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June 21, 2022

Merely for delayed filing of Audit report electronically addition to income of trust not justified

by CA Shivam Jaiswal in Income Tax, Legal Court Judgement

Merely for delayed filing of Audit report electronically addition to income of trust not justified

Facts and issues of the case

Facts, in brief, are that the assessee is a charitable trust. For assessment year 2018-19 the assessee filed its return of income electronically on 31.8.2018 declaring total income at Rs. NIL. Vide order dated 12.03.2020, passed u/s 143(1) of the Income-tax Act, 1961(“the Act), the CPC Bengaluru, assessed the total income of the assessee at Rs. 18,69,914/- by making following disallowances/ addition:

(i) Disallwoance  of   expenditure  incurred    for   charitable  purpose   Rs. 8,86,695/-;

(ii) Disallowance  of  exemption  claimed  u/s  11(1)(a)  amounting  to  Rs. 57,219/-; and

(iii)Addition  on   account    of   voluntary  contribution  amounting  to  Rs. 9,26,000/-.

Aggrieved against the action of the CPC, Bengaluru, the assessee preferred appeal before the learned CIT(Appeals), who after considering the submissions dismissed the appeal, by confirming the action of the CPC. Aggrieved against the order of the learned CIT(Appeals), now the assessee is in before this Tribunal.

Observation by the court

The assessee vehemently argued that the authorities below were not correct in sustaining the addition. Learned counsel submitted that the addition was made on account of non-furnishing of the audit report in form 10B through electronic mode. Learned counsel submitted that the learned CIT(Appeals) has noted the fact that return of income was filed on 31.08.2018 and the audit report was uploaded on 06.09.2018. Learned counsel submitted that no opportunity was given before making adjustment, which was sine qua non as per Section 143(1) of the Act. It was stated that disallowance of a sum of Rs. 8,86,695/-could not have been adjusted u/s 143(1) of the Act. It was stated that the authorities below have made double addition. Therefore, it was stated that the addition needs to be deleted. Further it was stated that disallowance of donation received(voluntary contribution), considering the same as income from other sources, was not justified. In fact the said receipts were voluntary contribution other than separate receipts and have been shown on income side and out of which Rs. 8,86,695/-  has been applied charitable purpose under section 11 of the Act. It tantamount to double addition and, therefore, unjustified. On the contrary, learned DR opposed the submissions and supported the orders of the authorities below.

The Court has heard rival submissions, perused the material available on record and the orders of the authorities below. The learned CIT(Appeals) confirmed the addition. From the above finding of learned CIT(Appeals) it is clear that learned CIT(Appeals) has not adverted to the submissions of the assessee. The appeal was dismissed merely on the ground that the assessee failed to furnish audit report electronically. It is seen that there was delay of six days in uploading the audit report. The Audit Report was available even before the impugned order u/s 143(1) of the Act was passed. Therefore, in my considered view the adjustment made by the Assessing was not justified without giving proper opportunity of hearing. I order accordingly. Grounds raised by the assessee are allowed. The Assessing Officer is directed to delete the addition.


The Court has disposed off the appeal and ruled in favour of the assessee

Read the full order from below


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