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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI LAXMI PRASAD SAHU
Per George George K, Vice President:
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 29.06.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
The grounds raised read as follows:
The appellate order of the learned Commissioner of Income-tax [Appeals] - NFAC, Delhi passed under Section 250 of the Act dated 29/06/2023 for the impugned assessment year 2017-18, in so far as it is against the Appellant is opposed to law, weight of evidence,
probabilities, facts and circumstances of the Appellant's case, requires to be quashed. 2. The appellant denies itself liable to be assessed on total income of Rs.4,00,00,000/- as determined by the learned assessing officer and upheld by the learned Commissioner of Income-tax [Appeals], as against the income reported by the appellant of Rs. NIL/-, on the facts and circumstances of the case.
3. The learned Commissioner of Income-tax [Appeals] is not justified in confirming the disallowance of accumulation of income made by the appellant under section 11(2) of the Act amounting to Rs.4,00,00,000/- which was disallowed by the learned assessing officer, on the facts and circumstances of the case.
4. The learned Commissioner of Income-tax [Appeals] failed to appreciate that the appellant having received an order of the learned Commissioner of Income-tax [Exemptions], Bengaluru, who condoned the delay in filing From No. 10 as per the CBDT Circular No. 30/2019, dated 17/12/2019, as a natural corollary even the return of income filed by the appellant is also deemed to have been condoned.
5. The learned Commissioner of Income-tax [Appeals] and the learned assessing officer failed to appreciate that the non-filing of the return within the due date as specified in the provisions of section 139 [1] of the Act was beyond the control of the appellant and was also not deliberate or intentional and it is merely a technical breach by the appellant for not filing the return of income within the due date as specified under section 139 [1] of the Act, for which the appellant cannot be and should not be penalized by not allowing the eligible claim of accumulation under section 11[2] of the Act, on the facts and circumstances of the case.
6. The learned Commissioner of Income-tax [Appeals] and the learned assessing officer failed to appreciate that filing of return under section 139 [1] of the Act to claim eligible accumulation of income as per section 11 [2] of the Act, is only directory in nature and not mandatory as per the intent of the statute, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] and the learned assessing officer further failed to appreciate that the provisions of section 11 [2] of the Act is a beneficial provision and a liberal view has to be taken, on the facts and circumstances of the case.
8. The learned Commissioner of Income-tax [Appeals] and the learned assessing officer failed to appreciate that the appellant has filed the return of income well within the time allowed as per section 139(4) of the Act and thus they ought to have appreciated that the provisions of section 139(4) has to be rad along with section 139(1) of the Act, on the facts and circumstances of the case.
9. The learned Commissioner of Income-tax [Appeals] and the learned assessing officer failed to appreciate that the appellant being a trust registered under section 12A of the Act, is entitled for all the benefit as envisaged under the provisions of section 11, 12 and 13 of the Act and ought to have held that since the appellant is a charitable institution is eligible for all the deductions and other benefits given to a charitable institution, on the facts and circumstances of the case.
10.Without prejudice, the appellate order passed by the learned Commissioner of Income-tax [Appeals], is against the principles of natural justice, since the appellant was not afforded a reasonable opportunity of hearing to make its submission, consequently the impugned appellate order passed requires to be cancelled, on the facts and circumstances of the case.
11.Without prejudice, to the right to seek waiver as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234 B of the Income Tax Act on the facts and circumstances of the case. The appellant contends that the levy of interest under section 234A& 234Bof the Act is also bad in law as the period, rate, quantum and method of calculation adopted by the learned assessing officer on which interest is levied are not discernible and are wrong on the facts of the case.
12.The appellant craves leave of this Hon'ble Tribunal to add, alter, amend, substitute or delete any or all of the grounds of appeal urged above at the time of hearing of the appeal by this Hon'ble Tribunal.
Brief facts of the case are as follows:
Assessee is a charitable trust. For the Assessment Year 2017-18, return of income was filed declaring Nil income after claiming exemption under section 11 of the Act. The Trust was granted registration under section 12A of the Act, vide order dated 25.11.2018. Assessee had filed Form 10 beyond the due date and had sought accumulation of income under section 11(2) of the Act which was in contravention of section 13(9) of the Act. The AO disallowed the benefit of accumulation and made an addition of Rs.4 Crores to the income of the assessee Trust.
