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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI M. BALAGANESH & SHRI KULDIP SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA Nos.3286 & 3287/M/2019 Assessment Year: 2004-05 & 2005--06
M/s. F.E. Dinshaw ADIT (E)-1(2), Charities, Room No.354, C-1, Wadia International Third Floor, Center, Vs. Aayakar Bhavan, Pandurang Budhkar Marg, M.K. Road, Worli, Mumbai - 400020 Mumbai – 400 025 PAN: AAATF0029L (Appellant) (Respondent)
Present for: Assessee by : Ms. Krupa Gandhi, A.R. Revenue by : Shri Rajat Mittal, D.R. Date of Hearing : 05 . 05 . 2022 Date of Pronouncement : 27 . 05 . 2022
O R D E R Per : Kuldip Singh, Judicial Member: For the sake of brevity aforesaid appeals bearing common question of law and facts are being disposed of by way of composite order.
The appellant, M/s. F.E. Dinshaw Charities (hereinafter referred to as ‘the assessee’) by filing the present appeals, sought to set aside the impugned orders even dated 01.03.2019 passed by the Commissioner of Income Tax (Appeals)-3, Mumbai [hereinafter
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referred to as the CIT(A)] qua the assessment years 2004-05 & 2005-06 on identically worded grounds except the difference in amount of addition on account of non application of income within stipulated time inter alia that:- “GROUND 1: RE-OPENING OF ASSESSMENT IS INVALID: 1. On the facts and in the circumstances of the case and in law, the Ld. C1T(A) erred in confirming the action of the Assistant Director of Income Tax (E) - 1(2), ("the A.O") of reopening the assessment u/s 147 of the Act. 2. The Appellant prays that the reopening proceeding /re-assessment order be quashed as null and void. WITHOUT PREJUDICE TO GROUND 1: GROUND II: ADDITION U/S. 11(1B) OF THE ACT ON THE ALLEGED GROUND THAT THERE WAS NON APPLICATION OF INCOME WITHIN THE STIPULATED TIME AMOUNTING TO RS.14,70,369: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the AO of making an addition of income u/s 11(1B) of the Act without appreciating that the amount appearing under clause 7 of the Auditors report in Form 10B was an inadvertent error. 2. The Appellant prays that addition of Rs.14,70,369/- & Rs.14,95,560/- for A.Y. 2004-05 & A.Y. 2005-06 respectively made u/s 11(1B) of the Act be deleted.”
Briefly stated facts necessary for adjudication of the controversy at hand are : assessee is a trust registered with Charity Commissioner, Bombay Public Trust, 1950. On the basis of audit report in form No.10(B), which quantified Rs.14,70,369/- and Rs.14,95,560/- for A.Y. 2004-05 & 2005-06 respectively as income under section 11(1)B of the Income Tax Act, 1961 (for short ‘the Act’) for non application of income within stipulated time, amount has not been considered as taxable income in the scrutiny assessment order, thus escaped assessment in view of clause c(i) of
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explanation 2 to proviso to section 147 of the Act, assessment has been reopened by recording reasons and by way of issuance of notice under section 148 of the Act and thereby brought to tax the amount of Rs.14,70,369/- and Rs.14,95,560/- for A.Y. 2004-05 & 2005-06 respectively being taxable under section 11(1B) of the Act by framing assessment under section 143(3) read with section 147 of the Act.
Assessee carried the matter before the Ld. CIT(A) by way of filing appeals who has confirmed the addition by dismissing the appeals. Feeling aggrieved the assessee has come up before the Tribunal by way of filing present appeals.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Ground No.1 6. This ground has not been pressed by the assessee, hence needs no adjudication.
Ground No.2 7. Perusal of the impugned order passed by the Ld. CIT(A) shows that the Ld. CIT(A) has merely agreed with the findings returned by the AO qua the addition made under section 11(1B) of the Act. The Ld. A.R. for the assessee challenging the impugned order contended that identical issue had come up before the Tribunal in A.Y. 2003-04 in assessee’s own case before the
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Tribunal in ITA No.4221/M/2015 vide order dated 20.01.2017 available at page 145 to 152 of the case law paper book, which fact has not been controverted by the Ld. D.R. for the Revenue who has rather contended that the Ld. CIT(A) has not made any discussion on this issue rather preferred to agree with the AO and as such issue be remanded back to the Ld. CIT(A).
