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Facts
The assessee, a non-profit organization, filed a NIL return for AY 2016-17. During scrutiny, the Assessing Officer rejected its claim for corpus donation of Rs.32,33,240, alleging insufficient proof, self-printed certificates, and belated filing of Form 10 for accumulation of income, which the CIT(Exemption) had refused to condone. The CIT(Appeals) upheld the Assessing Officer's order, leading to the assessee appealing to the ITAT.
Held
The Tribunal condoned the 273-day delay in filing the appeal, finding that the assessee was prevented by unavoidable circumstances. On merits, it held that the Assessing Officer and CIT(Appeals) incorrectly rejected the corpus donation claim, noting that payments were via RTGS, documents were signed, and the purpose was clearly specified. Citing Supreme Court precedents, the Tribunal ruled that furnishing Form 10 before assessment completion constitutes substantial compliance, and thus, the addition made by the Assessing Officer was set aside, directing the amount to be treated as corpus donation.
Key Issues
1. Whether the rejection of the corpus donation claim was justified due to alleged insufficient proof and belated filing of Form 10. 2. Whether the delay in filing Form 10 should be condoned, considering statutory amendments and CBDT circulars. 3. Whether the CIT(Appeals) validly dismissed the appeal ex parte without considering the merits.
Sections Cited
143(2), 142(1), 12A, 119(2)(b), 11(1)(d), 11(2), 143(3), 282(1), 250(6), 251(2), 250(4), 250(5), 251(1)(a), 251(1)(b), 60, 63, 139(1), 12AA, 13
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2016-2017 Bastuhara Sahayata Samiti,……………….…Appellant 27/1B, Bidhan Sarani, Srimini Market, Kolkata-700006, West Bengal [PAN:AAATB7422R] -Vs.- Income Tax Officer,……………………………..Respondent Ward-1(2), (Exemption), Kolkata, Office of the Income Tax Officer, 10B, Middleton Row, Kolkata-700071 Appearances by: Shri S.K. Tulsian, Advocate and Ms. Puja Somani, C.A., appeared on behalf of the assessee Shri Somnath Das Biswas, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing: May 20, 2025 Date of pronouncing the order: July 28, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of Id. Additional/Joint Commissioner of Income Tax (Appeals)-7, Mumbai dated 14.03.2024 passed for Assessment Year 2016-2017.
The appeal is time barred by 273 days in filing the appeal by the assessee before the Tribunal. However, Shri Arindom Sinha (A.Y. 2016-2017) Bastuhara Sahayata Samiti Roy, General Secretary of the appellant-assessee filed an affidavit stating that the appellant-assessee being a non-profit and social organization widely regarded for its relief work to refugees and disaster victims would not have gained in any manner whatsoever by not filing the appeal within the period of limitation and was not aware of any notices of hearing and the order passed by the ld. Addl./JCIT(Appeals). The assessee was not negligent in filing the appeal but for some unavoidable reasons and circumstances, no step was possible to be taken for filing the appeal within the prescribed time. When the assessee came to know about the order passed by the ld. Addl./JCIT(Appeals), the assessee approached the ld. A.R. to prefer an appeal, due to that there was a delay of 273 days in filing the appeal before the Tribunal. Therefore, he pleaded to condone the delay.
Considering the facts and circumstances of the case, I am of the view that the assessee was prevented in filing the appeal within the stipulated time. Therefore, I am inclined to condone the delay of 273 days. Hence the delay is condoned in the appeal.
