Law:

Section:

Section 11, read with section 139, of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Assessment year 1987-88 - Assessee-trust filed a return unaccompanied by audit report as required under section 12A - Assessing Officer rejected assessee-trust's claim for benefit under section 11 without any ado - Commissioner (Appeals) holding that non-furnishing of audit report was a defect and Assessing Officer should have given an opportunity to assessee-trust to rectify defect proceeded to grant benefits even without receiving audit report - Whether, on facts and in circumstances, Commissioner (Appeals) as well as Tribunal had completely overlooked defect and notwithstanding continued existence of defect, granted a benefit which assessee was not entitled to in absence of audit report - Held, yes HELD Section 12A(b) requires the trust which claims the benefit of sections 11 and 12, when it files a return of income, to file along with that return the report of the audit for that year in the Form prescribed under rule 17B of the Income-tax Rules, 1962. To the extent the return is not accompanied by that audit report in Form No. 10B, the assessee will not be eligible to claim the benefit of sections 11 and 12. The return so filed by such an assessee would, therefore, be defective, as the return filed by the trust is filed, inter alia, with the object of claiming a benefit under sections 11 and 12. Such a defect when noticed by the Assessing Officer is a defect which the Assessing Officer may bring to the notice of the assessee so that the assessee can rectify that defect within the time allowed by the Assessing Officer. [Para 6] Section 139(9) is a wholesome provision meant to avoid undue hardship to the assessees, who, for one reason or the other, may not have filed a return which is complete in all respects and may have defects therein. The Assessing Officer before making assessment is empowered to provide an opportunity to such assessees to correct those defects. An assessment made by the Assessing Officer without granting such an opportunity to the assessee to rectify the defect can result in drastic consequences…

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