The Ld. A.R. for the assessee contended that in A.Y. 2004-05 there was not any income with the assessee chargeable under section 1(11) of the Act and drew our attention towards page 10 of the paper book. He has also drawn our attention towards page 18 of the paper book which is a certificate for A.Y. 2004-05 wherein no such income is shown. The AO rather proceeded on a typographical error which crept into form 10-B and proceeded to decide the same on the basis of typo error.
We have perused the order passed by the Tribunal in assessee’s own case in A.Y. 2003-04 which is on the identical issue and decided in favour of the assessee by returning following findings: “4. We may first take up the appeal of assessee with respect to the addition of Rs.3,76,104/-. In this context, the relevant facts are that in the return of income, assessee had made a claim in terms of option available under Explanation-2(b) to Sec. 11(1)(a) of the Act of Rs.79,54,625/-. In terms of the said claim, assessee exercised the option of accumulating and applying the said sum towards the objects of the Trust within the next 12 months, i.e., in the subsequent Assessment Year of 2004-05. So however, in the prescribed Audit report Form no. 10B such accumulation of amount deemed to have been spent on the objects of the Trust was stated at Rs.75,78,521/-. This difference has prevailed with the Assessing Officer to hold that the amount of Rs.3,76,104/- has escaped assessment within the meaning of Sec. 147/148 of the Act and he has, in fact, disallowed the said sum in the impugned assessment. On the contrary, the claim of assessee has been that such difference is only an arithmetical error
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and that the amount of Rs.79,54,625/- stated in the computation of total income was the correct figure and that the amount of Rs.75,78,521/- stated in Form no. 10B was an inadvertent mistake. It is also noted that in the proceedings before the lower authorities, assessee also obtained and furnished a revised certificate from the Auditors in this regard, a copy of which has been placed in the Paper Book at page 67. The Assessing Officer as well as the CIT(A), however, disagreed with the assessee and held the assessee entitled to the relief under Explanation 2(b) to Sec. 11(1)(a) of the Act to the extent of Rs.75,78,521/- only. 5. Before us, the learned representative for the assessee has reiterated the submissions taken before the lower authorities. 6. On the other hand, the ld. DR has emphasised on the contradicting claim in the computation of income vis-a-vis the amount stated in the Auditors report in Form no. 10B and, therefore, justified the disallowance. 7. We have carefully considered the rival submissions. In our considered opinion, the action of income-tax authorities is quite misconceived having regard to the facts and circumstances of the case, as our aforesaid discussion would show. In the present case, in the computation of income assessee claimed deduction of an amount of Rs.79,54,625/- as application of money in terms of clause (ii)(b) of Explanation to Sec. 11(1) of the Act. It is also emerging that in the Audit report in prescribed Form no. 10B annexed with the return, said amount was shown as Rs.75,78,521/-. The explanation of assessee is that the amount stated in Form no. 10B is an inadvertent mistake. It is quite clear that in the subsequent Assessment Year of 2004-05 when assessee actually spent the said sum, the claim made was to the extent of Rs.79,54,625/-, as is borne out from the copy of statement of total income for Assessment Year 2004-05 placed in the Paper Book at pages 55 to 66. At the time of hearing, the learned representative pointed out that the claim of application of income to the extent of Rs.79,54,625/- with respect to Assessment Year 2003-04 stands accepted in the assessment for Assessment Year 2004-05, which has been finalized u/s 143(3) of the Act dated 29.12.2006. Therefore, the furnishing of Form no. 10B at an understated figure of Rs.75,78,521/- is ostensibly a mistake. Having regard to the entirety of facts and circumstances of the case, we find no reason to uphold the stand of Assessing Officer and as a consequence, order of CIT(A) is set-aside and Assessing Officer is directed to delete the addition of Rs.3,76,104/-. Thus, on this aspect, assessee succeeds.”
So during the years under assessment also the assessee has furnished from 10B with typographical error which fact is clear from the certificate furnished by the assessee available at page 18
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of the paper book and due to inadvertent mistake assessee has given understated figure which has been taken by the AO for making addition which is otherwise not sustainable in the eyes of law. So the amount referred under clause 7 of the audit report in form 10B was an inadvertent error. Hence the addition made by the AO and sustained by the Ld. CIT(A) is not sustainable, hence ordered to be deleted for A.Y. 2004-05 & 2005-06. Consequently, both the appeals filed by the assessee are hereby allowed.
Order pronounced in the open court on 27.05.2022.
Sd/- Sd/- (M. BALAGANESH) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 27.05.2022.
* Kishore, Sr. P.S.
Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench
//True Copy//
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.