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Facts
The assessee, a registered charitable trust, filed its income tax return for A.Y. 2019-20 with a delay of 18 days and also filed Form 10B late. The Assessing Officer rejected the claim for deduction under Section 11(2) of the Income Tax Act due to this delay.
Held
The Tribunal held that the explanation provided by the assessee for the delay in filing the return and requisite reports was reasonable and justified. Relying on a coordinate bench's decision, the Tribunal set aside the appellate order and remanded the matter to the Assessing Officer for allowing the claim under Section 11(2) after due verification.
Key Issues
Whether the delay in filing the return and Form 10B by a charitable trust bars the claim for deduction under Section 11(2) of the Income Tax Act, especially when the delay is explained.
Sections Cited
250, 143(1), 12A, 11(2), 119(2)(b), 139(1), 11(1)
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Income Tax Appellate Tribunal, MUMBAI BENCH “J(SMC
The instant appeal of the assessee was filed against the order of the Learned Commissioner of Income-tax (Appeal) / Addl / JCIT(A), Bubhaneshwar [in short, ‘Ld.CIT(A)’] the order passed under section 250 of the Income tax Act, 1961 (in short, ‘the Act’) for A.Y 2019-20, date of order 20/01/2025. The impugned order emanated from the order of the CPC, Bengaluru (for brevity the “Ld. AO”), passed under section 143(1) of the Actdate of order 18/05/2020.
Archana Foundation 2. The brief facts of the case are that the assessee is a registered public charitable trust and registered under section 12A of the Act and is engaging in upliftment of poor “Adivasi” people. It runs old-age home in the name of ‘Matoshree Vriddhashram’ at Khadavli, Balwadi, Shahpur and BMC School at Juhu. During the impugned assessment year, the assessee filed the return on 18/11/2019. The due date for filing the return was 31/10/2019. So there was a delay of 18 days in filing the return of income. The assessee filed Forms 9A&10B under rule 17B of the Income tax Rule,1962 (in short the “Rule”) with the ROIin the Income-tax Department. The assessee claimed deduction under section 11(2) of the Act related its income over expenditure. Due to delay in filing ROI and Form 10B, the Ld. AO rejected the deduction claimed U/s 11(2) of the Act, determined the total income amount to Rs.56,41,972/- and the tax liability was computed amount to Rs.20,30,885/- during the processing of return under section 143(1) of the Act. Being aggrieved on the assessment order, the assessee filed an appeal before the Ld.CIT(A). In an alternative remedy, the assessee filed a petition under section 119(2)(b) for condonation of delay in filing Form 10B and ROI considering the CBDT circular No.17/2022 dated 17/07/2022 and the circular No.6/2020 dated 19/02/2020 before the Ld. Commissioner of Income tax (Exemption), Mumbai. The assessehas taken plea that related to assessment year 2019-20, theabove mentioned circularsand the reason for delay in filing forms are duly explained. But finally, the assessee was remained unsuccessful as the said petition was duly rejected by the Ld.CIT(E), Mumbai by an order dated 05/01/2023. So, the assessee has no option to challenge the order of the Ld.CIT(A) dated 20/01/2025 before us.
Archana Foundation 3. During the argument before the bench, the Ld.AR submitted that the assessee has filed the return with a delay of 18 days and the reason for the same was well explained before the authority by form 9A. The reason of delay is mentioned as below:-
6. Reason for delay in filing income tax return and form no 9A - The Trust does not have any fulltime staff. It is managed only by women who are all Senior citizens who devote their time on honorary basis. There were some issues in the system while filing ITR and Form No. 9A due to which Appellant was unable to file the same within time. Most of the trustees are senior citizens and averse of digital filing requirements. Since one of the requirements of filing the Form No. 9A was that the signatory's Aadhaar should be linked, there was some delay in getting it complied. There was no malafide intention in filing the income tax return and Form No. 9A late, 7. These reasons for delay in filing of form 10/9A and ITR were communicated to Ld CIT(A) vide our submissions on 27-1-2021, 23-10-2021, 29-11-2023, 4-1-2024 and 6-11-2024.
The Ld.DR argued and fully relied on the orders of the revenue authorities on the record.
