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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Ms. Annapurna Gupta & Shri T.R. Senthil Kumar
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member
ITA No. 24/Ahd/2022 Assessment Year 2018-19
Association of Indian Deputy Commissioner Panelboard of Income Tax, CPC, Manufacturer Rushil Vs Bengaluru Central House, 2nd Floor, Near Processing Centre, Neelkanth Green Bengaluru-560500 Bunglows, Off Sindhu (Respondent) Bhavan Road, Ahmedabad-380058 PAN No:AANCA4932F (Appellant) Appellant by :Shri Tushar Hemani, Sr. Advocate & Shri Parimalsinh B. Parmar, A.R. Respondent by : Ms. Sudhiksha Rani, Sr.D.R. Date of hearing : 08-07-2022 Date of pronouncement : 22-07-2022 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
The present appeal has been filed by the Assessee against the order dated 24.12.2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “NFAC”), against the order passed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2018-19.
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2 The brief facts of the case is that the assessee is a Trust registered u/s. 12AA of the Act. For the Assessment Year 2018-19, the assessee filed its Return of income on 31/08/2018 declaring Nil income. The assessee received receipts amounting to Rs. 48,00,000/- out of which Rs. 1,37,628/- was applied towards the object of the trust, whereas Rs. 46,62,372/- was applied as per clause (2) of Section 11 of the Act. The assessee received a communication from the Assessing Officer informing the assessee has not filed the Audit Report. Immediately thereafter, the assessee realized its mistake and filed the Audit Report in Form 10B on 15.03.2019 by uploading the same in electronic mode. This Return of Income was processed by the Central Processing Centre, Bangalore (for short CPC) and vide order dated 07.12.2019 denying the exemption u/s.11 of the Act and demanding a tax of Rs. 16,55,288/-.
Aggrieved against the same, the assessee filed an appeal before the NFAC. The assessee submitted that Form 10B has not been filed within due time along with the Return of Income. However, Form 10B was filed belatedly on 15.03.2019. Therefore the assessee cannot be denied the benefit of Section 11 & 12 of the Act. The Ld. NFAC held that the assessee having filed Form 10B belatedly the disallowance of Rs. 48,00,000/- (137628 + 4662372) in the intimation order passed u/s. 143(1) is in order.
3.1. The Ld. CIT(A) held that as per Rule 12(2) of the Income Tax Rules, Form 10B shall be submitted electronically with effect from 01.04.2016 applicable for the Assessment Year 2016-17 onwards.
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As per the CBDT Circular 273 dated 03.06.1980, the CBDT has authorized the jurisdictional CIT/DIT to condone the delay in filing forms such as Form 10 & 10B. Thus, the CIT(A) has not been empowered u/s. 119(2)(b) of the Income Tax Act to condone the delay in filing Form 10B. Therefore, with due respect to the authorities relying upon by the assessee, the appeal filed is without merit and the same is dismissed. The assessee has a remedy before the jurisdictional CIT/PCIT/DIT for condoning the delay in filing Form 10B and claim benefit of Section 11 of the Act.
Aggrieved against this order, the assessee is in appeal before the Tribunal. Ld. Senior Counsel, Mr. Tushar Hemani appearing for the assessee submitted that the assessee is a charitable institution and it has also registered by the Commissioner u/s. 12AA of the Act. Similar issue arose in assessee’s own case for the Asesment Year 2017-18 wherein the assessee challenged the order u/s. 154 of the Act, wherein Ld. CIT(A) vide order dated 28.08.2020 condoned the delay and thereby allowed the appeal and the exemption u/s. 11 of the Act was granted to the assessee. The Ld. Senior Counsel also submitted the condition to file Form 10B along with the Return of Income is directory in nature and failure to file such Form NO. 10B is a technical or venial breach causing no revenue loss to the department. Such failure cannot lead to grave consequence of denying the exemption u/s. 11 of the Act.
4.1. The ld. Senior Counsel further relied on the judgment of jurisdictional High Court in the case of CIT vs. Xavier Kelavani Mandal P. Ltd. (2014) 41 taxmann.com 184 (Gujarat) and also
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relied on the judgment of jurisdictional High Court in the case of CIT vs. Mayur Foundation (2005) 274 ITR 562 (Gujarat). The Ld. Counsel also relied on the judgment of the Andhara Pradesh High Court in the case of CIT vs. Andhra Pradesh State Road Transport Corporation (2006) 285 ITR 147 (AP) and also relied on the judgment of Calcutta High Court in the case of CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 65 Taxmann.com 273 (Calcutta) in support of its case.
