Introduction

The case of Shri Jain Shwetamber Murtipujak Sangh, Dhamtari v. Income Tax Officer, Ward-1, Raipur was adjudicated by the Income Tax Appellate Tribunal (ITAT) Raipur Bench on May 22, 2023. The appellant, Shri Jain Shwetamber Murtipujak Sangh, a religious-cum-charitable trust registered under Section 12AA(1)(b)(i) of the Income Tax Act, 1961, contested the refusal of the Income Tax Officer to grant exemption under Section 11 for the assessment years (AY) 2016-17 and 2017-18. The crux of the dispute revolved around the denial of exemption due to the late filing of the mandatory audit report in Form 10B.

Summary of the Judgment

The ITAT Raipur Bench upheld the denial of Section 11 exemption for Shri Jain Shwetamber Murtipujak Sangh for both AY 2016-17 and AY 2017-18. The primary reason was the delay in filing Form 10B beyond the specified due date as per Section 139 of the Income Tax Act. The Tribunal meticulously analyzed the applicability of CBDT Circular No.28/2019 and concluded that the conditions for condonation of delay under Paragraph 4(i) were not satisfied. Consequently, the Tribunal dismissed the appeals while instructing the Assessing Officer to reconsider permissible deductions, thereby partially allowing the appeals for statistical purposes.

Analysis

Precedents Cited

The appellant relied on various judicial pronouncements to substantiate their claim for condoning the delay in filing Form 10B. They referenced the Central Board of Direct Taxes (CBDT) Circulars and past interpretations that allowed for flexibility in filing deadlines under specific circumstances. However, the Tribunal emphasized adherence to the latest circulars and stressed that only conditions explicitly mentioned could be grounds for condonation.

Legal Reasoning

The Tribunal's reasoning was anchored in the strict interpretation of the deadlines prescribed under the Income Tax Act and the accompanying CBDT Circulars. It was elucidated that:

• The "specified date" for filing Form 10B under Section 139 is crucial for claiming exemption under Section 11.
• Circular No.28/2019, which supersedes earlier circulars, sets clear parameters for condoning delays.
• The appellant failed to file Form 10B within the due date, and the subsequent filing did not meet the conditions stipulated under Paragraph 4(i) of the circular.
• Without satisfying the conditions of Paragraph 4(i), the Tribunal examined the applicability of Paragraph 4(ii) but found that the appellant had not availed the provisions under Section 119(2)(b) for condonation through reasonable cause.

Therefore, the Tribunal was constrained to uphold the denial of the Section 11 exemption.

Impact

This judgment reinforces the necessity for religious and charitable trusts to comply meticulously with statutory filing deadlines to avail tax exemptions. It underscores the limited scope for condoning delays, emphasizing that extensions are permissible only under explicitly defined conditions. Future litigations involving similar factual matrices can anticipate a stringent interpretation of filing deadlines, potentially narrowing the scope for leniency in non-compliance cases.

Complex Concepts Simplified

Section 11 Exemption

Under Section 11 of the Income Tax Act, 1961, income derived from property held under trust wholly for charitable or religious purposes is exempt from income tax, provided certain conditions are met.

Form 10B

Form 10B is a mandatory audit report form that registered charitable or religious trusts must file along with their income tax returns. It verifies that the income is applied wholly for the stated objectives.

CBDT Circulars

The Central Board of Direct Taxes (CBDT) issues circulars to provide guidelines and instructions for the administration of tax laws. Circular No.28/2019 delineates the conditions under which delays in filing Form 10B may be condoned.

Condonation of Delay

Condonation of delay refers to the acceptance of a late submission of documents or compliance with statutory requirements, provided valid reasons or circumstances justify the delay within defined parameters.

Conclusion

The ITAT Raipur's decision in Shri Jain Shwetamber Murtipujak Sangh v. Income Tax Officer serves as a pivotal reminder to charitable and religious trusts about the imperative of adhering to filing deadlines to secure tax exemptions under Section 11. The Tribunal's stringent stance on compliance, even in the face of technical glitches, sets a clear precedent that delays beyond prescribed conditions are unlikely to be condoned. Trusts must, therefore, invest in robust compliance mechanisms to ensure timely submissions of mandatory forms like Form 10B, thereby safeguarding their tax-exempt status and focusing on their core charitable or religious activities.