Consequences of not filing Form 10B electronically. Whether benefit of exemption under sections 11 and 12 shall be available to the assessee in respect of income derived? Another question is what to do in such circumstances? ITAT, AHMEDABAD BENCH ITA No. 355 & 356/AHD/2021 decided on the issue of dated 15 July, 2022 in the case of Ambica Sarvajnik Trust Anklav v. Dy. CIT (CPC). Kindly click the link to get the answer and full decision.
Answer : No benefit of exemption under sections 11 and 12 shall be available to the assessee in respect of income derived if not filed Form 10B electronically. The remedy is to file Form 10B electronically and to approach the Commissioner (Exemption) with an application to condone the delay in accordance with the delegated powers vested under section 119(2) (b) of the act. ITAT, AHMEDABAD BENCH ITA No. 355 & 356/AHD/2021 on dated 15 July, 2022 in the case of Ambica Sarvajnik Trust Anklav v. Dy. CIT (CPC)
The learned Commissioner (Appeals) has observed that the assessee is free to file the said Form 10B online and/or approach the Commissioner (Exemption), Ahmedabad after filing Form 10B electronically and to condone the delay in accordance with the delegated powers vested under section 119(2) (b) of the act. Such a power under section 119(2) (b) is not vested with learned Commissioner (Appeals). Therefore, the learned Commissioner (Appeals) dismiss the appeal filed by the assessee.
IN THE ITAT, AHMEDABAD BENCH
WASEEM AHMED, A.M. & T.R. SENTHIL KUMAR, J.M.
Ambica Sarvajnik Trust Anklav v. Dy. CIT (CPC)
ITA No. 355 & 356/AHD/2021
15 July, 2022
Against Assessee.
Assessee by: B.T. Thakkar, Authorized Representative
Revenue by: Ravindra, Senior Departmental Representative
Order
T.R. Senthil Kumar, J.M.
These two appeals are filed by the assessee against separate orders of even dated 19-8-2020 passed by the learned Commissioner (Appeals)-9, Ahmedabad relating to the assessment years 2016-17 and 2017-18. Since issue raised in both the appeals are common, for the sake convenience, we dispose of both the appeals by this common order.
- Registry has noted that there is a delay of 438 days in filing appeals by the assessee before the Tribunal. These appeals are filed before the Tribunal on 30-12-2021 whereas the appeals ought to have been filed on or before 20-12-2020. This period falls under COVID-Pandemic situation, thus following Hon’ble Supreme Court Judgment dated 23-3-2020 in suo moto W.P. (Civil) No. 3 of 2020, vide Hon’ble Supreme Court has extended time limit for filing appeals with effect from 15-3-2020. Thus, there is no delay in filing the above two appeals. Delay accordingly condoned, and take the appeals of the assessee for adjudication on merit. First we take assessee’s appeal for the assessment year 2016-17.
- Brief facts of the case are that the assessee is a public charitable trust. The assessee filed its return of income for the assessment year 2016-17 on 31-3-2018 declaring total income at Rs. 25,72,805 and deduction under sections 11 and 12 of the Income Tax Act, 1961 (‘the Act’ for short) was claimed at Rs. 19,63,782, thus resulting net deduction of Rs. 6,09,023 and tax liability of Rs. 65,907. The return was processed under section 143(1) of the act on 25-2-2019 by Deputy Commissioner, Centralized Processing Centre, Bangalore. The Centralized Processing Centre has not granted exemption under sections 11 and 12 on the ground that Form No. 10B was not filed electronically. Thus, the total income was worked out at Rs. 25,72,805 and demanded a tax of Rs. 7,73,720. Aggrieved against the same, the assessee filed appeal before the learned Commissioner (Appeals). During the course of assessment proceedings, the assessee submitted that the registration under section 12AA was granted to the assessee-trust on 28-9-2018. The assessee submitted that it has filed return of income on 31-3-2018 and contended that the proceedings were pending on the date, when the registration was granted. The assessee also submitted that the benefit of exemption under section 12AA i.e. benefit of exemption under sections 11 and 12 shall be available to the assessee in respect of income derived from property held under the trust for earlier assessment year and relied upon the provision of section 12A (2) inserted with effect from 1-10-2014 in support of its contention. The assessee further submitted that the trust was established for charitable purpose and provides good public facility to general public without any reservation of caste and creed where community marriages were held and needy girls were provided financial support for marriages. The assessee further submitted that there is no change in either objects or the activities for the assessment year 2016-17 as compared to the assessment year 2018-19. Thus, the assessee-trust claimed that it was eligible for benefit as granted by the first proviso to section 12A (2) of the act. However, the learned Commissioner (Appeals) dismissed the appeal and held as follows:
“4.6 It will be pertinent to mention that the law now stipulates that Form 10B is necessarily required to be filed electronically. This is necessitated by the department’s objective to increase the efficiency of tax administration by leveraging technology for easier verification of the entries in the ITR and to promote a non-intrusive administration and voluntary self-compliance. The ITR is now processed online only. If Form 10B is not filed electronically the benefits of technology in processing the return cannot be taken as any manual form 10B entries cannot be utilized for granting benefit under section 11 and 12 of the act by way of automatic computerized verification thereof. In the absence of electronic form 10B the assessing officer will not be able to give credit to the application claimed by the appellant under section 11(1). Although the appellant is eligible for exemption under section 11 and 12 by failure to comply with the statutory requirement of filing Audit Report in Form 10B electronically benefit of the deductions claimed by it is not allowed. Only standard deduction under section 11(1) (a) of 15% is allowable as of now. Subject to this, the action of assessing officer under section 143(1) is sustained. However, the appellant is free to file the said Form 10B online and/or approach the Commissioner (Exemption), Ahmedabad after filing Form 10B electronically to condone the delay in accordance with the delegated powers under section 119(2) (b) of the act. For statistical purpose, the ground of appeal 1 and 2 are dismissed.”
- Aggrieved against the same, the assessee is before us raising a solitary ground as under:
A.Y. 2016-17
The learned Commissioner (Appeals) erred in not granting exemption under section 11/12 of Rs. 19,63,782 from the gross income.
A.Y. 2017-18
The learned Commissioner (Appeals) erred in not granting exemption under section 11/12 of Rs. 14,99,371 from the gross income.
- The learned Authorized Representative for the assessee reiterated before us the arguments made before the learned Commissioner (Appeals) and in support of its grounds, claimed that the assessee is entitled for exemptions under sections 11 and 12 of the act. The learned Authorized Representative further filed additional grounds as follows:
Ground-2
‘The learned Commissioner (Appeals) erred in law and on facts in directing to tax income of the appellant trust at Maximum Marginal Rate (MMR) though the trust is registered under Bombay Public Charitable Trust Act, 1951 therefore tax should be charged at normal rate of tax.
- Per contra, the learned Departmental Representative appearing for the Revenue supported the orders passed by the lower authorities. Further, the learned Departmental Representative submitted that the assessee has misconstrued the entire 143(1) proceedings as well as the appellate order passed by the learned Commissioner (Appeals). The case of the department is that the assessee has failed to file Form No. 10B which is mandatorily required to be filed electronically with effect from assessment year 2016-17 onwards. As it can be seen from learned Commissioner (Appeals)’s order Para 4.5, that Form No. 10B was filed manually during the appellate proceedings on 3-3-2020. However, no evidence of filing the same electronically has been adduced by the assessee. No reference to this is being made in the written submission filed by the assessee. This is a serious defect and necessitates analysis of the provision of law and procedures as per the Income Tax Act and Income Tax Rules, 1962 for filing the Audit Report in Form 10B along with the return of income. In the absence of the same, the learned Commissioner (Appeals) not allowed the benefit of deduction claimed by the assessee under section 11 and 12 of the act. However, the learned Commissioner (Appeals) held that the assessee is free to file the said Form No. 10B online and/or approach the Commissioner (Exemption), Ahmedabad after filing Form 10B electronically to condone the delay in accordance with the delegated powers under section. 119(2)(b) of the act. For this technical reason, the appeal of the assessee has been dismissed. Thus, there is no error in the findings of the learned Commissioner (Appeals), the assessee now before the Tribunal also fails to inform when Form 10B was electronically uploaded and also failed to file condo nation petition before the concerned authorities. For this reason also, the learned Commissioner (Appeals)’s order does not require any interference and therefore prayed to dismiss the appeal filed by the assessee.
- We have given our thoughtful consideration and perused the material available on record. The grounds of appeal raised by the assessee is very general in nature without substantiating its claim how, the learned Commissioner (Appeals) erred in not granting exemption under section 11 and 12 of the act. The learned Commissioner (Appeals) has held that Form No. 10B was filed manually on 3-3-2020 during the appellate proceedings but no evidence of the Form 10B when was uploaded electronically by the assessee which is mandatory as per section 12A (1) (b) of the act read with rule 17B of the Income Tax Rules. However, the learned Commissioner (Appeals) has observed that the assessee is free to file the said Form 10B online and/or approach the Commissioner (Exemption), Ahmedabad after filing Form 10B electronically and to condone the delay in accordance with the delegated powers vested under section 119(2) (b) of the act. Such a power under section 119(2) (b) is not vested with learned Commissioner (Appeals). Therefore, the learned Commissioner (Appeals) dismiss the appeal filed by the assessee. Now before the Tribunal, the assessee has not produced only details of filing Form 10B electronically with condone delay petition. In absence of the same, we do not find any infirmity in the order passed by the learned Commissioner (Appeals) and therefore we have no hesitation in confirming the order passed by the learned Commissioner (Appeals).
- For the above reasons, the grounds raised by the assessee are hereby rejected and the additional grounds raised by the assessee are found not relevant to the facts and circumstances of the case, therefore the same is also rejected.
- In the result, appeals filed by the assessee are hereby dismissed.