GURU KRIPA RURAL DEVELOPMENT EDUCATIONAL AND RESEARCH TRUST ,UDUPI vs. JOINT COMMISSIONER OF INCOME TAX RANGE EXEMPTIONS , HUBLI

Per Shri A.K. Garodia, Accountant Member All these three appeals are filed by the assessee and the same are directed against three separate orders of ld. CIT(A)-10, Bangalore all dated 26.06.2018 for Assessment Years 2013-14 to 2015-16. All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience. 2. In all the three years, identical grounds are raised by the assessee and the issue involved is one and same i.e. regarding penalty levied by the AO u/s. 272A(2)(e) of the IT Act of Rs. 1,13,700/- in Assessment Year 2013-14, Rs. 77,200/- in Assessment Year 2014-15 and Rs. 40,700/- in Assessment Year 2015-16. 3. For the sake of brevity, we reproduce the grounds raised by the assessee before the Tribunal from Assessment Year 2013-14 in ITA No. 399/Bang/2019. The same are as under.

ITA Nos. 399 to 401/Bang/2019 Page 2 of 8 Tax effect relating to each Ground of Grounds of Appeal appeal (see note below) The learned Commissioner of Income Tax (Appeals) erred in upholding the order of 1. Rs.1,13,700/- penalty levied u/s.272A(2)(e) of the Act for the assessment year. The learned Commissioner of Income Tax 2. (Appeals) ought to have erred the order of Rs.1,13,700/- Penalty is barred by limitation. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that 3. there was no taxable income and the Rs. 1,13,700/- appellant had genuine difficulty for belated filing of return U/s.139(4A) of the Act. The learned Commissioner of Income Tax (Appeals) ought to have held the learned Respondent did not appreciated the 4. Rs.1,13,700/- explanation of the Appellant, properly and as such penalty is not warranted. The learned Commissioner of Income Tax (Appeals) ought to have held the appellant's 5. Rs.1,13,700/- case is one which falls u/s.273B of the Act and hence levy of penalty is not warranted. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that the appellant filed return 10-11-2016 for the 6. assessment years 2013- 2014 to 2015-2016 in Rs.1,13,700/- compliance with notice dated 05-08-2016 on coming to know its obligation notwithstanding the taxable income. The learned Commissioner of Income Tax 7. (Appeals) did not appreciate that penalty is Rs.1,13,700/- not warranted and is excessive. Appellant craves eave of the Hon'ble 8. Tribunal to add/modify/delete any other NA ground or grounds at the time of hearing. Total tax effect (see note below) 4. In course of hearing, it was submitted by ld. AR of assessee that there is delay of 225 days in filing these appeals before the Tribunal. The assessee has submitted an application for condonation of delay along with an affidavit. In the affidavit, it has been stated by Swamy Vikhyathananda, Chairman cum Managing Trustee of the assessee

ITA Nos. 399 to 401/Bang/2019 Page 3 of 8 trust that the order of CIT(A) dated 26.06.2018 was served on 21.07.2018 and he tried to contact the consultant Sri R.D. Shastry, C.A., Mangalore but he was not available and thereafter, he lost sight of papers and those papers were with Principal of the assessee society. It is also stated that in the meantime, there were financial and other problems in the assessee trust and the students in the school were suffering for midmeals and therefore, he had to go for financial assistances / donations and because of these reasons, he forgot about the orders confirming the penalties and thereafter, when the assessee trust received the letter from the AO for collection of penalty on 19.02.2019, the Chairman cum Managing Trustee immediately made efforts to contact Mr. R.D. Shastry, CA and on his advice, the appeal was filed before the Tribunal on 05.03.2019. In course of hearing, it was submitted by ld. AR of assessee that in view of these facts, the delay should be condoned. The ld. DR of revenue submitted that the delay should not be condoned. But in the facts of present case, we feel it proper to condone the delay and hence, condone the delay and admit the appeals. 5. Regarding the merit, it was submitted by ld. AR of assessee that in the written submissions in the statement of facts (SOF) filed by the assessee before the CIT(A), it has been explained in detail as to why there was delay in filing return of income. He submitted that these contents of SOF are reproduced by CIT(A) in para 5.1 of his order, as per the same, this is the explanation of the assessee that the assessee entertained bonafide belief that, since there was no income which is liable to tax, it is not mandatory to file the return of income. It was submitted that as per the provisions of section 273B of IT Act, no penalty should be levied u/s. 272A (2) also if the assessee proves that there was reasonable cause for the failure of the assessee. She submitted that in the facts of present case, section 273B is applicable and hence, penalty should be deleted. Reliance was placed on the Tribunal order rendered in the case of Shree Vasupujya Swami Shwetamber Jain Sangh Vs. JCIT in ITA Nos. 818 to 821/Bang/2018 dated 20.07.2018, copy of the Tribunal

