Income Tax Appellate Tribunal - Mumbai
Swajan Pariwar Trust vs Assistant Director Of Income Tax ... on 11 March, 1996
ORDER
V. Dongzathang, Vice President
1. This appeal of the assessee is directed against the order of the Dy. CIT(A) for the asst. yr. 1990-91.
2. The assessee filed the return of income without the audit report in Form No. 10B. Since the return was to be accompanied by the audit report in Form No. 10B, the Assessing Officer (AO) while processing the case under s. 143(1)(a) of the Act denied the benefits of exemption under s. 11 of the Act to the assessee-trust. Aggrieved by the said order the assessee filed an application for rectification under s. 154 of the Act and submitted that the exemption should be allowed as Form No. 10B was submitted along with the application. The AO, however, rejected the explanation as the statutory requirement of filing Form No. 10B of the Act was not complied with by the assessee at the time of filing the return.
3. Aggrieved by the said order the assessee took up the matter in appeal before the Dy. CIT(A) and it was submitted that the AO was not justified in rejecting the application under s. 154 of the Act as the default in filing Form No. 10B along with return was merely a procedural formality. The learned Dy. CIT(A), however, held that the prima facie adjustment was rightly done in the light of the circular of the Board as the assessee failed to file Form No. 10B along with the return which was mandatory. The assessee also cited the decision of the Hon'ble Calcutta High Court in the case of CIT vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal) and the subsequent decision in the case of CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal) for the proposition that if the audit report was not filed along with the return of income, the return became defective and the AO was required to give an opportunity to the assessee to submit the audit report and rectify the defect before completing the assessment. Reliance was also placed on the decision of the Tribunal in the case of Calcutta Management Association vs. ITO (1992) 42 ITD 62 (Cal) wherein the Tribunal allowed time for filing Form No. 10B even upto the appellate stage. The learned Dy. CIT(A) did not accept the contentions on the reasoning that the power of condonation of delay is the exclusive power of the DIT (Exemption) and this power has not been delegated to the appellate authorities. Therefore, the order of the AO cannot be said to be rectifiable. He accordingly rejected the appeal of the assessee.
4. The assessee is still aggrieved and has come up in appeal before the Tribunal. Shri Atul K. Jasani, the learned counsel appeared for the assessee and Shri V. S. Gore, the learned Departmental Representative, appeared for the Revenue. After hearing both the parties I am of the view that the AO as bound to rectify the order in the light of the decision of the Hon'ble Calcutta High Court cited above. Since the Hon'ble Calcutta High Court has held that the filing of the audit report in Form No. 10B was merely a procedural formality for the purpose of enabling the AO to allow the benefit of exemption to the trust and such procedural defect only makes the return become defective and rectifiable, the assessee is to be given the benefit as the defect has since been removed by filing of Form No. 10B. The AO is directed to rectify the order accordingly.
5. In the result, the appeal stands allowed.