THE NEST FOUNDATION ,MUMBAI vs. THE ASSISTANT DIRECTOR OF INCOME TAX , BENGALURU

Ld. Counsel for the assessee, at the outset, submitted that the appeals of the assessee were dismissed by the learned Addl./JCIT(A) on account of delay, holding that there was no sufficient cause in filing the appeal for the assessment year 2018-19 with a delay of 2,199 days and the appeal for the assessment year 2019-20 with a delay of 2024 days. Ld. Counsel for the assessee, referring to the affidavit which is placed at pages 1 to 4 of the paper book submitted that insofar as the assessment year 2018-19 is concerned, the accounts of the assessee were duly audited by M/s. Dilip B. Desai & Co., Chartered Accountants and the audit report was issued on 25.07.2018. The assessee had duly filed Form No. 10B on the Income-tax portal on 31.10.2018 within the prescribed time and the assessee also filed the return of income u/s 139(4) of the Act on 02.11.2018 claiming exemption u/s 11 of the Act. Ld. Counsel submitted that the return of income was processed u/s 143(1) by the CPC, disallowing the exemption claimed u/s 11 of the Act on the ground that Form No.10B had not been filed on or before the due date for filing the return of income. Ld. Counsel submitted that the assessee had in fact duly furnished Form No.10B electronically within the prescribed time, as is evident from page 22 of the paper book, which is the acknowledgment of receipt of Form No.10B issued by the Income Tax Department on the e-filing portal on 31.10.2018.

Ld. Counsel for the assessee further invited our attention to the Circular issued by the CBDT in F.No. 225/358/2018/ITA.II dated 08.10.2018 u/s 119 of the Income-tax Act, 1961, and referring to the said Circular submitted that the CBDT had extended the period for filing the return of income as well as various audit reports pertaining to the assessment year 2018-19 till 31.10.2018. The assessee, vide e-filing acknowledgment No. 364564981311018, filed the audit report in Form No. 10B on 31.10.2018 for A.Y. 2018-19.

Ld. Counsel further referring to the affidavit submitted that the assessee-trust was represented by a Chartered Accountant, Mr. Dilip B. Desai, who was more than 80 years of age during the relevant period and was confined to bed on account of age-related ailments. Owing to his advanced age and inability to handle online compliance, he had engaged a junior associate for carrying out e-filing and related matters. During the outbreak of COVID-19 in the year 2020, the said junior associate unfortunately passed away in June 2020, and Mr. Desai was unable to effectively continue his professional practice due to his advanced age and deteriorating health. The Managing Trustee of the assessee-trust was not conversant with taxation and procedural processes and was entirely dependent upon the aforesaid tax consultant for rendering tax matters of the trust. During the COVID period, the Managing Trustee had to remain in his hometown in Village- Pampakuda, District-Ernakulam, Kerala, for nearly two years and was not aware of the intimation orders passed u/s 143(1) of the Act and the consequential demands raised by the Department. Ld. Counsel further 3 referring to the affidavit submitted that the e-mail registered on the Income-tax portal belonged to the aforesaid tax consultant, and therefore no communication from the Income-tax Department came to his knowledge. Further, no physical communication or notice was received by the assessee-trust from the Department. The assessee-trust came to know about the demands for the assessment years 2018-19 and 2019-20 upon receipt of the intimation u/s 143(1) for the assessment year 2024-25, and immediately thereafter the assessee-trust approached another tax professional and upon obtaining proper advice preferred the appeals before the learned CIT(A) with delay condonation applications. Therefore, Ld. Counsel submitted that the delay in filing the appeals was neither intentional nor deliberate but occurred due to bona fide circumstances, and the reasons were beyond the control of the assessee. It was submitted that there was no mala fide intention or negligence on the part of the assessee. Ld. Counsel further submitted that since the assessee-trust is solely engaged in charitable activities and provides shelter, care and education to more than 30 orphan children, the assessee is dependent upon voluntary donations received from the public and does not earn any commercial profits. In the interest of justice, the learned Addl. CIT/JCIT(A) should have condoned the delay and entertained the appeals, which are otherwise allowable on merits. The assessee had complied with the requirement of filing Form No. 10B within the due date specified by the CBDT in its Circular for the assessment years 2018-19 and 2019-20.

Coming to the assessment year 2019-20, Ld. Counsel submitted that the CBDT issued similar Circular No. 225/157/2019/ITA-II dated 27.09.2019 u/s 119 of the Act, which is placed at page 53 of the paper book, whereby the due date for filing returns, audit reports and other forms for the assessment year 2019-20 was extended till 31.10.2019. Ld. Counsel, referring to page 19 of the paper book, which is the e- filing acknowledgment of receipt of Form No.10B issued by the Income-tax Department e-filing portal, submitted that the assessee had filed Form No.10B on 30.10.2019, which is within the due date as specified by the CBDT in its Circular.

Therefore, it is submitted that the CPC, while processing the return, was not justified in disallowing the exemption claimed u/s 11 of the Act by the assessee-trust on the ground that the assessee did not file Form No.10B before the due date for filing the return of income for A.Y. 2018-19 and A.Y. 2019-20.

We have heard the rival contentions and perused the orders of the authorities below. Insofar as the delay in filing the appeals before the learned Addl. CIT/JCIT(A) is concerned, the assessee filed an affidavit explaining the reasons and circumstances that led to the delay in filing the appeals as under:

Upon perusing the affidavit and the reasons explained therein for the delay in filing the appeals and also considering the COVID-19 circumstances prevailing during the years from the end of 2019 to 2022, we are of the considered view that the assessee was prevented by reasonable cause from filing the appeals in time before the learned Addl. CIT/JCIT(A). Thus, the delay in filing the appeals by the assessee before the learned Addl. CIT/JCIT(A) is condoned respectively.

Coming to the merits of the disallowance made by the CPC while processing the returns for the assessment years 2018-19 and 2019-20 by denying the exemption claimed u/s 11 by the assessee-trust on the ground that the assessee did not file Form No. 10B before the due date for filing the respective returns of income, we find that the due dates for filing returns, audit reports, forms, etc., for the assessment years 2018- 19 and 2019-20 were extended by the CBDT till 31.10.2018 and 31.10.2019 vide Circular F. No. 225/358/2018/ITA.II dated 08.10.2018 and F. No. 225/157/2019/ITA-II dated 27.09.2019 respectively.

We further find from the acknowledgments of receipt of Form No. 10B issued by the Income-tax Department e-filing portal to the assessee for the assessment years 2018-19 and 2019-20 that the assessee had, in fact, filed Form No.10B on 31.10.2018 and 30.10.2019 for the assessment years 2018-19 and 2019-20 respectively, which are well within the due dates specified by the CBDT Circulars.

Thus, we are of the view that there is no justification in denying exemption u/s 11 of the Act by the CPC while processing the returns u/s 143(1) for the assessment years 2018-19 and 2019-20 of the assessee-trust. Accordingly, we delete the disallowance made u/s 11/12 while processing the returns u/s 143(1) for the assessment years 2018- 19 and 2019-20. The grounds raised by the assessee for the assessment years 2018-19 and 2019-20 are allowed. 9

In the result, both the appeals of the assessee are allowed.