Aggrieved by the Assessment Order, assessee filed appeal before the First Appellate Authority (FAA). During the course of appellate proceedings, assessee filed an order of the CIT(E) dated 13.10.2020 condoning the delay in filing Form 10 for Assessment Year 2017-18 in light of CBDT’s Circular No.30/2019 dated 17.10.2019. The assessee Trust also filed a copy of the CIT(E), Bangalore, order dated 11.12.2020, condoning the delay in filing Form 10B in view of circular No.10/2019 dated 22.05.2019 [refer para 4(ii)]. However, despite the CIT(E) having accepted the situation of condoning the delay in filing Form 10 and Form 10B, the FAA did not grant the benefit of accumulation of income under section 11(2) of the Act, since there was no evidence on record for condonation of delay in filing the return of income.
Aggrieved by the order of the CIT(E), assessee has filed the present appeal before the Tribunal. The learned Counsel for the assessee had filed a Paper Book comprising of 26 pages enclosing therein the certificate of registration under section 12A of the Act, copy of Form 10AC being the renewal of registration dated 24.09.2021, acknowledgment for filing the return of income for Assessment Year 2017-18 along with computation of total income and financial statements, copy of Form 10 for accumulation of income under section 11(2) of the Act, dated 19.12.2017, copy of the order passed by the CIT(E) condoning the delay in filing Form 10, copy of the application for condonation of delay in filing the return of income before the PCCIT (E), Delhi, etc.
The learned AR submitted that the sole reason for not granting the benefit of accumulation of income under section 11(2) of the Act was on account of assessee not having filed the return of income within the due date specified under section 139(1) of the Act. In this context, the learned AR submitted that assessee has filed the application for condonation of delay in filing the return of income and the same is pending consideration. It was submitted that the matter may be restored to AO to take a decision subsequent to the order passed on the application for condoning the delay in filing the return of income. The learned AR for the aforesaid submission relied on the order of the Chennai Bench of the Tribunal in the case of ITO (E), Trichy Vs. Ms/. Papathiyammal Pitchai Education Trust, in for Assessment Year 2020-21 (order dated 19.10.2023).
7. The learned DR submitted that assessee in order to get the benefit of accumulation of income has to file Form 10, Form 10B and the return of income within the due date specified under section 139(1) of the Act. The learned DR submitted that assessee has only produced the order of CIT(E) wherein delay in filing Form 10 and Form 10B was condoned. It is submitted that since delay in filing the return of income has not been condoned, CIT(A) was justified in not allowing accumulation of income under section 11(2) of the Act.
We have heard the rival submissions and perused the material on record. From 10 and Form 10B have been filed belatedly by the assessee. However, the delay in filing Form 10 and Form 10B has been condoned by the CIT(E). There is a delay in filing the return of income and assessee has filed application for condonation, which is pending consideration. The limited prayer of the learned AR is to remand this matter to the AO and direct him to take a decision in matter after PCCIT(E), Delhi, had disposed off the assessee’s application for condonation of delay in filing the return of income. On identical situation, the Chennai Bench of the Tribunal in the case of ITO (E), Trichy Vs. Ms/. Papathiyammal Pitchai Education Trust (supra), had restored the matter to AO and directed the AO to take a decision after the outcome of the condonation petition filed by the assessee. The relevant finding of the Chennai Bench of the Tribunal reads as follows:
“5. We are of the considered opinion that though the assessee has valid registration u/s 12AA, still, it has to comply with the mandatory requirements of law to lay claim on impugned deduction. The law mandates the assessee to file return of income within due date as prescribed u/s 139(1) along with Form No.10B so as to lay claim on this deduction. Certainly, the assessee has defaulted in the same. Now, Ld. AR has submitted evidences of seeking relevant condonation from appropriate authorities. Therefore, considering the same, we set aside the order of Ld. CIT(A) and restore the appeal back to the file of Ld. CIT(A) for fresh adjudication in the light of condonation petitions filed by the assessee. All the issues are kept open.”
Taking into consideration the prayer of the learned AR and the order of the Chennai Bench of the Tribunal, the matter is restored to the files of the AO. The AO is directed to take a decision in accordance with law after the assessee’s application for condonation of delay in filing the return of income has been disposed off by the relevant authority. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes.