Denial of deduction u/s 11 not filing of Audit Report in Form 10B within due date. The CIT(A) to wait till disposal of condonation application pending before CIT(Exemption)
ABCAUS Case Law Citation:
ABCAUS 3666 (2023) (02) ITAT
In the instant case, the assessee had challenged the order passed by the Commissioner of Income Tax, National Faceless Appeal Centre (NFAC) upholding the rectified intimation order u/s 154 confirming denial of deduction / exemption u/s 11 for want of filing of Form 10B within due date.
The assessee filed its return of income claiming exemption u/s 11. However, the assessee did not file Audit Report in Form No. 10B along with the return of income and it was filed belatedly.
The CPC, by an intimation u/s 143(1) denied the exemption claimed by the assessee u/s 11 of the Act. The rectification request u/s 154 of the Act filed by the assessee was also rejected.
Consequently, the assessee filed an application with the CIT (Exemptions) seeking condonation of delay in filing of Form No. 10B.
In the meanwhile, the assessee preferred an appeal against the order passed u/s 154 and submitted that filing of Form 10B was only directory and not mandatory requirement and belated filing of audit report should not have resulted in denial of exemption u/s 11 of the Act.
The CIT(A) while disposing of the said appeal observed that CBDT has delegated the power of condonation of delay to CIT(Exemptions) or Chief Commissioners of Income tax.
The CITA) further observed that since the assessee had already filed condonation application before the CIT(Exemptions), which was pending for disposal, the assessee was free to follow up with CIT (Exemptions) for condonation of delay. Accordingly, the appeal was dismissed.
The ITAT concurred with the findings of CIT(A) that filing of Audit Report in Form No. 10B was mandatory requirement to claim exemption u/s 11.
However, the Tribunal opined that since the assessee’s application for condonation was already pending before appropriate authority, the CIT(A) should have waited for disposal of the same before rejecting the assessee’s appeal.
Accordingly, the Tribunal restored the appeal back to the file of the CIT(A) with direction to pass the appellate order only after considering the outcome of the assessee’s condonation application.
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