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Income Tax Appellate Tribunal, LUCKNOW BENCH ‘B’, LUCKNOW
Before: SHRI A. D. JAIN & SHRI T. S. KAPOOR
PER T. S. KAPOOR, A.M.
This is an appeal filed by the Revenue against the order of learned CIT(A)-4, Lucknow dated 13/08/2019 pertaining to assessment year 2014- 2015. In this appeal the Revenue has taken the following grounds of appeal:
“1. The learned CIT(A) has erred in law and on facts in allowing the rectification u/s 154 to the assessee which was rejected by the Assessing Officer denying the claim
I.T.A. No.654/Lkw/2018 C.O.No.01/Lkw/2019 2 Assessment Year:2014-15 of utilization and accumulation of income u/s 11(2) of the Act as the assessee failed to file form 10, failed to get the accounts audit and failed to file the audit report in form 10B within the due time electronically.”
The assessee has also filed Cross Objections to the appeal filed by the Revenue which is basically in support of the order of learned CIT(A). However, ground No. 4 taken by the assessee relates to the grievance whereby the learned CIT(A) has not given direction to the Assessing Officer for giving benefit of accumulation u/s 11(2) of the Act.
At the outset, Learned A. R. submitted that the Cross Objections filed by the assessee has become infructuous in view of the fact that the Assessing Officer has passed consequential order in view of the order of learned CIT(A) wherein he has allowed benefit of exemption u/s 11 and also benefit of accumulation u/s 11(2) of the Act and filed a copy of the order dated 25/10/2018. Therefore, it was prayed that the Cross Objections filed by the assessee may be treated as infructuous.
Arguing the appeal filed by the Revenue, Learned D. R. submitted that the Assessing Officer had not allowed claimed of the assessee u/s 11 of the Act as the assessee had failed to file Form 10 and had also failed to get its accounts and file audit report u/s 10B of the Act.
Learned A. R., on the other hand, submitted that it is wrong on the part of Learned D. R. to say that the accounts were not audited and Form 10 and Form 10B were not filed. It was submitted that in fact the assessee has forgotten to tick the appropriate column required to tick the column relating to audit of accounts and submission of Form 10B. Learned A. R. in this respect invited our attention to the order of learned CIT(A) wherein he has specifically noted that assessee had filed Form 10B within prescribed period of time and therefore, it was prayed that learned CIT(A) has rightly allowed relief to the assessee.
I.T.A. No.654/Lkw/2018 C.O.No.01/Lkw/2019 3 Assessment Year:2014-15
We have heard the rival parties and have gone through the material placed on record. We find that vide intimation dated 16/03/2016 u/s 143(1) of the Act, the CPC had not allowed the claim of the assessee u/s 11(1) and 11(2) of the Act and the rectification application filed by the assessee u/s 154 of the Act was also rejected vide order dated 16/07/2016. The order for rectification states that assessee had claimed exemption u/s 11 but had not furnished details of audit in the schedule and Form 10B was not filed. However, the order of learned CIT(A) clearly states that assessee had filed copy of audit report and Form 10B on 31/03/2015. Copy of acknowledgement of receipt of Form 10B indicating therein the date of receipt as 31/03/2015 is placed at paper book page 17 whereas copy of acknowledgement of Form 10 filed on 17/03/2016 is placed in paper book pages 29 to 31 wherein the fact of having filed Form 10 is mentioned as 17/03/2016. The learned CIT(A) has allowed relief to the assessee u/s 11(1) of the Act by holding as under: “5.1 The appellant has raised as many as 17 grounds of appeal through which it has been emphasized that the AO was unjustified in rejecting the application of the appellant made u/s 154 of the Act.
The appellant society is a charitable society which is registered u/s 12A and 10(23C)(vi) of the Act. Return of income filed on Nil income after claiming deduction u/s 11 of the Act. However, due to over sight, the audit flag was not marked "yes" in the schedule of the ITR filed by the appellant. Although the audit in form 10B was e-filed separately. The return of income was filed on 31.03.2015 and the audit in form 10B was also filed on the same date. The AO issued a notice u/s 139(9) of the Act stating that the compulsory audit report was not filed and directed the appellant to file the corrected return incorporating the detail of such audit failing which the return filed by the appellant would be treated as invalid return. The said notice was not responded and subsequently the return of income was processed on 16.03.2016 after denying the claim of utilization and accumulation of income u/s 11(2) of the Act. The appellant filed an application u/s 154 of the Act regarding the same which was rejected subsequently.
