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Facts
The assessee, a trust registered u/s.12A, filed its Return of Income for AY 2018-19 belatedly. The CPC passed an order u/s.143(1) taxing the entire gross receipts, denying exemption u/s.11 due to non-filing of Form 10B. The CIT(A) confirmed this addition.
Held
The Tribunal held that in the absence of Form 10B, the income should be calculated on a commercial principle. The CPC's action of taxing entire receipts under section 143(1) solely for non-filing of Form 10B was set aside. The Assessing Officer was directed to tax only the net income after verification.
Key Issues
Whether the entire gross receipts can be taxed under Section 143(1) due to the non-filing of Form 10B, instead of taxing only the net income after considering expenses.
Sections Cited
250, 143(1), 1961, 139(1), 11, 12A, 10B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by Assessee against the order of ld.Addl./Joint Commissioner of Income Tax(Appeal)-1, Gurugram passed under section 250 of the Income Tax Act, 1961 for the A.Y.2018-19 dated 17.03.2025, emanating from order u/s.143(1) of the Income Tax Act, 1961, dated 16.07.2019. The Assessee has raised following grounds of appeal :
1. On the facts and circumstances of the case and in law the Additional/Junior CIT(A)-1, Gurugram, NFAC erred in confirming the action of the 'AO', CPC of denying exemption under S. 11 in the intimation u/s 143(1) for delayed filing of Form 10B
2. On the facts and circumstances of the case and in law the Additional/Junior CIT(A)-1, Gurugram, NFAC erred in not accepting the claim of the appellant, that the addition, if any, ought to have been restricted only to the Net commercial income and not the entire Gross Receipts.
The appellant craves leave to add to, amend, alter, modify, delete or add a new ground of appeal before or at the time of hearing.”
Findings & Analysis : 2. We have heard both the parties and perused the record placed before us. In this case, Assessee has filed Return of Income for A.Y.2018-19 on 27.11.2018. The due date for filing Return of Income u/s.139(1) was 30.09.2018. An order u/s.143(1) was passed by Centralized Processing Centre(CPC) on 16.07.2019 assessing the total income of the Assessee at Rs.17,34,624/- in place of Rs.3,12,920/- shown by assessee in the Return of Income.
Aggrieved by the order u/s.143(1), Assessee filed appeal before ld.CIT(A). Ld.CIT(A) confirmed the addition.
Aggrieved by the order of the ld.CIT(A), Assessee filed appeal before this Tribunal. Ld.AR submitted that Assessee is a Trust registered u/s.12A of the Income Tax Act, 1961, and Assessee had claimed exemption u/s.11 of the Act. However, ld.AR further submitted that due to technical reasons, Form No.10B was not filed along with the Return of Income. Ld.AR submitted that therefore, Assessee’s claim for exemption u/s.11 was denied, but ironically, Entire Gross Receipts has been taxed u/s.143(1) of the Act. Ld.AR pleaded that entire Gross Receipts cannot be taxed as there are expenditures and only the Net Income should have been taxed. Ld.AR took us through the page no.12 of the ld.CIT(A)’s order which has reproduced Income & Expenditure Account. Ld.AR, therefore, submitted that only the Net Income should have been taxed. Ld.AR relied on the decisions of the ITAT Pune in for A.Y.2018-19 and ITAT Pune Bench’s order in for A.Y.2015-16.
It is observed from order u/s.143(1) of the Act, that total receipts have been taxed. In the ld.CIT(A)’s order, the Income and Expenditure Account has been reproduced, the same is reproduced here as under : PARTICULARS AMOUNT(RS.) COMMERCIAL INCOME INTEREST FROM BANKS 4,34,698 OTHER RECEIPTS 12,99,426 DIVIDEND 500 TOTAL COMMERCIAL INCOME –(A) 17,34,624 PARTICULARS AMOUNT(RS.) EXPENSES FOR DCOMMERCIAL INCOME EXPENSES ON THE OBJECTS OF THE 5,008,308 TRUST : 1,18,153 EDUCATION 5,540 DEPRECIATION 3,30,681 AUDIT FEES 1,98,830 MISCELLANEOUS EXPENSES EMPLOYEE BENEFIT EXPENSES TOTAL COMMERCIAL EXPENSES –(B) 11,61,512 NET COMMERCIAL INCOME (A-B) 5,73,112 4.1 Thus, as per the submission of the Assessee which has been reproduced by the ld.CIT(A), the Net Income was Rs.5,73,112/-. The assessee had raised this ground before the ld.CIT(A) and also relied on the decisions of the ITAT. However, ld.CIT(A) has not bothered to decide this issue. However, since ld.CIT(A) has reproduced the Income and Expenditure Account of the Assessee in his order, it means that ld.CIT(A) has verified the impugned Income and Expenditure Account.
Ld.CIT(A) has also recorded a fact that Assessee has not filed copy of Form No.10B during the appellate proceedings. We will also like to note that Assessee has not filed copy of Form No.10B before us.
Be it as it may be, in the absence of Form No.10B, the Income of the Assessee needs to be calculated on the Commercial Principle. Assessee has claimed deduction of various expenses. In the order u/s.143(1) of the Act, the CPC has considered entire receipts as Income of the Assessee. There is no provision u/s.143(1) for the CPC to consider entire receipts as Income of the Assessee, only because Form No.10B was not filed. Therefore, the order u/s.143(1) taxing the entire receipts is set-aside. Accordingly, we direct the Assessing Officer to tax only the Net Income after verification. Assessee shall file all the necessary details before the Assessing Officer. Accordingly, Ground No.2 raised by the Assessee is allowed for statistical purpose.
Ground No.1 : 7. This Ground No.1 is not pressed by the ld.AR, hence, Ground No.1 raised by the Assessee is dismissed as not pressed.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 25 June, 2025.