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

The NFAC, Delhi erred in confirming the rejection of the plea for accumulation as per Form No.10 filed on 13.04.2019 and consequently erred in recomputing the tax exemption computation under Section 11 of the Act in adding back Rs. 1,51,65,700/- on the presumption of short

The NFAC, Delhi failed to appreciate that the Form No. 10 filed on 13.04.2019 claiming a sum of Rs. 1,51,65,700/- as accumulation/ set aside in terms of Section 11 (2) of the Act would replace the originally filed Form No. 10 dated 28.09.2018 claiming a sum of Rs.11,78,168/- as accumulation / set aside in terms of Section 11 (2) of the Act and ought to have appreciated that the action in disallowing the sum claimed as accumulation forming part of Form Ne. 10 dated 13.04.2019 by reckoning the same filed beyond the time limit stipulated under the Act should accordingly be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that in the absence of availability of option in the ITBA web portal for filing rectified Form No. 10 dated 13.04.2019 for the purpose of claiming / correcting accumulation of income in terms of Section 11 (2) of the Act, which lack of option could not be attributable to the appellant, the impugned order passed without considering the analogy of revised return having an over riding effect on the original return in terms of Section 139( 1) / 139( 4) of the Act by effacement theory, would negate the findings in relation there to.

The NFAC, Delhi failed to appreciate that in any event the filing of Form N o.10 along with the return of income ought to be reckoned as directory and not mandatory and further ought to have appreciated that having filed the said Form No.10 in pleading for correct accumulation of income well before the commencement of assessment proceedings should be considered as sufficient compliance for the tax exemption computation benefit under Section 11 of the Act, there by vitiating the presumption of shortfall in the application of income.

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 order of assessment under consideration was passed out of time, invalid, passed without juri iction and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that the findings from para 5 of the impugned order were Wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

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.

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, ITA No.92/Mds/2015 (d) Commissioner of Income Tax Vs. Moti Ram Gopi Chand Charitable Trust, 8. 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

Aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us.

The ld.AR for the assessee submitted that the assessee is a charitable trust registered u/s.12AA of the Act. During the assessment year 2018-19, the assessee filed its return of income within the due date prescribed u/s.139(1) of the Act along with the Form-10 on 28.09.2018 stating therein an amount of Rs.11,78,168/- is accumulated during the F.Y. 2017-18. Later on, the assessee found that there was an error occurred inadvertently in filing the Form-10 and filed a revised Form-10 on 13.04.2019 by showing an amount of Rs.1,51,65,700/- as accumulation of income for the F.Y. 2017-18. Further, the ld.AR submitted that when the case was selected for scrutiny by issuing a notice u/s.143 (2) of the Act on 21.09.2019, the assessee had already filed a revised Form-10 also in the e-filing portal. Therefore, the assessing officer has :-6-: ITA. No.:2944/Chny/2024

Further, the ld.AR drew our attention to the entire set of the return of the income filed in Form ITR 7, wherein, the assessee has shown an amount of Rs.1,51,65,700/- as “accumulated or set apart for specified purposes u/s.11(2) of the Act in PART B-T1 STATEMENT OF INCOME FOR THE PERIOD ENDED ON 31ST MARCH 2018, under S.No. 4(vii) in page 5 of the ITR 7. 13. 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

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 ITA No.903/Chny/2023 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.

Per contra, the ld.DR relied on the orders of the lower authorities and prayed for confirming the order of the ld.CIT(A).

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

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