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Facts
The assessee, a charitable trust, filed its return of income declaring Nil income after claiming exemption under Section 11 of the Income Tax Act. The Assessing Officer (AO) proposed to deny the exemption due to a delay in filing Form 9A. The CIT(E) rejected the condonation application for the delay. The AO disallowed the exemption and depreciation claim. The CIT(A) dismissed the appeal.
Held
The Tribunal held that CBDT Circulars provide powers to condone delays in filing Form 9A and the return of income. The Tribunal also noted that several High Courts and Tribunals have held that furnishing forms is not mandatory if filed before assessment completion. The Tribunal deemed it fit to remit the issue to the AO to await the outcome of the second condonation application filed by the assessee.
Key Issues
Whether the delay in filing Form 9A and the return of income can be condoned, and if so, whether the exemption under Section 11 of the Act should be granted. Whether the disallowance of depreciation was justified.
Sections Cited
11(2), 139(1), 11(6), 234A, 234B, 234C, 11, 12, 119(2)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI, VICE – & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 12/06/2024 in respect of the A.Y. 2016-17 and raised the following grounds: “
1. The order passed by the learned Commissioner of Income Tax (Appeal), NFAC under section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
2. The appellant denies itself to be assessed at an income of Rs. 1,24,32,110/- as against the returned income of Rs. NIL/-, on the facts and circumstances of the case.
3. Grounds on disallowance of exemption claimed u/s 11(2), Rs.1,11,73,827/-: a. The authorities below have failed to appreciate that filing of form 9A within the time specified under section 139(1) of the Act is only directory in nature and not mandatory, on the facts and circumstances of the case. b. The authorities below ought to have allowed the accumulation as the appellant has satisfied all other condition and the exemption cannot be denied merely on a technical breach of delay in filing form 9A, on the facts and circumstances of the case. c. The appellant in the subsequent years has not claimed the money spent out of the accumulation fund as application of income, thus, there is no loss to the revenue and is revenue neutral, on the facts and circumstances of the case. d. Without prejudice and not conceding that filing of form 9A is directory in nature, the learned CIT(A) ought to have awaited the order of the learned CIT(E) in view of the condonation application filed by the appellant before the learned CIT(E) on 26.02.2020, on the facts and circumstances of the case.
4. Grounds on disallowance of depreciation, Rs.12,58,280/-: a. The authorities below have erred in disallowing the claim of depreciation of Rs.12,58,280/- on the fact and circumstances of the case. b. The authorities below have failed to appreciate that the appellant has not claimed application of income towards capital expenditure in previous years, thus no disallowance of depreciation could be made for the impugned year, on the facts and circumstances of the case. c. The learned assessing officer has verified the claim of depreciation for the assessment year 2017-18 and has allowed such claim, thus leading to the inference that the purchase of capita assets was not claimed as application, on the facts and circumstances of the case.
5. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, Page 3 of period and on what quantum the interest has been levied are not in accordance with law and further are not discernable from the order and hence deserves to be cancelled on the facts and circumstances of the case.
6. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
7. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.”
2. The brief facts of the case are that the assessee is a charitable trust registered under the provisions of the Income Tax Act. The assessee filed its return of income on 30/03/2017 and declared a Nil income after claiming exemption u/s. 11 of the Act. Thereafter the case has been selected under CASS and notice u/s. 143(2) was issued. Subsequently, a notice u/s. 142(1) was issued. The assessee filed their response electronically. The AO proposed to deny the exemption for which the assessee filed their reply and sought for the condonation in filing the form 10B which was also granted by the AO. Thereafter the assessee filed her application before the Ld.CIT(E) for condoning the delay in filing the form no. 9A which was rejected by the Ld.CIT(E). The Ld.CIT(E) had observed that the return has been filed after the due date i.e. on 30/03/2017 and the form 9A was also uploaded on 30/03/2017. The AO therefore concluded that the CBDT Circular No. 7/2018 granted powers to the commissioner for condoning the delay in filing the form 9A and not to condone the delay in filing the return of income and therefore the exemption has to be denied u/s. 11(2) of the Act. The AO had disallowed the claim of depreciation by relying on the amendment made w.e.f. 01/04/2015 to section 11(6) of the Act.
3. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The assessee had also relied on the CBDT Circulars and submitted that the second application to condone the said delay in filing the form 9A is pending before the Ld.CIT(E) and prayed to defer the appeal till
Page 4 of such time. The Ld.CIT(E) without considering the said submissions, had dismissed the appeal.
As against the said order, the present appeal has been filed before this Tribunal.
