The auditor failed to file the audit report including the return of income the Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) ruled while asking to permit an exemption under section 11 of the Income Tax Act, 1961.
In this matter, the taxpayer, Karma Falya Trust filed an income tax return for Assessment Year 2018-19 by declaring total income at Rs. Nil post claiming exemption of Rs.15,37,255/- under section 11 of the Income Tax Act, 1961.
Thereafter, under Section 143(1) of the IT Act the return of income was processed disallowing the claimed exemption of Rs.15,37,255/- under Section 11 of the Income Tax Act. The disallowance is created as the Audit Report is not filed via the taxpayer including with income return.
The taxpayer filed a petition before the CIT(A) as aggrieved from the Assessment Order. The CIT(A) partly permitted the petition of the taxpayer.
The taxpayer representative (AR) Divyang Shah before the tribunal, claimed that when Form No.10B (R) w for trust is not filed accompanied with a return of income for any trust, but it is filed at the time of the assessment proceedings or appellate proceedings then exemption under Section 11 of the IT Act must not be rejected based on the Audit Report under Section 12A of the Act is not filed with Income Tax Return.
As per the Audit Report, the non-compliance under Section 12A of the Act is a procedural lacuna and therefore when the Audit Report was filed, it must have been taken on record.
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Santosh Kumar, the Department representative (DR) claimed that the taxpayer has furnished the Audit Report beyond the obligatory date as provided in the Income Tax Statute and, hence, the CIT(A) has denied that.
The tribunal noticed that in the current case, the taxpayer received the audit report on 31.10.2018 from the Auditor but cannot file that on the Income Tax Portal. Therefore, within the time the audit report was prepared excellently.
CIT(A) must have carried an understanding of it and the Assessing Officer (AO) must consider the Audit Report for permitting the exemption under Section 11 of the Income Tax Act to the assessee. Thus the single-member bench Suchitra Kamble (Judicial Member) authorized the plea filed by the taxpayer.
| Case Title | Karma Falya Trust, Vs D.C.I.T. |
| Case No. | ITA No.10/Ahd/2023 Assessment Year: 2018-19 |
| Date | 05.01.2024 |
| Assessee by | Shri Divyang Shah |
| Revenue by | Shri Santosh Kumar |
| Ahmedabad ITAT | Read Order |