ITA Nos. 399 to 401/Bang/2019 Page 4 of 8 order was submitted and our attention was drawn to para no. 7 of this Tribunal order and it was pointed out that it was held by the Tribunal in this case that the contention put forward by the assessee that it has a bonafide belief not to file the return of income prior to registration was a plausible explanation. He submitted that in the facts of present case, this Tribunal order is applicable and therefore, the penalty in the present case should also be deleted. The ld. DR of revenue supported the orders of authorities below. 6. We have considered the rival submissions. First of all, we reproduce para 5.1 from the order of CIT(A) because this para contains the relevant portion of statement of facts filed by assessee before CIT(A) in which the assessee has explained regarding the reasons about delay in filing return of income. The same is as under. “5. Decision 5.1 I have gone through the statement of facts, grounds of appeal as well as the penalty order dated 06.04.2017 passed by the JCIT, Hubballi. The appellant is a Trust and the due date for filing of the return was 30.09.2013. But the appellant filed the return on 10.11.2016 which is delayed by 1,137 days. The chairman of the trust stated that he was not aware of the requirement of filing return of income due to which the return was not filed in time. In the Statement of Facts the appellant has submitted as under: The Appellant is running Educational Institution at Hosmaru a back ward area in Karkala Taluk, Udupi District. 50% Of the total students are from very poor labour class families and such children are getting free education. The area is Naxalite affected area and the object of the trust, which is run by Saint Shri Shri Swamy Vikhyathananda is to make the children of that area as good citizens of India by providing good academic and moral quality education. The Institutions are recognized by the Government of Karnataka. major chunk of funds received by the rust either as school fees and as donation are applied for charitable object of the Trust to promote education. In compliance with directions of the learned Income Tax Officer (Exemptions) Ward - 1, Mangalore, dated 05-08-2016, the appellant filed return of income for the Assessment years 2013- 2014, 2014-2015 & 2015-2016 and there was no taxable income, in view of deduction u/s.11 of the Act. On 31-01-2017, the learned joint Commissioner of Income-tax, Range-Exemptions, Hubli, in F.No.61/272 A(2)(e)/

ITA Nos. 399 to 401/Bang/2019 Page 5 of 8 JCIT(E)/HBL/2016-17 issued a notice proposing to levy penalty u/s.272A(2)(e] on the ground there is violation of provision of section 139(4) of the Act. The appellant by its explanation dated 22-02-2017 submitted that it entertained bonafide belief that, since there was no income which is liable to tax it is not mandatory to file the return; but return was filed voluntarily, however when it was brought to notice about the requirement of filing voluntarily return of income, it has complied for all the assessment years, though there was no taxable income. The learned joint Commissioner of Income-tax, Range- Exemptions, Hubli on 06-04- 2017 passed an order levying penalty u/s.272A(2)(e) of the Act and levied penalty of Rs.1,13,700/-for the Assessment Year 2013-2014. The learned Point Commissioner of Income-tax, Exemptions Range, Hubli concluded that there was no genuine reason which prevented from filing of return of income before due date and has calculated penalty at the rate of Rs.100/-per day. The appellant is aggrieved by the order of penalty is filing this appeal before this Hon'ble Commissioner of Income tax (Appeals). Order of penalty dated 06-04-2017 has been communicated on appellant on 13-04- 2017.” 7. Now we reproduce para nos. 7 and 8 of this Tribunal order rendered in the case of Shree Vasupujya Swami Shwetamber Jain Sangh Vs. JCIT (supra). The same are as under. “07. Therefore, for AY 2013-14 relevant to FY 2012-13 for an assessee like the present, fell well below the taxable limit. As mentioned hereinabove, the income of the assessee trust for all the relevant four financial years was less than Rs.2 lakhs and therefore the assessee trust do not fall within the ambit of section 139(4A) of the Act and therefore the assessee is not required to file the return of income. As the assessee was not required to file the return of income as stipulated u/s.139(4A), therefore the provisions of section 272A(2)(e) are not applicable. Hence the imposition of penalty by the lower authorities is without any merit. Further we are of the opinion that assessee was granted the registration by the CIT (Ex) u/s.12A of the Act, only in 2016. Therefore, also we are of the opinion that the contention put forward by the assessee that it has a bonafide belief not to file the return of income prior to registration was a plausible explanation. Further the decision relied upon in the matter of Malad Jain Yuvak Mandal Medical Relief Centre, by the CIT (A) while dismissing the appeal of the assessee, is in fact in favour of the assessee which is clear from the following paragraphs : 6. In the present matter, it is not in dispute that the income of the assessees is exempt under section 10(22) of the Act. Further, the present matter is in respect of Assessment Years 1991-1992 and 1992-1993. Under section 139(4A), every person in receipt of income derived from property held under trust or held under some

