Delhi ITAT Directs the Revenue Authorities to Permit the Exemption Benefit to the Assessee U/S 11 & 12

The Revenue Authorities needed to tax the correct person accurately and will not disallow the eligible deductions on mere technicalities, New Delhi ITAT stressed.

The Bench of M. Balaganesh (Accountant Member) and Yogesh Kumar U.S (Judicial Member) followed that “the Revenue has rejected the plea of the Assessee based on mere technicalities and it is not the case of the Revenue that the Audit Report was not ready as on the date of filing of the return or Assessee is not eligible for any other reason for claiming charitable status by claiming application of income for charitable purpose u/s 11 & 12 of the Act”. (Para 8)

Under the case, the taxpayer, an Educational Trust, filed its return citing its 12AA registration and claiming charitable status through availing the application of income for charitable purposes under sections 11 and 12 of the Act. The ITR was processed through the CPC without verification of registration u/s 12AA resulting in non-allowance of application of income for charitable pursuit.

After obtaining the intimation u/s 143(1), the assessee filed a rectification application u/s 154 regarding deductions for the application of income for charitable purposes under pertinent Sections 11 and 12 of the Act. The order under section 154 was passed by refusing the application of income for charitable purposes and demanding the tax regarding the gross receipt of the trust as its income.

The taxpayer argued that the return for the appropriate year had been uploaded in time specifying the identical audit report as 29/09/2017, and the post revealed for not uploading the audit report, a letter for condonation of delay is been filed by the taxpayer uploading the Form 10B including with the certificate from the auditors explaining the reason for delay and hard copy of Form No. 10B was sent via registered post to the Jurisdictional Commissioner of Income Tax (Exemptions).

The bench noted that is the matter of the taxpayer that it uploaded its audit report on 29/09/2017 in Form No. 10B via its auditor, because of the technical glitches in the software the audit report uploaded was not accepted in the system was denied and no intimation either by email or any post through the department has been furnished to the taxpayer on the same concern.

The Form No. 10B was ready dated 29/09/2017 i.e. before filing the income Return under section 139 of the Act i.e. 26/10/2017, and after learning that the said mistake of not uploading the Audit Report, the same was uploaded on 06/09/2019, from the record the bench determined.

ITAT rendered the revenue authorities to permit the advantage of exemption to the taxpayer.