SIVA SAKTHI SATHYA SAI CHARITABLE TRUST,CHENNAI vs. ITO, EXEMPTIONS WARD 4, CHENNAI, CHENNAI

The NFAC, Delhi failed to appreciate that the beneficial circular issued by the CBDT in this regard in Circular No.273 dated 03.06.1980 would fortify the plea for entertaining the filing of Form No. 10 pleading for correct accumulation of income in the tax exemption computation under Section 11 of the Act well before the commencement of assessment proceedings, there by vitiating the decision in confirming the technical stand taken by the Assessing Officer in the assessment order.

The NFAC, Delhi failed to appreciate that the entire re-computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless appellate regime, the consequential appellate order passed should be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that there was no effective/proper opportunity given before passing the impugned order including non granting of personal hearing and any order passed in violation of the principles of natural justice is nullity in law.

The Appellant craves leave to file additional grounds/arguments at the time of hearing. 3. Brief facts are that the assessee is a charitable trust engaged in providing homes for mentally challenged, destitute children and senior citizens. The assessee filed its return of income for the A.Y. 2018-19 on 29.09.2018 by declaring total income of Rs.NIL. The case was selected for scrutiny under CASS and accordingly statutory notices were issued. During the assessment proceedings, the following discrepancies were noticed.

The assessee trust registered u/s.12AA of the Act and filed its return of income along with Form No.10 on 28.09.2018 stating therein an amount of Rs.11,78,168/- is accumulated during the F.Y. 2017-18. Later, the assessee filed one more Form No.10 for the F.Y. 2017-18 in the e-filing portal on 13.04.2019 i.e. after due date u/s.139(1) of the Act by showing the accumulation amount u/s.11(2) of the Act as Rs.1,51,65,700/-. In response to the observation made by the AO, the assessee stated that the Form-10 originally filed on 28.09.20218 was inadvertently shown an accumulation as Rs.11,78,168/- instead of Rs.1,51,65,700/- and hence the revised form No.10 has been filed with the actual amount of accumulation.

Further, the assessee submitted the proof of Fixed Deposits made in accordance with the Form No.10 submitted on 13.04.2019 as required u/s.11(5) of the Act. The assessee also stated that since the option for revising the Form- 10 was available in the portal, the assessee had filed only the revised Form-10 instead of revising the entire return of income. However, the Assessing Officer

During the appellate proceedings, the assessee submitted that there is no restriction to file the revised Form-10 during the assessment proceedings. In support of the above argument, the assessee relied on the following judicial decisions of the various courts: (a) Samaj Seva Nidhi Vs. ACIT, ITTP No.67/2004 (b) CIT v. Nagpur Hotel Owners Association [2001] 247 ITR 201 (c) V Ramakrishna Charitable Trust Vs. DDIT, (d) Commissioner of Income Tax Vs. Moti Ram Gopi Chand Charitable Trust, ITA No.349/2013

Further, the assessee furnished the details of fixed deposits made by the assessee corresponding to the accumulated amount as shown in the revised Form-10 filed subsequently. Further, the assessee stated that since the original return of income has been filed within due date of filing of return and the revised Form-10 has been filed before the completion of the assessment, the AO has erred in rejecting the revised form 10. Therefore, the revised Form- 10 filed by the assessee on 13.04.2019 shall be treated as valid compliance

The ld.AR submitted that in the light of the above, it is very clear that the original Form-10 filed along with the return of income was inadvertently shown the amount of accumulation of income as Rs.11,78,168/- instead of Rs.1,51,65,700/-. The ld.AR also took us through the financials as on 31.03.2018 wherein, the assessee has made a enough deposit as required u/s.11(5) of the Act, which has been accumulated out of the current year’s gross receipts towards specified purposes (P/B Page No.4). Further, the ld.AR relied upon the decision of the Hon’ble Supreme Court of India in the case of Commissioner of Income-tax v. Nagpur Hotel Owners’ Association reported in :-7-: ITA. No.:2944/Chny/2024 [2001] 114 Taxman 255 (SC), wherein, the Hon’ble Court observed that the compliance of the requirement of filing Form-10 will have to be any time before the assessment proceedings. The relevant extract of the order is as under: “6. 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 of the Act. If during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from Section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he 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, in our opinion, 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, in our opinion, 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 this 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 order will have to be reopened. In our opinion, the Act does not contemplate such reopening of the assessment. In the case at hand it is 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, we are of the opinion that the stand of the Revenue that the High Court erred in answering the first question in favour of the assessee is correct, and we reverse that finding and answer the said question in the negative and against the assessee. In view of our answer to the first question, we agree with Mr. Verma that it is not necessary to answer the second question on the facts of the case.”

Further, the ld.AR also relied upon the decision of this Tribunal in the case of Sri Vetri Vinayagar Educational Trust v. ITO (Exemptions Ward), Trichy in for A.Y. 2016-17, wherein, the Tribunal has held that the AO is empowered to allow the assessee to file audit report if not filed along with return at any time before completion of assessment by relying on the ratio laid down in the case of Chandraprabhuji Maharaj Jain vs DCIT (110

In the light of the above, the assessee prayed for setting aside the order of the ld.CIT(A) by allowing the grounds of appeal filed by the assessee.

We have heard the rival contentions, perused the materials available on record and gone through the orders of the authorities below. It is an undisputed fact that the assessee is a registered trust u/s.12AA of the Act and filed its return of income by claiming exemption u/s.11 of the Act on or before the due date for the A.Y. 2018-19. The assessee also filed Form No.10 for accumulation of income u/s.11(2) of the Act along with the return of income. However, the assessee had filled the accumulated amount inadvertently as Rs.11,78,168/- instead of Rs.1,51,65,700/-. We find that the assessee has noticed the mistake occurred while filing the Form No.10 and filed a revised Form No.10 with the correct amount of Rs.1,51,65,700/- on 13.04.2019. Further, we find that the scrutiny selection under CASS has been made for the A.Y. 2018-19 on 21.09.2019, which is subsequent to the filing of revised Form No.10 by the assessee. As pointed out by the ld.AR, the assessee in the return of income filed in ITR 7 has clearly shown the amount of accumulation made from the income of the assessee during the F.Y. 2017-18 as Rs.1,51,65,700/-,

Our above view is supported by the decision of the Hon’ble Supreme Court in the case of Nagpur Hotel Owners’ Association (supra) and the decision of the Hon’ble High Court of Madras in the case of Chandraprabhuji Maharaj Jain (supra) and also the decision of the Chennai Tribunal in the case of Sri Vetri Vinayagar Educational Trust (supra). Further, we note that in the case of CIT (E) v. Canara Bank Relief and Welfare Society reported in [2024] 158 taxmann.com 241 (Delhi), the Hon’ble High Court of Delhi has clearly stated that the assessee is not precluded from filing a revised Form-10 during the reassessment proceedings.

In the facts and circumstances of the case and respectfully following the judicial precedents (supra), we are of the considered view that the AO and that of ld.CIT(A) have erred in rejecting the revised Form-10 filed by the assessee for accumulation of income u/s.11(2) of the Act by denying the :-10-: ITA. No.:2944/Chny/2024 exemption claimed u/s.11 of the Act. Therefore, we are inclined to set aside the order of ld.CIT(A) and direct the AO to consider the revised Form-10 filed by the assessee on 13.04.2019 for an accumulation of income for an amount of Rs.1,51,65,700/- and recompute the income in accordance with law. Thus, we allow all the grounds of appeal filed by the assessee.

In the result, the appeal of the assessee is allowed.