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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI MANJUNATHA.G, HON’BLE
आदेश / O R D E R
PER MANJUNATHA.G, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order of the
Commissioner of Income Tax (Appeals), Income Tax Department, National
Faceless Appeal Centre (NFAC), Delhi, dated 13.03.2023, and pertains to
assessment year 2019-20.
The assessee has raised the following grounds of appeal:
The order under the Section 154 is not in accordance with law and facts and circumstances of the case. The respected CIT(A) has summarily dismissed our appeal based on the circular of CBDT No.16/2022 dated 19/07/2022. The intimation under section 143(1)(a) was made on 11/05/2020, revision petition was moved on 12/06/2020, order under section 154 was passed on 14/08/2020, appeal against the order was filed on 28/08/2020, all the above has happened prior to the date of
ITA No.492/Chny/2023
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the circular. The CIT(A) is not justified in invoking the circular while disposing the appeal.
The assessing officer did not give any notice of the defect and no opportunity was given to the assesse before making the order under section 143(1)(a) to curate to defect, which was clerical in nature and due to oversight. This is against all tenants of natural justice. The honourable CIT(A) is not justified in relying on a circular issued much after all the assessment proceedings and rectification petition.
The honourable Supreme Court and in the case Mahendra Mills Ltd Vs Appellate Assistant Commissioner of Income Tax 099 ITR 0135 (1975) and the honourable Madras High Court in the case CIT Vs MRM Plantation P Ltd 240 ITR 0660 (1999) wherein it is held that the 'record' referred to in s. 154 of the Act is the record available to the officer exercising the powers under that section, at the time the proceedings for rectification. So the assessing officer is not justified in not considering the Form 10B while making the rectification petition.
The Assessment has been erroneously made under general provisions of the Act and without considering the registration under section 12AA of the Act C-No. 1419(4)/89-90 dated 18/10/1989, effective from 31/07/1989 by the Honourable Commissioner of Income-tax Coimbatore. The learned CIT(A) did not even consider this grounds of appeal while dismissing our appeal petition under section 246 of the Act.
The Assessment ought to have been made considering the Provisions of Section 11 of the Act. The learned CIT(A) did not even consider this grounds of appeal while dismissing our appeal petition under section 246 of the Act.
The Assessment failed to consider the claim of Application under section 11 of the Act amounting to Rs.35,74,097/- and erred in assessing the Gross receipt as an assessable income. The learned CIT(A) did not even consider this grounds of appeal while dismissing our appeal petition under section 246 of the Act.
The Assessment failed to take note of the fact that the defect of not filing the Audit Report has been cured before moving the petition under section 154. The rectification order ought to have been made under the provisions of Section 11 of the Act, considering the Form 10B filed as the same is on his record while disposing off the petition.
Income under the Income Tax Act is always net of expenses. To totally disallow all expenses incurred to generate the income is against all tenants of taxation and it is not fair and unjust. At the maximum the respected assessing officer should have taxed the income net of expenses and taxed at individual rates as laid out in CBDT Circular No: 320 dated 11/01/1982. To tax the entire gross receipts under maximum marginal rate under section 167A is totally unfair. The learned CIT(A) did not even consider this grounds of appeal while dismissing our appeal petition under section 246 of the Act.
The Appellant humbly plead the Honourable Bench to set aside the order under section 154 and approve the claim of application of Rs.35,74,097/- and determine the income under the Provisions of Section 11 of the Act and pass such other or further orders as he may deem fit and proper in this case.
ITA No.492/Chny/2023 :: 3 ::
The brief facts of the case are that the assessee is a Trust registered
u/s.12A of the Income Tax Act, 1961 (in short “the Act"), and filed its return
of income on 25.06.2019 without Form No.10B along with return. The AO
completed the assessment u/s.143(1)(a) of the Act, vide order dated
11.05.2020 and disallowed the claim of exemption in absence of necessary
Form No.10B along with return of income. Thereafter, the assessee filed
Form No.10B on 12.06.2020 and moved Rectification Petition u/s.154 of
the Act, seeking grant of exemption. The petition was disposed off by the
AO dated 14.08.2020 without making any modification to the order
u/s.143(1)(a) of the Act. Aggrieved by the order of the AO, the assessee
preferred an appeal before the Ld.CIT(A). The Ld.CIT(A) rejected the claim
of the assessee on the ground that there was no apparent mistake in the
order of the AO passed u/s.143(1a) of the Act, and thus, the Rectification
Petition filed by the assessee u/s.154 of the Act, is not maintainable.
Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before
us.
We have heard both the parties, perused the materials available on
record and gone through orders of the authorities below. We find that the
assessee’s Trust is registered u/s.12AA of the Act, has claimed
accumulation of income for specified purpose. However, not filed relevant
Form No.10B along with return of income for the impugned assessment
year. The AO completed assessment u/s.143(1)(a) of the Act, on
11.05.2020 and rejected the claim of exemption in absence of relevant
ITA No.492/Chny/2023 :: 4 ::
Form No.10B. Thereafter, the assessee has filed Form No.10B on
12.06.2020 and filed Rectification Petition u/s.154 of the Act. The AO
rejected the petition filed by the assessee on the ground that there was no
apparent mistake in the order passed by the AO u/s.143(1)(a) of the Act.
We find that the assessee is a registered Trust and eligible to claim
exemption u/s.11 of the Act. In the process, the assessee can also claim
exemption towards income accumulated for specified purpose in Form
No.10B. However, such Form should be filed along with return of income
filed for relevant AY within due date specified u/s.139(1) of the Act. In the
present case, there is no dispute with regard to the fact that the assessee
did not file Form No.10B along with return of income and even before the
AO, processed the return of income u/s.143(1) of the Act. But, fact remains
that the assessee has filed said Form No.10B and filed Rectification Petition
u/s.154 of the Act. In our considered view, when the assessee is entitled
for exemption u/s.11 of the Act, the AO ought to have entertained
Rectification Petition filed by the assessee when the assessee has filed
relevant Form No.10B specifying the amount of income accumulated for
specified purpose, for which, income has been accumulated. The Ld.CIT(A)
without appreciating the fact simply rejected the appeal filed by the
assessee. Therefore, we are of the considered view that the issue needs
to go back to the file of the AO, and thus, we set aside the order of the
Ld.CIT(A) and restored the issue back to the file of the AO and direct the
AO to re-consider the issue in light of relevant Form No.10B filed by the
ITA No.492/Chny/2023 :: 5 :: assessee. Needless to say, the assessee shall explore other options provided under the Act, including filing application, if any, before the competent authority for condonation of delay in filing Form No.10B to get the benefit of exemption towards income accumulated for specified purpose as mentioned in Form No.10B filed before the AO.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 02nd day of August, 2023, in Chennai.
Sd/- Sd/- (महावीर िसंह) (मंजूनाथा.जी) (MANJUNATHA.G) (MAHAVIR SINGH) लेखा सद)/ACCOUNTANT MEMBER उपा�� /VICE PRESIDENT चे$ई/Chennai, िदनांक/Dated: 02nd August, 2023. TLN आदेश की �ितिलिप अ*ेिषत/Copy to: 1. अपीलाथ� / Appellant 3. आयकर आयु+ / CIT 5. गाड� फाईल / GF 2. ��थ� / Respondent 4. िवभागीय �ितिनिध / DR