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Facts
The assessee society, an educational institution, filed an original return declaring income of Rs.14,32,822/- and claiming exemptions under Sections 10A/10AA, leading to Nil taxable income. A revised return was allegedly filed belatedly, reducing the declared income and claimed exemption. The AO and CIT(A) disallowed the exemption claims due to lack of substantiation and considered the revised return invalid, assessing income at Rs.14,32,820/-.
Held
The Tribunal dismissed the appeal, holding that the revised return was non-est as it was filed beyond the statutory time limit. It upheld the disallowance of exemptions under Sections 10A/10AA due to the absence of supporting evidence. The additional ground for exemption under Section 10(23C)(iiiad) was also rejected because the original return was filed belatedly, and the necessary facts to ascertain its eligibility were not on record.
Key Issues
Validity of belatedly filed revised return; Admissibility of exemption claims under Sections 10A/10AA and 10(23C)(iiiad) without proper substantiation and timely filing of original return.
Sections Cited
Section 143(3), Section 143(3A), Section 143(3B), Section 10A, Section 10AA, Section 119(2)(b), Section 10(23C)(iiiad), Section 139(5), Section 139(4C)(c), Section 139(1)
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI RAVISH SOOD
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee society is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 02.07.2024, which in turn arises from the order passed by the A.O under Sec.143(3) r.w.s. 143(3A) & 143(3B) of the Income-tax Act, 1961 (in short ‘the Act’) dated 13.04.2021 for the assessment year 2018-19. The assessee society has assailed the impugned order on the following grounds of appeal:
“1. That under the facts and the law the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi erred in passing the Order ex-parte without considering the submission of the Appellant. Prayed that addition of Rs.14,32,820/- be deleted.
2. That the Ld. Commissioner of Income Tax (Appeals) further erred in not appreciating the facts that the original Return wherein the income was offered at Rs.14,32,822/- was an error on the part of the person filing the Return, the actual income as per Profit and Loss Account at Rs.2,32,822/- for which revised Return was filed which neither the Ld. AO nor the Ld. CIT (Appeals) accepted. Prayed that original Return declaring income at Rs.14,83,000/- was erroneously filed which is not the income of the Appellant and the actual income of the Appellant is only Rs.2,32,822/-. Prayed that income be assessed at Rs.2,32,822/-.
3. That under the facts and the law, the Appellant erroneously filed the Return of Income originally which was revised subsequently and audited accounts were filed. Prayed that income as per revised return at Rs.2,32,822/- be accepted.”
Also, the assessee society has raised an additional ground of appeal which reads as under:
“That under the facts & the law, the Ld. CIT(A) erred in dismissing the appeal though appellant was not liable to tax, as it is existing solely for the educational purposes & its receipts does not exceed Rs.1 crore, therefore, in this case society is not liable to tax u/s. 10(23C), the addition be deleted.”
Shri G.S. Agrawal, Ld. Authorized Representative (for short ‘AR’) for the assessee society, at the threshold of hearing of the appeal, submitted that the present appeal involves a delay of 23 days. Elaborating on the reasons leading to the delay of 23 days involved in filing of the present appeal, the Ld. AR has filed an application seeking condonation of delay a/w. an “affidavit” dated 15.10.2024. It was submitted by the Ld. AR that as the delay involved in filing of the present appeal had occasioned due to bonafide reasons, therefore, the same in all fairness be condoned.
Per contra, Smt. Tarannum Verma, Ld. Sr. Departmental Representative (for short ‘DR’) has placed on record a counter affidavit of the A.O, dated 22.01.2025.
After considering the application filed by the assessee society seeking condonation of delay of 23 days involved in filing of the appeal and the “affidavit” dated 15.10.2024 a/w. medical certificates of the President of the assessee society and the counter affidavit filed by the A.O, dated 22.01.2025, I am of the view that as there were justifiable reasons leading to the delay of 24 days involved in filing of the present appeal which is not inordinate, therefore, the same merits to be condoned.