I.T.A. No.654/Lkw/2018 C.O.No.01/Lkw/2019 4 Assessment Year:2014-15
The claim of the appellant was rejected only on the basis that the audit flag was not properly marked in the schedule of the ITR filed by the appellant. It is to be seen that filling up the audit details in the schedule of the ITR is independent of e- filing of audit report in form 10B. These two acts should not be correlated with each other as filing of audit details in the schedule does not guaranty that the report in form 10B has been e-filed and vice a versa. The AO needs to check that whether the audit report has been e-filed or not in both the cases. In this case the ITR and the audit report were filed simultaneously on 31.03.2015 which was available to the AO as on the date of notice u/s 139(9) of the Act i.e. 17.11.2015 and as on the date of order u/s 143(1) of the Act i.e. 16.03.2016. The appellant has filed copy of Form 10 on 17.03.2016 also, a copy of which was submitted before the undersigned during the course appellate proceedings.
In view of the above, I find that the Assessing Officer was unjustified in issuing the notice u/s 139(9) of the Act in the first place. Further, the Assessing Officer should have made sure that the audit report was not filed by the appellant, before rejecting the claim of the appellant regarding the utilization of the amount for charitable purposes. The AO also violated the provisions of the Act when the return filed by the appellant was processed u/s 143(1) of the Act despite a notice of defect u/s 139(9) of the Act remained uncomplied with. Further the application made u/s 154 of the Act was rejected by the AO stating that there was no prima facie defect/ error in the order which was sought to be rectified. The order made u/s 154 of the Act suffer from lack of application on part of the AO. The order is not based on the fact of the case and is therefore held as wrong and unjustified. The AO is directed to allow the claim made by the appellant in return of income filed by it. The additions made by the Assessing Officer vide order dated 16/03/2016 are directed to be deleted.”
6.1 In the above order, passed by learned CIT(A), the learned CIT(A) has though allowed relief u/s 11(1) but has not given any direction to Assessing Officer regarding benefit of accumulation u/s 11(2) of the Act, probably in view of the fact that Form No. 10 was not filed within prescribed period of time as the prescribed period for filing Form No. 10 is the prescribed period u/s 139(1) of the Act and in this case Form No. 10
I.T.A. No.654/Lkw/2018 C.O.No.01/Lkw/2019 5 Assessment Year:2014-15 has been filed on 17/03/2016 which is beyond prescribed period of time allowed u/s 139(1) of the Act. However, learned CIT(A) has rightly allowed relief to the assessee u/s 11(1) of the Act as the assessee had duly filed Form No. 10B within prescribed period of time. The ground taken by the Revenue that Form No. 10 was not filed within prescribed period of time and therefore, the benefit of accumulation should not have been given, is an incorrect ground as learned CIT(A) has not given any direction for giving benefit of accumulation u/s 11(2) of the Act. In view of the above findings, the appeal filed by Revenue is dismissed.
Coming to the Cross Objections filed by assessee, we find that Form No. 10 was not filed by assessee within prescribed period of time and therefore, learned CIT(A) has rightly not given any directions for benefit of accumulation u/s 11(2) of the Act. Moreover, Learned A. R. has stated at the Bar that learned CIT (Exemptions), vide order dated 25/10/2018, has already allowed relief to the assessee both u/s 11(1) & 11(2) of the Act and therefore, the Cross Objections filed by the assessee do not survive and has become infructuous and therefore, dismissed. 8. In the result, the appeal filed by the Revenue and the Cross Objections filed by the assessee are dismissed.
(Order pronounced in the open court on 19/07/2019)
Sd/. Sd/. ( A. D. JAIN ) ( T. S. KAPOOR ) Vice President Accountant Member Dated:19/07/2019 *Singh
Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Assistant Registrar