At the time of hearing, the Ld.AR submitted that by way of Circular No. 7/2018, the CBDT had granted powers to the Ld.CIT(E) to condone the delay in filing the form no. 10 and form no. 9A for the A.Y. 2016-17. The Ld.AR further submitted that as per the Circular No. 6/2020, the CBDT had also directed to consider the applications for condoning the delay in filing the return of income in respect of the A.Y. 2016-17 to 2018-19 and therefore submitted that the order of the AO as well as the Ld.CIT(A) is not correct. The Ld.AR further submitted that when the delay in filing the form no. 9A and return of income were condoned by the Ld.CIT(E), the assessee would get the benefits of deduction u/s. 11 and 12 of the Act. Insofar as the disallowance of depreciation, the Ld.AR submitted that they have not claimed the application of income towards the capital expenditure in previous years and therefore no disallowance of depreciation could be made in the current year. The Ld.AR also filed a paper book and also the judgment of the Hon’ble Delhi High Court as well as the orders of the Coordinate Benches of this Tribunal and submitted that the delay in filing the forms / audit report could not be a reason for denying the deductions. The Ld.AR also filed the copies of the Circular Nos. 7/2018 and 06/2020.
The Ld.DR submitted that the assessee had not filed their return of income as well as form no. 9A within the stipulated period and therefore the AO had rightly denied the deductions including the depreciation.
We have heard the arguments of both sides and perused the materials available on record.
From the assessment order, we came to know that the Ld.CIT(E) had not condoned the delay in filing the form no. 9A by stating that the return
Page 5 of has been filed after the due date for filing the said return. Relying on the said order, the AO had denied the exemption claimed u/s. 11 of the Act. We have perused the Circular No. 7/2018 and 6/2020. In the first Circular dated 20/12/2018, the CBDT had granted powers to the commissioners to condone the delay in filing the form no. 9A and form no. 10 in respect of the A.Y. 2016-17. Similarly, the CBDT granted powers to condone the delay in filing the return of income along with the form no. 9A and form 10 in respect of the assessment years 2016-17, 2017-18 & 2018-19. From the said circulars, it is evident that the Ld.CIT(E) has powers to condone the said delays if there are valid reasons. The Ld.CIT(E) on the wrong presumption that the return was filed belatedly and therefore the application to condone the delay in filing the form no. 9A could not be accepted. Subsequent to his order dated 27/12/2018, another Circular No. 6/2020 has been issued by the CBDT granting powers to the commissioners to condone the delay u/s. 119(2)(b) of the Act in filing the form no. 9A as well as the return of income.
We have also considered the submissions made by the assessee that a second application to condone the said delay in filing the form no. 9A as well as the return of income has been filed before the Ld.CIT(E) pursuant to the Circular No. 6/2020 dated 19/02/2020. In the said circular itself, the Board has given the difficulties faced by the assessees and therefore given powers to the CIT(E) to deal with the said applications. We have also considered the fact that, irrespective of the Circular for accepting the belated filing of the form no. 9A, several Hon’ble High Courts as well as the Tribunals have held that the furnishing of forms is not mandatory one if the said forms are filed before the completion of the assessment. If the forms are filed, then the AO has to consider the said forms and pass orders in accordance with law. Further, the assessee had submitted the second application before the Ld.CIT(E) pursuant to the Circular No. 6/2020 dated 19/02/2020 and sought for the condonation of the delays in filing the form no. 9A and return of income. The Ld.CIT(A) had not accepted the said claim by stating that both the authorities are in different platforms and therefore rejected the prayed to defer the hearing till the Ld.CIT(E) had decided the application.
Page 6 of Considering the said submissions made by the assessee and also considering the Circulars issued by the CBDT, we are of the view that the assessee should be granted an opportunity to pursue his remedy before the Ld.CIT(E) which admittedly they have done it on 26/02/2020. If the Ld.CIT(E) had considered the said application and condoned the said delay, the assessee will get the benefits granted u/s. 11 of the Act. In such circumstances, the assessee would be in a position to enjoy the benefits of the provisions. We, therefore deem it fit to remit this issue to the file of the AO and direct him to await the outcome of the second application filed by the assessee for condoning the delays in filing the form no. 9A as well as the return of income and thereafter proceed in accordance with law. We, therefore set aside the orders of both the authorities and remitted the issue to the file of the AO for fresh consideration based on the above directions given by us. We have also requested the Ld.CIT(E) to consider the application dated 26/02/2020 filed by the assessee based on the circulars issued by the CBDT and also on the basis that the assessee is a charitable organization and the mere delay in filing of form no. 9A would not be a reason to deny the exemption claimed u/s. 11 of the Act.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 02nd March, 2026.
Sd/- Sd/- (PRASHANT MAHARISHI) (SOUNDARARAJAN K.) Vice – President Judicial Member Bangalore, Dated, the 02nd March, 2026. /MS /