Per contra the ld. D.R. Ms. Sudhiksha Rani appearing for the revenue supported the order passed by the lower authorities and contended that when the assessee failed to file Form 10B along with return of income. The assessee is not eligible for exemption u/s. 11 of the Act as per the amendment in Finance Act, 2015 with effect from 01.04.2016. The case laws relied upon by the assessee counsel are clearly distinguishable since the same were rendered prior to the amendment taken place by Finance Act, 2015, which is now made it mandatory to file Form 10B along with the return of income. Further assessee’s reliance on CIT(A) order passed in assessee’s own case for the Assessment Year 2017-18 is also not legally valid decision, since CIT(A) has no power to condone the delay in filing Form 10B as per Section 119(2(b) of the Act. Thus the assessee Trust seems to be regularly defaulting in not filing Form 10B along with the Return of Income for the present assessment year also though, the amendment has taken place with effect from 01.04.2016 onwards. In the above circumstances of the case, the dismissal of the appeal by the Ld. CIT(A) is correct in law. The assessee has a proper remedy before the jurisdictional
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CIT/PCIT/DIT for condoning the delay in filing Form 10B. Therefore, the appellate order passed by the CIT(A) does not require any interference and the same is passed in accordance with the provisions of the Act and thereby requested to dismiss the appeal filed by the assessee.
We have given our thoughtful consideration and perused the material available on record, including the Paper Book filed by the assessee. On filing the original Return of Income by the assessee on 31.08.2018, the assessee was communicated by the Assessing Officer, the assessee has not filed the Audit Report in Form 10B along with the return. It is thereafter the assessee field Form 10B on 15.03.2019 by uploading the same in electronic mode. Thus, the assessee is well aware that there is a delay in filing Form 10B but however assessee seems to have not made any application for condonation of delay in filing Form 10B before concerned PCIT/CIT/DIT as provided u/s. 119(2)(b) of the Act.
6.1. There is recent Circular No. 7/2018 dated 20.12.2018 passed by the CBDT which reads as follows:
SECTION 119 OF THE INCOME-TAX ACT, 1961 - CONDONATION OF DELAY SECTION 119(2)(b) OF THE INCOME-TAX ACT, 1961 IN FILING OF FORM NO. 10 AND FORM NO. 9A FOR AY 2016-17 CIRCULAR NO. 7/2018 [F.NO.197/55/2018-ITA-I], DATED 20-12-2018
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
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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.
The Finance Act, 2015 amended section 11 and section 13 of the Act with effect from 1-4-2016 (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
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.
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.
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 allowed under the relevant provisions of the Act
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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 any one or more of the forms or modes specified in sub- section (5) of section 11 of the Act.
6.2. As per the above circular, filing of Form 10B electronically along with the Return of Income has become mandatory because of the amended Sections 11 & 13 of the Act, by the Finance Act, 2015. This being the first year of e-filing of these forms, representations have been received by the Board/field authorities stating that the Form No. 10 could not be filed with in the specified time for the assessment year 2016-17.
6.3. Considering the hardship faced by the assessee, the CBDT issued Circular No. 7/2018, authorizing Commissioner of Income Tax, to admit belated application in Form No. 10 in respect of Assessment Year 2016-17 which were filed belatedly. Thus, the finding of the ld. CIT(A) that, he has no power in condoning the delay in filing Form 10B is legally correct in law. As rightly argued by the Ld. D.R., the assessee seems to be consistently filing the above Form 10B belatedly, for which proper remedy left to the assessee is approaching the Administrative CIT, who is to condone the delay but not with filing appeal u/s. 250 of the Act. We do not find any infirmity in the order passed by the Ld. CIT(A) and it has open to the assessee to avail the appropriate legal remedy in accordance with Income Tax Act. We also further found that the case laws relied upon by the Ld. Senior Counsel will not be
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applicable to the present case, since in the case of Mayur Foundation cited (supra) wherein the Assessment year involved is 1980-81 and in the case of Xavier Kelavani Mandal P. Ltd. cited (supra) wherein the Assessment Year involved is 2006-07. In our considered view, filing of Form 10B is being mandatory because of the amendment made in Finance Act, 2015 with effect from 01.04.2016 applicable for the Assessment Year 2016-17. Therefore the above case laws are clearly distinguishable to the facts of the present case. Thus, the grounds raised by the assessee are hereby rejected and the appeal filed by the Assessee is dismissed.
In the result, the appeal filed by the Assessee is dismissed.
Order pronounced in the open court on 22 -07-2022 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 22/07/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद