INCOME TAX OFFICER WARD-1 (EXEMPTIONS) , MANGALORE vs. M/S SAINT AGNES SOCIETY , MANGALORE

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 benefit 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 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 of 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 11 on 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.

In view of the amendment brought in Rule12 (2) of rules and under clause (c) to section 11( 2) , law has mandatory to file Form 10 electronically. However prior thereto under Rule 17, notice was required to be given and delivered before the expiry of the time allowed under sub-section (1) of section 139 for furnishing the return of income and there was no requirement of filling the form electronically.

In the present case, the form 10 has not been filed before the AO on or before the due date for filing the return u/s.139(1) as on ITA.599/Bang/2018 Page - 10 30.09.2014, Further the assessee has not filed the form electronically. Lastly the form submitted by the assessee was inchoate as it is lacking the necessary particulars in respect of income for which the benefit was sought u/s.11(2) of the Act. Under the relevant form 10 (supra), it was necessary for the assessee to give the specific details of the amount for which the assessee was seeking the benefit u/s.11(2) of the Act. However the needful has not been done and the CIT (A) based on the judgment of the Hon'ble Supreme Court in the matter of CIT v. Nagpur Hotel Owners' Assn [(2001) 247 ITR 201] and more particularly in view of the entry made in the concerned column of the IT return, had allowed the benefit u/s.11(2) of the Act.