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April 11, 2023

It is not justified to deny a deduction under Section 11 because Form No. 10B was not filed

It is not justified to deny a deduction under Section 11 because Form No. 10B was not filed

Fact and issue of the case

The instant appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeal), NFAC, Delhi,[in brevity the ‘CIT (A)’] bearing appeal DIN & Order No. ITBA/NFAC/S/250/2022-23/1046010605(1), date of order 27.09.2022, the order passed u/s 250 of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2018-19.The impugned order was emanated from the order of the ld. Income Tax Officer, Exemption, Jalandhar, (in brevity the AO) order passed u/s 143(1) of the Act date of order 21.05.2021.

Brief fact of the case is that the assessee filed the return u/s 139. The return was processed u/s 143(1) and claimed deduction u/s 11 which was disallowed by the CPC, Bangalore and total addition was made Rs. 11,46,800/-. The assessee had not filed the audit report in Form No. 10B with the return u/s 139. Accordingly, the return was treated as defective u/s 139(9). The assessee rectified within one month &submitted the report on dated 23.03.2019 as time allowed in the deficiency letter by the ld. AO. Finally, the rectified order was passed on dated 21.05.2019 without considering the submission of assessee and sustained the addition amount of Rs. 11,46,800/- with the assessee’s total income. Aggrieved assessee filed an appeal before the ld. CIT(A) but remained unsuccessful. Being aggrieved assessee filed an appeal before us.

Observation of the court

During hearing the ld. counsel for the assessee has filed written submission which is kept in the record. The ld. counsel for the assessee placed that due to unavoidable reason the audit report in Form No. 10B was not filed with the return. The return was treated as defective u/s 139(9) by the revenue. The ld. AO allowed 30 days’ time for recovering the deficiency. Within 30 days the Form No. 10B was filed therefore assessee is eligible for deduction u/s 11 of the Act.

We heard the rival submission and considered the documents available in the record. We respectfully relied on the order of the Jurisdictional High Court for adjudication the issue. The filling of Form No. 10B is a procedural direction in in the provision. The assessee is registered u/s 12A and followed the direction as per the Act during filing of return. For non-filing of Form No. 10B with the return is just a failure of procedural system. Form 10B was filed within stipulated time for removal of defect in the return. Here we respectfully refer the order of Hon’ble High Court of Gujarat in the case of Sarvodaya Charitable Trust vs. Income Tax Officer. (Exemption), [2021] 125 taxmann.com 75 (Gujarat).

The assessee had rectified the defect within stipulated time and the procedure for filing Audit Report was completed. We find that assessee is eligible for deduction u/s 11 of the Act. The addition made by the ld. AO is liable to be quashed. Accordingly, the appeal of the assessee is allowed.

In the result, the appeal of the assessee bearing ITA No.214/Asr/2022 is allowed.

Order pronounced in the open court on 24.02.2023

Conclusion

In the result, appeal of the assessee is allowed and ruled in favour of the assessee

Read the full order from here

ShyamCharanSewa-Trust-Vs-DCIT-ITAT-Amritsar

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