The facts in brief are that the assessee filed its return of income for the assessment year 2016-17 on 22.09.2016 through CPC declaring NIL gross total income vide e-filing. The case was selected for Complete Scrutiny through CASS. Notice under section 143(2) of the Income Tax Act dated 14.07.2017 was served upon the assessee. Requisitions were made vide notice under section 142(1) of the Act dated 07.02.2018 and was served upon the assessee. The assessee is registered under section 12A dated (A.Y. 2016-2017) Bastuhara Sahayata Samiti 24.06.1994. The assesee furnished audit report in Form No. 10B dated 10.08.2017 along with the return of income. The assesese has claimed donation amounting to Rs.32,33,240/- as Corpus in nature that has been capitalized. The assesese could not submit any proof to substantiate the claim. A number of certificates submitted towards proof of Corpus Donation showed that the certificates were printed by the assessee himself and then signature of the donors were obtained. The assesee could not furnish any explanation. The assessee filed a petition for condonation of delay in submission of Form 10 before the ld. CIT(Exemption), Kolkata which was rejected by the ld. CIT vide order under section 119(2)(b) of the Income Tax Act dated 20.12.2018. It was noted that the claim has not mentioned in the ITR 7 and in the resolution passed in the Executive Committee meeting, the fund was set apart as Corpus Fund. As such, the claim of donation of Rs.32,33,240/- as corpus in nature that has been capitalized was rejected and the amount was added to the income of the assessee for the relevant assessment year by the ld. Assessing Officer.
On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).
6. The ld. Addl./JCIT(Appeals) dismissed the appeal of the assessee by observing as under:- “3.8. Since the appellant has not presented any arguments or submissions or any details filed in support of its claim, the appeal is decided judiciously based on materials available on record.
(A.Y. 2016-2017) Bastuhara Sahayata Samiti 3.9. I have perused the impugned assessment order u/s 143(3) of the Act dated 21.12.2018. The appellant has not furnished any submissions in support of the grounds of appeal during the appellate proceedings. Taking into account the entire conspectus of this case, I see no reason to disturb the categorical findings of the assessing officer regarding assessment of the total income of the appellant at Rs.27,40,520/-“.
7. On being aggrieved, the assessee preferred an appeal before the ITAT. At the time of hearing, the ld. Counsel for the assesese has filed a written submission in support of his claim. The written submission of the ld. Counsel for the assessee reads as under:- 7. The first three grounds raised in this appeal are against passing of the impugned ex parte appellate order without delivering or transmitting the hearing notices at the address provided and requested in the Appeal Form-35 itself vide sr. no. 17 under specific column “Address to which notices may be sent to the appellant” particularly in the situation when it was alleged that all the notices sent through e-mail available in the portal remained uncomplied with. Facts and situations faced by the appellant have been stated in para-2, page-1 of this submission above and hence not being repeated here. Therefore, the notices issued were not as per modes stated in sec. 282(1) of the Act and hence the order passed was in violation of principle of natural justice. 7.1. Furthermore, the Ld. C.I.T.(A) passed the appellate order ex parte and dismissed the appeal in limine in utter disregard of the statutory provisions contained u/s. 250(6) of the Act on the supposition that the assessee was not interested in pursuing its appeal. Section 250(6) of the Act reads as under: “250. (6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. ” Further, sec. 251(2) read with Explanation reads as under : 251. (2) The Commissioner (Appeals)shall not enhance an assessmen or a penalty or reduce the amount of refund unless the appellant had a reasonable opportunity of showing cause against enhancement or reduction.
(A.Y. 2016-2017) Bastuhara Sahayata Samiti Explanation. - In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, that such matter was not raised before the Commissioner (Appeals) by the appellant”. On cumulative consideration of sec. 250(6) r.w.s. 250(4), 250(5), 251(1)(a), 251(1)(b) and Explanation to sec. 251(2) of the Act, it shall be amply clear that the ld. CIT(A) has no power to dismiss appeal in limini for non-prosecution of appeal by the assessee/appellant and he is obliged to dispose of the appeal on merits, more so when all the required information, details, documents etc. n relation to the issue in appeal were already in the assessment records. As decided in the case of CIT -vs.- Premkumar Arjundas Luthra (HUF) [2016] 240 taxmann 133 (Bom.)/(2017) 297 CTR 614(Bom.), relying on the Supreme Court decisions in CIT vs. Kanpur Coal Syndicate 53 ITR 225 (SC), CIT vs. Rai Bahadur Hardutroy Motilal Chamaria 66 ITR 443 and CIT vs. B.N. Bhattacharjee 118 ITR 461 (SC), the Ld. C.I.T.(A) is required to apply his mind to all issues which arise from the order appealed against before him and that he is obliged to dispose of the appeal on merits by passing a speaking order and deciding the points raised in appeal by stating his reasons for the decision as such. The relevant observations of the said Bombay High Court decision is quoted below. “Further s. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. In fact, the CIT(A) is obliged to dispose of the appeal on merits. In fact, with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do........ This is amply clear from the s. 251(1)(a) and (b) and Explanation to s. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.
