ratio decidendi by the Hon’ble jurisdictional High Court and other Hon’ble High Courts and taking note that Ld. CIT(A) has also relied on the order of the Hon’ble Jurisdictional High Court, we confirm the order of the Ld. CIT(A) and dismiss the appeal of the revenue.

5. In the result, appeal of the revenue is dismissed.

Order pronounced in the open court on 6th May, 2019

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