Succinctly stated, the assessee society had filed its return of income in “Form ITR-5” for A.Y.2018-19 on 10.02.2019, declaring an income of Rs. Nil. Ostensibly, the return of income filed by the assessee society is allegedly claimed to have been revised on 03.04.2020, declaring an income of Rs.Nil. Subsequently, the case of the assessee society was selected for scrutiny assessment u/s. 143(2) of the Act.
During the course of the assessment proceedings, the A.O observed that the assessee society in its original return of income filed on 10.02.2019 in “Form ITR-5”, had disclosed its income of Rs.14,32,822/- under the head profits and gains from business or profession, against which, it had claimed exemption u/ss.10A/10AA of the Act and disclosed its net taxable income at Rs.Nil. Thereafter, the assessee had allegedly filed a revised return of income on 03.04.2020, wherein it had declared its income at Rs.2,32,822/- under the head profits and gains from business or profession, against which, after claiming an exemption u/ss.10A/10AA of the Act of Rs.71,786/- the net taxable income was scaled down to an amount of Rs.1,61,036/-. Also, the assessee had along with its revised return of income filed a copy of the audit report dated 18.11.2020 a/w. financial statements. Accordingly, the A.O observed that the assessee society by allegedly revising its return of income had scaled down its gross total income/receipts from 14,32,822/- to Rs.2,32,822/-. It was observed by the A.O that the assessee society had not only failed to explain the reasons for reduction of its gross total income, but had also not furnished details of the exemption that was claimed in the original return of income. Apart from that, the A.O on a perusal of the e-filing portal of the assessee society noticed that though the revised return of income was filed by it u/s.119(2)(b) of the Act but the same was not processed for the condonation of delay therein involved.
The A.O taking cognizance of the fact that the assessee had not furnished any documentary evidence in support of its claim of reducing the gross total income from Rs.14,32,822/- to Rs.2,32,822/- and also, not furnished the details of its claim for exemption u/ss.10A/10AA of the Act, thus, after declining its aforesaid claim of exemption, worked out its income as was originally disclosed in the original return of income at Rs.14,32,822/- Accordingly, the A.O vide his order passed u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Act, dated 13.04.2021 determined the income of the assessee society at Rs.14,32,820/-.
Aggrieved, the assessee society carried the matter in appeal before the CIT(Appeals), but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under:
“5.1. The appellant has challenged the addition made of Rs.14,32,822/- the claim of deduction u/s.10A/10AA, without submitting sufficient evidences or counter arguments in support of his claim. Mere claiming that the AO erred in making the additions does not give an edge to the appellant. During the assessment proceedings, various statutory notices u/s.148/143(2)/142(1) alongwith detailed questionnaire were issued calling for information. In response to the above notices, the appellant has submitted its reply and after considering the reply and submission, the AO made an addition of Rs.14,32,822/- by disallowing deduction u/s.10A/10AA of the I.T. Act, 1961. Further, during-appellate proceedings, no response received from the appellant to substantiate its claim in support of grounds of appeal though enough opportunities of being heard were given to it, as tabulated in Para 3 above. The appellant has not made any argument much less submitted any evidence on the basis of which the proposition made by the AO in the impugned assessment order can be controverted. Hence, keeping in view all the stated facts and discussions and in the absence of any corroborative evidence or material /submission on records and further the available documentation indicates that the assessee has consistently defaulted in every stage of the assessment/appellate proceedings considering the established pattern of non- compliance, there is no reason to alter the decision of the AO. In view of this, the grounds raised by the appellant are dismissed.
6. In the result the appeal of the appellant is Dismissed.”
The assessee society being aggrieved with the order of the CIT (Appeals) has carried the matter in appeal before the Tribunal.