During the argument before the bench, the Ld.AR further mentioned that this reason for delay in filing return was duly explained before the revenue authority. The trustees are senior citizens and not very much conversant with the digital filing compliance, etc. So once the requirement of filing form 9 was that the signatory’s Adhaar should be linked with the digital signature, but the trustee was unable to comply with the requirement due to its inability. The Ld. AR respectfully stated that the issue is squarely covered by the order of the co- ordinate bench, Mumbai Bench ‘SMC’ for A.Y. 2017-18 in assessee’s own case “9. To arrive at this conclusion we found support from various judicial pronouncements as mentioned below: “[2001] 114 Taxman 255 (SC)/[2001] Commissioner of Income-tax v. Nagpur Hotel Owners’ Association It is abundantly clear from the wordings of sub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required, under rule 17 in Form No.
10. If during the assessment proceedings the Assessing Officer does not have the necessary information, the question of excluding such income from assessment does not arise at all. As a matter of fact, the benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subject to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time it completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules, even then it is reasonable to presume that the intimation required under section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of the income, the assessing authority cannot entertain the claim of the assessee under section 11. Therefore, compliance of the requirement of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of section 11 on the basis of information supplied subsequent to the completion of assessment would mean that the assessment will have to be reopened. The Act does not contemplate such reopening of the assessment. In the instant case, it was evident from the records of the case that the respondent did not furnish the required information till after the assessments for the relevant years were completed. In the light of the above, the stand of the revenue that the High Court erred in answering the question in favour of the assessee was correct, and that finding was to be reversed. [2021] 130 taxmann.com 506 (Chandigarh - Trib.) Institution of Civil Engineers Society v. ACIT (Exemptions) [2017] 81 taxmann.com 396 (Bombay) Commissioner of Income-tax-III, Pune v. Sakal Relief Fund Section 11 of the Income-tax Act, 1961 read with rule 17 of the Income-tax Rules, 1962 - Charitable or religious trust - Exemption of income from property held under (Accumulation of income) - Assessment years 2000-01 and 2001-02 - Whether for excluding an income of a charitable trust Archana Foundation from net of taxation under section 11, intimation in Form 10 was to be filed with Assessing Officer before completion of assessment proceedings - Held, yes - Whether even if Form 10 was filed during re-assessment by assessee-trust, benefit of accumulation under section 11(2) was available because such filing would be considered within time allowed for furnishing return of income under section 139(4) - Held, yes [Paras 12 & 13][In favour of assessee] [2019] 111 taxmann.com 272 (Mumbai - Trib.) Shree Dadar Jain v. Income-tax Officer (E), Mumbai Income-tax Act, 1961, read with rule 17 of the Income-tax Rules, 1962 - Charitable or religious trust - Exemption of income from property held under (Accumulation of income) - Assessment year 2014-15 - Assessee a religious trust claimed deduction under section 11(2), amounting to Rs. 6.50 crores - Assessing Officer denied deduction so claimed on ground that assessee had not filed Form No. 10 for accumulation of income electronically alongwith resolution of Trustee - However, all requirements for claiming accumulation of income as stipulated under section 11(2) were satisfied except that Form No. 10 was not submitted before stipulated time as provided under section 139(1) but same was filed in physical mode before completion of assessment proceedings and there was no dispute between rival parties as to genuineness of deduction so claimed - It was also undisputed that purpose of accumulation of income under section 11(2) was to purchase property for furtherance of activities and objects of assessee, and assessee had invested said accumulation of income in one mode prescribed under section 11(5) by taking FDR's with banks - Moreover, assessee did purchase property in immediately succeeding financial year and aforesaid accumulation of income under section 11(2) stood applied in immediately succeeding year for purposes of objects and activities of assessee trust - Whether therefore, assessee would be entitled to deduction under section 11(2) as claimed - Held, yes [Para 8.19] [In favour of assessee]. [2014] 49 taxmann.com 315 (Allahabad) Commissioner of Income-tax v. Moti Ram Gopi Chand Charitable Trust Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under (Accumulation of income) - Assessment year 2008-09 - Whether benefit of exemption under section 11 is available on setting apart of 85 per cent amount to be spent in next year before assessment is complete - Held, yes - Whether even when a request by way of letter, which complies with requirement and furnishes all information required in Form 10 was made available on record and there was sufficient proof before Assessing Officer that amount was not only kept apart but was also spent in next year, exemption was to be granted - Held, yes [Paras 9 and 11] [In favour of assessee]”
Keeping in view the facts of the case and judicial pronouncements by the Honorable Apex Court, Honorable Jurisdictional High court and coordinated bench of ITAT, we are inclined to allow the appeal of the assessee. It is hereby directed to the authorities below for deletion of addition made in the guise of withdrawal of exemption u/s. 11(1) of the Act.