The Tax Publishers2021 TaxPub(DT) 0583 (Mum-Trib)

INCOME TAX ACT, 1961

Section 154

Where assessee had filed audit report before the due date of return of income under section 139(1) was not controverted by department and CIT(A) had also upheld the disallowance of exemption by simply stating that it is not a rectifiable mistake under section 154, further, when the assessee had complied with the statutory provisions in terms of the CBDT Circular, the delay, if any, in filing the audit report should have been condoned. Therefore, assessee's claim of exemption under section 11 was allowed.

Rectification under section 154 - Denial of exemption under section 11 - Audit report in Form No. 10B filed belatedly -

Assessee filed its return of income and the said return was processed under section 143(1) by disallowing claim of exemption under section 11. Assessee filed rectification application under section 154. Assessee had filed rectification application under section 154 to AO, which was rejected observing that there was no prima facie error in the order which was sought to be rectified. It was noted in e-filed return of income, assessee had claimed exemption under section 11 but had not furnished details of the audit in the schedule of audit information and that in rectification application, assessee had made fresh claim of income which could not be made in the rectification request. Due to these reasons, rectification application was rejected by AO. Held: As decided in Kasturi Foundation [ITA No. 3663/Mum./2019, dt. 11-11-2020], the claim of assessee that it had obtained the audit report prior to the date of filing of return of income and had filed audit report before the due date of return of income under section 139(1) was not controverted by Department. CIT(A) had also upheld the disallowance of exemption by simply stating that it is not a rectifiable mistake under section 154. When assessee had complied with the statutory provisions in terms of the CBDT Circular, the delay, if any, in filing the audit report should have been condoned. Therefore, disallowance made by AO was deleted and allowed assessee's claim of exemption under section 11.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15



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