Requirement of Filing Audit Report in Form 10B is only Procedural: ITAT

Societies, trusts etc. registered u/s 12AA of the act are required to obtain fresh registrations as per recent updates in the law. According to the Third Amendment of Income Tax Rules 2023, the tax audit report needs to be furnished by charitable trusts, institutions and NGOs to file form 10B. Every organisation or trust registered under Section 12 must file Form 10B as per the Third Amendment of the Income Tax Act. Audit report in Form 10B is filed one month prior to the filing of return of income.

Issues involved:
Assessee Shambhu Dayal Modern school a society registered u/s 12AA of the act filed its return of income for AY 2021-22 u/s 139(4) as belated return. Audit report in Form 10B was filed beyond its prescribed due date. Whether no uploading of Form 10B within prescribed due date will become grounds for denial of claim of exemptions u/s 11.

Facts of the case explained:
Assessee filed return of income for AY 2021-22 on 31.03.2022 claiming nil exemptions under section 11 of the act. After amendments in the Act, all charitable institutions were required to apply for fresh registrations u/s 12AB of the act despite the fact that there were registrations under section 12AA. It was granted to assessee as provisional registrations on 05.04.2022 for AY 2022-23 to AY 2026-27. ITR processed u/s 143(1) stating that details of fresh registrations were not filed and hence exemptions u/s 11 were denied. However, it was impossible for assessee to mention details of registration u/s 12AB obtained on 05.04.2022 to mention them in ITR filed on 31.03.2022. Still, assessee furnished all the details before CIT(A). 

As per information available in the records, it is a fact that the assessee filed audit report in Form 10B beyond prescribed due date. It was first year of assessee to file audit report in form 10B. Assessee did not fulfil this requirement of law.

The CIT(A) ignored the fact of assessee having obtained the provisional registration under section 12AB of the Act and proceeds to uphold the denial of exemption under Section 11 of the Income tax law on the ground that the assessee had not furnished the details of fresh registration obtained.

Assessee had a previous registration u/s 12AA and he had applied for fresh registration u/s 12AB within prescribed time limit. This provided protection to assessee for claiming exemptions u/s 11. It was observed that fresh registration could be granted only from the year in which application was preferred by the assessee. At the cost of repetition, the said application made by the assessee for seeking fresh registration under section 12AB of the Act is well within time allowed by CBDT.

Conclusion:
Tribunal had allowed appeal of the assessee. Assessee has complied with provisions of filing income tax return, filing audit report in Form 10B(it was beyond the due date), applying for fresh registration u/s 12AB as compliance to new amendments in the statute as required. ITAT  held that From AYs 2022-23 to 2026-27, the assessee would be eligible for exemption under section 11 of the At given the fresh registration obtained under section 12AB of the Act.