On the above premise, it is submitted that the disposal of the appeal by the Ld. C.I.T.(A) by not passing a speaking order on each of the grounds of objection raised in the appeal is unsustainable in law and liable to be quashed more so when entire details, information of the activities of the trust, copies of Form No. 10B 5 (A.Y. 2016-2017) Bastuhara Sahayata Samiti with Annexures, Balance Sheet, Income & Expenditure Account, Receipts & Payments statement, details of donations received etc. filed before the Ld. A.O. during the assessment stage are already on the record of the department and which are also filed with this submission in the Paper Book. Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 allows the additional evidence to be admitted in some circumstances which are as under: “Production of additional evidence before the Tribunal.
The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income- tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.” Therefore, as per Rule 29 above, one of such situations arises in this case of the appellant when the hearing notices u/s 250 of the Act were not sent at the address specifically requested for in the Appeal Form-35 itself and the Ld. CIT(A) has decided the case ex parte qua the appellant. Therefore, the evidences already produced /filed before the dl. AO and which are also filed with this submission in the paper book may kindly be admitted for adjudication of the issues raised in this appeal before the Hon’ble Tribunal.
9. Ground Nos. 4 to 6 of this appeal are against disallowance of deduction of corpus donation u/s 11(1)(d) of the Act and set apart claim u/s 11(2) of the Act which are as below: (4) That, the Ld. A.O. erred in having disallowed the deduction of Rs.32,33,240/- as part of corpus donation in terms of sec. 11(1)(d) of the Act received from various donors through account payee cheques/RTGS for the specific purpose to aid the disaster victims in spite of the fact that the appellant made substantial compliance of requirements of filing Form-10 with the A.O. before culmination of assessment proceedings and the Ld. CIT(A) without considering the merits of the case arbitrarily upheld the said disallowance. (5) That, the Ld. revenue authorities further erred in disallowing the set apart claim of Rs.32,33,240/- on the stand that condonation petition for belated e-filing of Form-10 had been rejected by the Ld. CIT (Exemption), which was beyond the spirit 6 (A.Y. 2016-2017) Bastuhara Sahayata Samiti of CBDT Circular No.7/2018 dated 20.12.2018 clarifying that the delay in filing of Form-10 may be condoned u/s 119(2)(b) of the Act considering that e-filing of Form-10 for A.Y. 2016-17 was the first year after the amendments in the LT. Act and Rules. (6) That, the Ld. A.O. while not giving cognizance to set apart claim of Rs.35,00,000/- in computing the income for the A.Y. 2016-17 erred in not having appreciated the undisputed fact that aforesaid accumulation of income u/s 11(2) of the Act stood applied in the immediately succeeding A.Y. 2017-18 for the objects and activities of the appellant-trust and the assessment of the said year has been completed accordingly.
10. On a perusal of the impugned assessment order u/s. 143(3) of the Act dated 21.12.2018 and also the facts and circumstances of the case summed up above, the Hon’ble Bench would find that the Ld. A.O. has rejected the accumulation/set apart of the voluntary contributions/donations made by the respective contributors/ donors across India for the specific purpose of corpus of the appellant-society, which was capitalized in the society’s Balance Sheet as at 31.03.2016, and treated the same as income of the year mainly for the following reasons and understanding: (i)That proof of receipt of corpus donation of Rs.32,33,240/- shown in the Schedule-VC of ITR has not been submitted. A few letters claimed to have received from the donors across India towards Corpus Donation were appeared to be printed by the appellant- society and the donors’ signatures were obtained thereon. The appellant had, therefore, failed to explain its case in the light of sec.11(1)(d) of the Act. (ii)That the appellant e-filed Form No. 10 belatedly on 07.12.2018 by exercising the option to accumulate or set apart an amount of Rs.35,00,000/- u/s.11(2) of the Act, which was an afterthought and a clear ploy for concealment of income, inasmuch as the donations claimed as corpus donation were not corpus in nature but general donations. (iii)That petition for condonation of delay in on-line filing of Form No. 10 was rejected by the Ld. C.I.T. (Exemption) vide order u/s.119(2)(b) of the Act dated 20.12.2018 and as such set apart claim of Rs.35,00,000/- has not been given cognizance to while computing the income for the A.Y. 2016-17.
