SRI DATTATREYA SAI ASHRAM TRUST,BHUBANESWAR vs. ITO EXEMPTION, BHUBANESWAR

It was submitted by the ld. AR of the assessee that the assessee is a charitable trust filing its return of income regularly. It was the submission that originally the return filed by the assessee for the relevant assessment year admittedly did not accompany the Form 10 as was required to be filed. Consequent to non-filing of the Form 10, the intimation came to be issued u/s.143(1) of the Act bringing to tax the excess of income over expenditure. On appeal before the ld. CIT(A), the assessee had filed the requisite Form 10 along with Form 10B and the copy of the resolution for accumulation of the unutilized income. The ld. CIT(A) vide an order dated 03.11.2017 in appeal No.265/2016-17 had for the purpose of necessary verification with regard to the claim of the assessee in respect of the accumulation, have restored the issue to the file of AO. The AO again passed an order giving effect to the order of the ld. CIT(A) on 28.12.2018 holding that the Form No.10 had not been furnished before the expiry of the time allowed under sub-section 1 of Section 139 of the Act.

It was the submission that against this order, the assessee had filed an appeal before the ld. CIT(A) and the ld. CIT(A) upheld the order of the ld. AO. It was the submission that Form No.10 was before the AO when the order giving effect to the order of the ld. CIT(A) dated 03.11.2017. It was the submission that if the AO is in possession of the Form No.10 when the assessment proceedings was before him then the assessee should not be denied the benefit of the accumulation. It was the prayer that the AO may be directed to grant the assessee the benefit of accumulation as claimed.

In reply, ld. DR vehemently supported the order of the ld. AO and CIT(A).

We have considered the rival submissions. A perusal of the decision of the Hon’ble Supreme Court in the case of Nagpur Hotel Owners’ Association, reported in 247 ITR 201 shows that it is necessary that the Assessing Authority must have information at the time he completes the assessment. In absence of any such information, it is not possible for the Assessing Authority to give the assessee the benefit of such exclusions. Once the assessment is so completed, it would be futile to find fault on Assessing Authority for having included such income in the assessable income of the assessee. The facts of the present case shows that the Form No.10, Form No.10B and the resolution for accumulation was before the ld. CIT(A) when the order was passed by the ld. CIT(A) on 03.11.2017. It is trite law that when an appeal is pending before the ld. CIT(A), it is nothing but extension of assessment proceedings and such details could be produced even at the stage of the appeal. The Hon’ble Supreme Court in the case of Jute Corporation India Ltd., reported in 187 ITR 688 (SC) has categorically held that the ld. CIT(A) is vested with wide powers u/s.251(1)(a) of the Act while hearing an appeal against the order of the assessment made by the AO. While considering the scope and powers of the appellate authority, Courts have consistently held that the power of the First Appellate Authority can do what the AO ought to have done and also direct the latter to do what he has failed. Here in the present case, clearly the requisite details were filed before the ld. CIT(A) - 1, Bhubaneswar, who has passed the order dated 03.11.2017 and it is after being in possession of the said details the issue was restored to the file of the AO for verification. The word used by the ld. CIT(A) is to verify the claim of the assessee in accordance with the provisions of law and revise the processed income if required. The ld. CIT(A) did not direct the AO to re-examine the allowability or not of the accumulation of income. This being so, clearly the ld. AO while passing the order u/s.251/143(1) of the Act dated 28.12.2018 while giving effect to the order of the ld. CIT(A)

03.11.2017 has fallen into error in re-examining the issue instead of verifying the claim of accumulation.

It may be worthwhile to mention here that the Hon’ble Bombay High Court in the case of Sakal Relief Fund, reported in 295 CTR 561 (Bom) has held that even if the Form No.10 is filed during the reassessment proceedings, the benefit of accumulation u/s.11(2) of the Act is available. The Hon’ble Bombay High Court in the case of Mumbai Metropolitan Regional Iron & Steel Market Committee, reported in 378 ITR 103 (Bom) has categorically held that the appellate proceedings before the ld. CIT(A) were a continuation of assessment and, therefore, late filing of the required documents would not disentitle the assessee from the benefits of Section 11 of the Act. If the assessee is required to file Form 10 and other documents before the completion of the assessment and there is only a technical plea raised by the revenue then that should not take away the benefit of accumulation in accordance with law.

The Hon’ble Delhi High Court in the case of Daulat Ram Education Society, reported in 278 ITR 260 after referring to the decision of the Hon’ble Supreme Court in the case of Nagpur Hotel Owners’ Association, referred to supra, considered the question as to whether the prescription of Form No.10 for the purpose of accumulation u/s.11(2) of the Act was mandatory or directory, and came to the conclusion that the requirement of filing of Form No.10 at the time of assessment was only directory and it would suffice if the same while filing even thereafter so long as in support of the claim of the accumulation was furnished by the assessee even at the time of assessment.

This being so, as it is noticed that the Form No.10 and relevant documents were filed before the ld. AO when the consequential order giving effect to the ld. CIT(A) was passed, the denial of the benefit of accumulation to the assessee is unsustainable. Consequently, the AO is directed to grant the assessee the benefit of accumulation as claimed by the assessee.

In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 26/06/2023.