THE QUAIDE MILLETH EDUCATIONAL AND SOCIAL TRUST,CEHNNAI vs. ITO, EXEMPTIONS WARD 1, CHENNAI, CHENNAI

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ITA 2814/CHNY/2024Status: DisposedITAT Chennai31 January 2025AY 2016-17Bench: due date as specified under Section 139(1). Accordingly, Ld. AO denied accumulation under Section 11(2) and framed the assessment.4 pages

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Facts

The assessee filed its return claiming exemption under Section 11 and sought accumulation of Rs.20.35 Lacs under Section 11(2) by filing Form No.10. However, Form No.10 was filed belatedly after the due date specified under Section 139(1), leading the AO to deny the accumulation and frame the assessment. The CIT(A) confirmed the AO's action, noting that filing Form No.10 is mandatory by the due date and the assessee's remedy is to seek condonation of delay under Section 119(2)(b) as per CBDT Circular No.03/2020.

Held

The Tribunal held that after the amendment to Section 13(9) with effect from 01-04-2016, filing Form No.10 within the due date under Section 139(1) is mandatory, not merely directory. It emphasized that a remedial mechanism for condonation of delay under Section 119 is already available via CBDT Circular No.03/2020. Therefore, the appeal was restored to the CIT(A) to consider any condonation application filed by the assessee within three months, failing which the AO's action would be confirmed.

Key Issues

Whether the belated filing of Form No.10 for accumulation of income under Section 11(2) can be condoned, considering the mandatory nature of filing after the amendment to Section 13(9) and the availability of a specific condonation mechanism under Section 119 via CBDT Circular No.03/2020.

Sections Cited

11, 11(2), 13(9), 119, 119(2)(b), 139(1), 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: HON’BLE SHRI ABY T. VARKEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2016-17 arises out of the order of learned Addl. / Joint Commissioner of Income Tax (Appeals)-4, Bengaluru [CIT(A)] dated 15-03-2024 in the matter of an assessment framed by the Ld. AO u/s.143(3) of the Act on 26-12- 2018. The registry has noted delay of 158 days in the appeal, the condonation of which has been sought by the Ld. AR. Considering the period of delay and the status of the assessee, the delay is condoned and we proceed with disposal of the appeal on merits.

Upon perusal of assessment order, it could be seen that the assessee filed its return of income on 22-11-2016 claiming exemption u/s 11 of the Act. During scrutiny proceedings, it was noted that there was shortfall in application of income and the assessee had filed Form No.10 seeking accumulation of amount of Rs.20.35 Lacs u/s 11(2) of the act. However, this form was filed belatedly on 24-04-2017 though the same was required to be filed on or before due date as specified u/s 139(1). Accordingly, Ld. AO denied accumulation u/s 11(2) and framed the assessment.

The Ld. CIT(A) held that in terms of amendment to Sec.13(9) w.e.f. 01-04-2016, the assessee is mandatorily required to file this form within due date u/s 139(1). Further, the remedy available to the assessee would be to file petition for condonation of delay u/s 119(2)(b) of the Act before appropriate authority as per Circular No.03/2020 dated 03-01-2020. This circular authorizes the Commissioner of Income Tax to admit the applications filed for belated filing of Form No.9A / 10 and condone the delay. Accordingly, the action of Ld. AO was confirmed against which the assessee is in further appeal before us.

It is quite discernible that the new amendment as applicable w.e.f. 01-04-2016 put an obligation on the assessee to file this form before due date u/s 139(1). The same is not merely an empty formality but mandated by the statute. Having not done so, the appropriate remedy that would be available to the assessee is to seek remedy before appropriate authority as per Circular No.03/2020. Thus, a remedial mechanism has already been provided to the assessee under law and the proper recourse for the assessee would be to seek condonation before appropriate authority.