ITA Nos. 399 to 401/Bang/2019 Page 6 of 8 legal obligation for charitable or religious purposes is required to furnish a return of income if its total income, ignoring exemptions under section 11 and section 12 of the Act, exceeds the maximum amount not chargeable to income Tax. In other words, section 139(4A) deals with filing of returns by Charitable or Religious Trust or Institution, whose income was exempt under section 11 and section 12 of the Act. The Tribunal has come to the conclusion that since the income of the assessee was exempt under Section 10(22) and, since, section 10 is not referred to in section 139(4A), and, since, section 11 and section 12 alone have been referred to in the said section 139(4A), the assessee - Trust was not bound to file the returns under section 139(4A). We do not agree with the view expressed by the Tribunal. Section 139(4A) enjoins upon every person who is in receipt of income derived from property held under trust for charitable or religious purposes to file a return if the total income in respect of which he is assessable exceeds the maximum amount which is not chargeable to Income Tax. The total income for this purpose is to be computed without giving effect to the provisions of section 11 and section 12 of the Act. Once the concept of total income which is required to be computed under the Act is kept in mind then, the assessee will have to file a return indicating the manner in which he has computed the total Income. Even if a Trust or an Institution claims that its income is exempt from tax under section 11 and section 12 of the Act, it is required to file a return because the assessee's claim for exemption could be decided by the Department only after the relevant material is placed before the Department by the filing of the assessee's return. Therefore, if an assessee who claims exemption under section 11 and section 12 is required to file the return, as stated above, then we do not see any reason as to why an assessee who claims exemption of income under section 10(22) should not file the return because, ultimately, the assessee's claim for exemption has to be decided by the Department only after the relevant material is placed before it by filing the returns. ......................." In the said case the total income of the assessee without giving effect to the provision of sections 11and 12 of the Act was more than the threshold limit. However in the present case total income of the assessee without giving effect of the provisions of section 11 and 12 of the Act was less than the threshold limit and therefore there was no occasion for application of this judgment. In view of this judgment no penalty is leviable as the order passed by the lower authorities is without merit. 08. In this regard, we may place reliance on the judgment of the Hon'ble jurisdictional High Court in CIT v. Vidya Sagar Educational Trust [(2009) 315 ITR 298], wherein the Hon'ble jurisdictional High Court on identical facts, was considering whether the assessee was required to file the return of income or not before 30.10.2001, There also the assessee was under the bonafide impression that the assessee was not required to file the return on or before 31.10.2001 as it had obtained exemption u/s.10(22) and 10(22) of the Act. In the present

ITA Nos. 399 to 401/Bang/2019 Page 7 of 8 case, 12A was granted on 25.07.2016, therefore the plea of the assessee is a plausible one and is therefore entitled to relief.” 8. The assessee has filed a paper book for foreach of these 3 years in which the assessee has enclosed the income and expenditure account for these three years. As per the income and expenditure account for the year ending 31.03.2013 relevant to Assessment Year 2013-14, Excess of Income over Expenditure was Rs. 1,60,494.15, for Assessment Year 2014-15, the Excess of Income over Expenditure is Rs. 1,95,281.18 and for Assessment Year 2015-16, there is Excess of Expenditure over Income of Rs. 1,33,362.79 which means that there was loss in Assessment Year 2015-16. In the case of Shree Vasupujya Swami Shwetamber Jain Sangh Vs. JCIT (supra), four Assessment Years were involved i.e. Assessment Years 2012-13 to 2015-16 and it is noted by Tribunal in para 7 of this Tribunal order as reproduced above that for all the relevant Financial Years, income was less than Rs. 2 Lakhs and therefore, the assessee does not fall within the ambit of section 139(4A) of the IT Act and therefore, the assessee is not required to file return of income. The Tribunal also held that as the assessee was not required to file the return of income as stipulated u/s. 139(4A), therefore, the provisions of section 272A(2)(e) are not applicable. As we have noted above, in the present case also, in all the three relevant Assessment Years, income of the assessee was below Rs. 2 Lakhs in each of these three years and therefore, this Tribunal order is squarely applicable in the present case and respectfully following the same, we delete the penalty in the present case also. 9. In the result, all the three appeals filed by the assessee are allowed. Order pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) Judicial Member Accountant Member Bangalore, Dated, the 05th July, 2019. /MS/

ITA Nos. 399 to 401/Bang/2019 Page 8 of 8 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order

Assistant Registrar, Income Tax Appellate Tribunal, Bangalore.