In regard to point (i) above, the Ld. A.O. alleged that the appellant has not established its claim as contemplated in clause (d) of sec.11(1) of the Act. This section reads as under:
(A.Y. 2016-2017) Bastuhara Sahayata Samiti “11(1) subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) to (c)…………….. (d) Income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution. ” Facts in relation to the receipt of corpus donations have been stated above. On the above backdrop of the case, it would be seen that the corpus donation of Rs.32,33,240/- received during F.Y. 2015- 16 (A.Y. 2016-17) clearly falls within the purview of clause (d) of sec.11(1) of the Act. For better appreciation at this stage, it is reiterated that as per Resolution of the Board of Trustees, the society made a public appeal with specific purpose of raising corpus fund from donors across India to help/assist the natural calamity victims and requested to send the donations directly to the bank account of the society, payee being ‘North Bengal Relief Fund’. On the said appeal, the society had received total donation of Rs.32,33,240/- from various donors across India through Account Payee Cheques/RTGS. Most of the donors remitted their donations/ contributions directly to the Bank Account of the society, thus leaving no scope to know their addresses. Receipts were drawn in respect of those donors/ contributors whose names were ascertainable or available to the society. In other cases, receipts acknowledging donation with dates, PAN and amount donated were drawn. Copies of such receipts and certificates issued by various donors towards their funding of corpus donation were filed before the Ld. A.O. In regard to the allegation that certificates issued by the donors appeared to be printed by the society and donors’ signatures were obtained on those certificates, it is submitted that such donors were not acquainted with the language and format of certificate and just to help those donors, the society provided the printed copy of such certificate who after being satisfied with the contents of the certificate vis-a-vis purpose of their donations signed on those printed copies of the certificates. There was, therefore, nothing irregularity or illegality in such certificates when the printed copies of the certificates were provided upon request of the respective donors and the said contributions already stood deposited/credited in the bank account of the society. Furthermore, it is a very common phenomenon that banks, other financial institutions and public offices in general do provide their respective printed forms depending upon requirements of services to be provided by them to their customers/ public in general and they act on such information as given on the printed form under the signatures of the persons/public concerned. Therefore, the authenticity of the information provided in the printed form does not matter if the 8 (A.Y. 2016-2017) Bastuhara Sahayata Samiti same is under the consent and signatures of the persons concerned. In view of the above, the allegation of the Ld. A.O. that proof of receipt of corpus donation had not been filed is totally beyond the actual facts of the case and hence baseless. 11.1. Coming to point (ii) above alleging submission of Form No. 10 belatedly as an after-thought, it is submitted that it was never an afterthought or intentional omission on the part of the appellant- society inasmuch as neither the society was aware nor its Lawyer advised/guided properly about e-submission of Form No. 10 at the relevant time and nothing else. This was due to the lack of knowledge of the amendment brought in for the first time by The Finance Act, 2015 to sec. 11(2) of the Act w.e.f. 01.04.2016 relevant to A.Y. 2016- 17 under consideration, which is quoted as under for ready reference: “(2) Where eighty-five per cent of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely: (a)Such person furnishes a statement in the prescribed form and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years; (b)the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5); (c)the statement referred to in clause (a) is furnished on or before the due date specified under subsection (1) of section 139 for furnishing the return of income for the previous year: Provided that in computing the period of five years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded. Explanation.—Any amount credited or paid, out of income referred to in clause (a) or clause (b) of subsection (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA or to any fund or institution or trust or any 9 (A.Y. 2016-2017) Bastuhara Sahayata Samiti university or other educational institution or any hospital or other medical institution referred to in subclause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.” On a reading of the said sec. 11(2) of the Act, it would be seen that there was in fact no departure on the part of the appellant-society from the outline/conditions as contained therein and the set apart amount was spent during the immediate next financial year relevant to A.Y. 2017-18. Hence allegation of the Ld. A.O. that it was a clear ploy for concealment of income was unfounded and baseless; more so when the audited balance sheet, income & expenditure statement etc. for AYs 2016-17 & 2017-18 were filed during the course of the assessment proceeding, establishing that the set apart corpus funds were spent during the next financial year and nothing adverse was commented thereupon. 11.2. Next with regard to point No. (iii) above, it is submitted that the Ld. A.O. has not given any cognizance to the set apart claim of Rs.35,00,000/- made by the appellant on the alleged stand that the condonation petition for belated e-filing of Form No. 10 had been rejected by the Ld. C.I.T. (Exemption) vide order u/s.119(2)(b) of the Act dated 20.12.2018. In this connection it is humbly reiterated that the delay in filing the prescribed Form No. 10 electronically before the Ld. A.O. was due to lack of knowledge of the society and as also improper guidance and advice from the Lawyer looking after the income-tax matter of the society. Considering the said reality and amendment brought in secs. 11 & 13 of the Act w.e.f. A.Y. 2016-17 under appeal, the Ld. A.O. was fair enough to advise the society to submit the belated Form No. 10 with a condonation petition before the Ld. C.I.T.(Exemp.). The society thus filed before the Ld. CIT (Exemp.) a condonation petition explaining the reasons for such bona fide procedural error. However, the Ld. C.I.T.(Exemption) rejected the condonation petition and refused to entertain Form No. 10 filed electronically on the ground that the said Form No. 10 was filed only after detecting of the lacuna by the A.O. 11.3. In this connection, it would not be out of the context to refer to Article 265 of the Constitution of India which lays down that no tax shall be levied except by authority of law. Hence only legitimate tax can be recovered and even a concession by a tax-payer does not give authority to the tax collector to recover more than what is due from him under the law. This goes to prove that the government is empowered to collect tax from the citizens only as per the mandate provided in the law. If the statute provides certain relief to the assessee, the same should be granted to the assessee even 10 (A.Y. 2016-2017) Bastuhara Sahayata Samiti without any claim made thereon by the assessee. In the instant case, the assessee had duly made the claim of corpus donation qua corpus fund by way of a computation filed during the assessment proceedings and had fairly mentioned all the details in the ITR and Balance Sheet, though Form No. 10 was not e-filed for the bona fide reasons stated above. On the aforesaid facts, therefore, the revenue cannot take advantage of an ignorance of an assessee. This is what has been clarified by the Hon’ble CBDT vide its Circular No. 14 (XL-35) dated 11.4.1955, the relevant portion of which is being reproduced below : "Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should (a)Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b)Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs." [Emphasis ours] Thus, from the above circular it is manifest that there was indeed no impediment to the Ld. A.O. to advise the society to e-file Form No. 10 with condonation petition, may be during the course of the impugned assessment proceeding. Therefore, the allegation of the Ld. C.I.T. (Exemption) in his order u/s. 119(2)(b) of the Act dated 20.12.2018 that filing of Form No. 10 belatedly and condonation petition thereafter was only after detection by the A.O. of a wrong claim of ‘Corpus’ is of no avail in view of Article-265 of the Constitution of India and the said circular of Hon’ble C.B.D.T. 11.4. The Ld. A.O. in spite of his advice to file Form No. 10 electronically, which was in tune with Article- 265 and CBDT Circular (supra) chose to rely on the order of the Ld. C.I.T. (Exemption). In this connection it is submitted that the Ld. C.I.T.(Exemption) has also acted beyond the spirit of CBDT Circular No.7/1018 (F.No.197/55/2018-ITA-I) dated 20.12.2018 while rejecting the condonation petition vis-a-vis Form No. 10 filed before him. In the said circular, Hon’ble CBDT has relaxed the provisions 11 (A.Y. 2016-2017) Bastuhara Sahayata Samiti relating to filing of Form No.10 electronically for A.Y. 2016-17 and it has been clarified that the delay in filing of Form No.10 for A.Y. 2016-17 may be condoned u/s 119(2)(b) of the Act considering the fact that e-filing of Form No.10 for A.Y. 2016-17 was the first year in view of the said amendments in the LT. Act and Rules w.e.f. 01.04.2016 relevant to A.Y. 2016-17. For better appreciation, the said CBDT Circular is reproduced below: “Sub: Condonation of delay under section 119(2)(b) of the Income- tax Act, 1961 in filing of Form no. 10 and Form No. 9A for AY 2016- 17 1.Under the provisions of section 11 of the Income-tax Act, 1961 (hereafter ‘Act’) the primary condition for grant of exemption to trust or institution in respect of income derived from property held under such trust is that the income derived from property held under trust should be applied for the charitable purposes in India. Where such income cannot be applied during the previous year, it has to be accumulated and applied for such purposes in accordance with various conditions provided in the section. 2.The Finance Act, 2015 amended section 11 and section 13 of the Act with effect from 01.04.2016 (A.Y. 2016-17). Consequently, Income-tax Rules, 1962 (hereafter 'Rules') were also amended vide the Income-tax (1st Amendment) Rules, 2016. As per the amended provisions of the Act read with rule 17 of the Rules, while 15% of the income can be accumulated indefinitely by the trust or institution, 85% of income can only be accumulated for a period not exceeding 5 years subject to the conditions, inter alia, that such person submits the prescribed Form No. 10 electronically to the Assessing Officer within the due date specified under section 139(1) of the Act. 3.Further, where the income from the property held under trust and applied to charitable or religious purposes falls short of 85% of the income derived during the previous year for the reason that the income has not been received during that year or any other reason, then on exercise of the option by submitting in Form No.9A electronically by the trust/institution on or before the due date of furnishing the return of income, such income shall be deemed to have been applied for charitable or religious purpose. 4.Representations have been received by the Board/field authorities stating that the Form No. 9A and Form No.10 could not be filed in the specified time for AY 2016-17, which was the first year of e-filing of these forms. It has been requested that the delay in filing of Form No. 9A and Form No.10 for AY 2016-17 may be condoned under section 119(2) (b) of the Act.
(A.Y. 2016-2017) Bastuhara Sahayata Samiti 5.Accordingly, in supersession of earlier Circular/Instruction issued in this regard, with a view to expedite the disposal of applications filed by trusts for condoning the delay and in exercise of the powers conferred under section 119(2)(b) of the Act, the Central Board of Direct Taxes hereby authorizes the Commissioners of Income-tax, to admit belated applications in Form No. 9A and Form No.10 in respect of AY 2016-17 where such Form No. 9A and Form No.10 are filed after the expiry of the time allow ed under the relevant provisions of the Act.
The Commissioners will, while entertaining such belated applications in Form No. 9A and Form No. 10, satisfy themselves that the assessee was prevented by reasonable cause from filing of applications in Form No. 9A and Form No. 10 within the stipulated time. Further, in respect of Form No. 10 the Commissioners shall also satisfy themselves that the amount accumulated or set apart has been invested or deposited in anyone or more of the forms or modes specified in subsection (5) of section 11 of the Act.” [Emphasis supplied] 12. In view of the above sequence of facts and CBDT Circulars, in particular points-4 & 5 emphasized above, it is reiterated that neither the Ld. A.O. nor the Ld. C.I.T.(Exemption) has disputed the fact that the set apart amount of corpus donation of Rs.32,33,240/- has been expended during the immediate next financial year relevant to A.Y. 2017-18 and that being so, the A.Y. 2016-17 under appeal being the first year after the amendment of sec. 11 & 13 of the Act, delay in filing electronically Form No. 10 should be condoned u/s. 119(2)(b) of the Act.
Similarly, on the facts of the case as stated above, benefit of accumulation of corpus fund as contemplated in clause (a) of sec.11(2) of the Act (refer Ground No.6 of this appeal) is also available to the appellant-society and the said section reads as under: “(2) Where eighty-five per cent of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation that sub-section is not applied, or not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:- (a) Such person furnishes a statement in prescribed form and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the 13 (A.Y. 2016-2017) Bastuhara Sahayata Samiti period for which the income is to be accumulated or set apart, which shall in no case exceed five years;” The appellant’s case thus clearly falls within the meaning of sec.11 (1)(d) r.w.s. 11(2) of the Act and belated online filing of Form No. 10 for unintended and bona fide cause explained above ought to have been condoned as per the Board Circulars referred to above, more so when the entire corpus donation was undisputedly applied for relief in the subsequent A.Y. 2017-18. It is pertinent to state that copies of Form No.10B, Balance Sheet, Income & Expenditure Account and Receipts & Payments Accounts were all filed before the Ld. A.O. to establish compliance to sec.11(2) of the Act.
