COMMISSIONER OF INCOME-TAX Vs. SHAHZEDANAND CHARITY TRUST

JUDGEMENT

(1.) At the instance of the Revenue, the Income-tax Appellate Tribunal, Amritsar (hereinafter referred to as "the Tribunal"), after drawing up a statement of the case, has referred the following question of law to this court for its opinion :

(2.) For the assessment year 1977-78, the assessee which is a charitable trust claimed that its income was exempt from payment of income-tax under Sections 11 and 12 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), being income of the public charitable trust. The assessee had been allowed the benefit of exemption in respect of its income in the past years regularly ; however, for the assessment year 1977-78 which is in issue, it was found by the Income-tax Officer that its income was not liable to be treated as exempt under Section 11 of the Act. It was further held by the Income-tax Officer that the assessee was not entitled to the exemption as it had failed to furnish the auditor's report which was required to be done mandatorily under Section 12A(b) of the Act.

(3.) The assessee carried an appeal before the Appellate Assistant Commissioner who after hearing counsel for the assessee was satisfied that the first objection of the Income-tax Officer did not have any merit. The appellate authority found substance in the second objection taken by the Income-tax Officer. According to him, the provisions contained in Section 12A(b) made it mandatory for the assessee to furnish the auditor's report duly signed and verified by the chartered accountant with the return of income. Failure to furnish the auditor's report disentitles the assessee to claim the exemption under Sections 11 and 12 of the Act. The assessee's request to take the report of the auditor during the pendency of the appeal on record was rejected by the appellate authority on the ground that the submission of the auditor's report along with the furnishing of return was mandatory. Since the assessee had failed to furnish the report along with the return before the Income-tax Officer, the appellate authority could not take the same on its file. The plea of counsel for the assessee that the Income-tax Officer had not provided him with an opportunity to produce the auditor's report in the prescribed form was not accepted. The Appellate Assistant Commissioner dismissed the appeal on the ground that the assessee had not furnished the auditor's report in the prescribed form.