As stated above, the Ld. A.O. has not given any cognizance to the set apart claim of the appellant on the ground of belated online filing of Form No. 10 and rejection of condonation petition by the Ld. C.I.T.(Exemption). Kind attention of the Hon’ble Bench is drawn to the fact that contents of both the physical Form No. 10 and electronic version of Form No. 10 are almost same. Thus, it is submitted that mere procedural lapse for bona fide reasons as explained above should not cause prejudice to the appellant- society in claiming its legitimate deduction u/s 11(2) of the 1961 Act. As per several judicial precedents it has been decided that furnishing of Form No. 10 at any time before completion of assessment will be a sufficient compliance of requirements of the law. Reliance in this connection is placed on the Hon’ble Bombay High Court decision in the case of CIT vs. Nagpur Hotel Owners Association (1994) 209 ITR 441 (Bom). However, when the matter went to Hon’ble Supreme Court at the behest of Revenue in the aforesaid case, the Hon’ble Supreme Court has held that there will be substantial compliance if the said Form No. 10 is filed by the assessee before the AO prior to completion of assessment proceedings, by holding as under [Source (2001) 247 ITR 201 (SC)]: 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 bene fit 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 it 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 14 (A.Y. 2016-2017) Bastuhara Sahayata Samiti 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 o f 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 lion 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. "[Emphasis supplied] 14.1. Following the aforesaid decision of Hon’ble Apex Court, amendment brought in for the first time by The Finance Act, 2015 to sec. 11(2) of the Act w.e.f. 01.04.2016 relevant to AY 2016-17 and CBDT Circular (supra), the Hon’ble ITAT, Mumbai vide order dated 19.08.2019 in the case of Shree Dadar Jain Paushadhshala Trust -vs- ITO (E), Mumbai (ITA No.2061/Mum/2019) has further clarified the identical issue as involved in the case of the appellant- samity and held that the assessee is entitled for deduction u/s 11(2) of the Act towards accumulation of income.
To sum up what has been stated above, the appellant- society took a resolution to raise corpus fund by way of donations for providing aids to the disaster victims of North Bengal and Nepal and the donors made contributions/donations towards corpus fund for that specific purpose. In view of the above, the appellant- society humbly submits to consider the case in the above perspective and to allow deduction of Rs.32,33,240/- as part of corpus donation in terms of sec.11 (1)(d) of the Act in computing the total income for the A.Y. under appeal.
(A.Y. 2016-2017) Bastuhara Sahayata Samiti 8. I have considered the written submission filed by the ld. Counsel for the assessee. The main grievance of the assessee is that the ld. Assessing Officer has not considered the amount of Rs.32,33,240/- as corpus donation by saying that the certificates were printed by the assessee himself and then signature of the donors were obtained. I have gone through the receipts filed by the assessee. Admittedly all the receipts printed by the assessee- Samiti. All the payments were made through RTGS. There is no single payment by way of cash. Apart from this, all the documents were signed by the different persons and on perusal of the receipts, the purpose of donation has categorically mentioned as corpus donation, therefore, I am of the view that the ld. Assessing Officer as well as ld. Addl./JCIT(Appeals) were not correct in rejecting the corpus donation and the amount of Rs.32,33,240/- was added to the total income of the assessee. Therefore, I direct the ld. Assessing Officer to consider the same as corpus donation and it should be capitalized. Hence, the addition made by the ld. Assessing Officer is hereby set aside.
So far as the delay in submitting Form 10 is concerned, I am of the view that as per several judicial pronouncements, it has been decided that furnishing of Form 10 at any time before completion of assessment will be a sufficient compliance of requirements of the law. On this aspect, the Hon’ble Supreme Court in its judgment reported in 247 ITR 201 (SC) has categorically held that there will be substantial compliance if the said Form No. 10 is filed by the assessee before the ld. Assessing Officer prior to completion of assessment proceedings. Admittedly in this case, the assessee has
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 28/07/2025.