I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
Shri G.S. Agrawal, Ld. AR for the assessee society, at the threshold of hearing of the appeal, submitted that as the assessee society is an educational institution whose gross receipts during the subject year were below the amount prescribed u/s. 10(23C)(iiiad) of the Act, therefore, on the said count itself its income not liable to be assessed to tax. Elaborating further on his contention, the Ld. AR submitted that as the income of the assessee society as per the mandate of law was not liable to be brought to tax, therefore, there was no justification for the A.O to have made the impugned addition as the same did tantamount to collection of tax de-hors the law, which, thus, was violative of Article 265 of the Constitution of India. The Ld. AR in support of his aforesaid contention had relied on the following judicial pronouncements:
(i) Madanlal Mohanlal Sakhala Vs. Addl. CIT, (2023) 154 taxmann.com 178 ( ITAT, Mumbai) (ii) Pr. CIT Vs. H.P Housing & Urban Development Authority(HIMUDA), (2023) 157 taxmann.com 598 (P.H. High Court) (iii) Ena Chaudhari Vs. ACIT, (2023) 148 taxmann.com 100 (Calcutta High Court) (iv) Bhuneshwar Prasad Sahu Vs. DCIT, CPC, JAO-ITO, Bhatapara, TAXC No.201 of 2023 (C.G High Court)
Also, the Ld. AR submitted that though the assessee society had admittedly wrongly disclosed its income in “Form ITR-V”, but the department cannot be permitted to take advantage of the ignorance of the assessee society. The Ld. AR in order to buttress his aforesaid claim had relied on the CBDT Circular No.14(XL-35)/1955, dated 11.04.1955 and judgment of the Hon’ble High Court of Allahabad in the case of CIT-II, Lucknow Vs. Lucknow Public Educational Society (2009) 318 ITR 223 (Allahabad).
Carrying his contention further, the Ld. AR submitted that as the assessee society had been saddled with the taxes because of an inadvertent mistake on the part of its counsel who had wrongly disclosed its income, and also, erroneously raised a claim for exemption u/ss. 10A/10AA of the Act, therefore, the determination of its income and the consequential tax liability, which, defied all logic cannot be sustained and is liable to be vacated. The Ld. AR in support of his aforesaid contention had relied on the order of the ITAT, Chandigarh in the case of Punjab Agricultural University Vs. DCIT (Exemption), Chandigarh, & dated 18.12.2024.
Lastly, the Ld. AR submitted that though the assessee society had not raised any claim of exemption u/s.10(23C)(iiiad) of the Act in its original return of income, but had thereafter, remaining well within its right had raised the said claim before the Tribunal. The Ld. AR in support of his aforesaid contention relied on the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Pruthvi Brokers & Shareholders, (2012) 349 ITR 336 (Bom.)
Per contra, Smt. Tarannum Verma, Ld. Sr. DR had relied on the orders of the lower authorities. The Ld. Sr. DR submitted that as the claim of the assessee society that it is an educational institution existing solely for educational purposes and not for the purposes of profit, i.e. a sine-qua- non for claiming exemption u/s.10(23C)(iiiad) of the Act, was not discernible from the record, therefore, its additional ground of appeal, based on which, it had raised the claim for exemption u/s. 10(23C)(iiiad) of the Act does not merit admission. Elaborating further on her contention, the Ld. DR had taken me through Section 10(23C)(iiiad) of the Act which pre-supposes that the educational institution should be existing solely for the educational purposes and not for the purposes of profits.
As is discernible from the record, the assessee society had filed its return of income declaring an income under the head profits and gains of business or profession of Rs.14,32,822/-, which based on a claim of exemption u/ss.10A/10AA of the Act was reduced to Rs.Nil. Thereafter, the assessee society had allegedly filed a revised return of income on 03.04.2020, wherein it had disclosed an income of Rs.2,32,822/- under the head “profits and gains of business or profession”, which thereafter, based on its claim for exemption u/ss.10A/10AA of the Act of Rs.71,786/- was scaled down to Rs.1,61,036/-.
Before proceeding any further, I may herein observe that as the revised return of income was not filed by the assessee society within the stipulated time period as contemplated under sub-section (5) of Section 139 of the Act, therefore, the same is non-est in the eyes of law.
Apropos the original return of income that was filed by the assessee society by disclosing gross receipts of Rs.14,32,822/- under the head “profits and gain of business or profession”, which, thereafter, based on its claim for exemption u/ss.10A/10AA of the Act was scaled down to a net taxable income of Rs.Nil, it transpires that nothing was placed on record by the assessee society in support of its aforesaid claim of exemption u/ss.10A/10AA of the Act. Accordingly, the CIT(Appeals) had rightly approved the view taken by the A.O, wherein, the latter had after declining the assessee’s claim for exemption u/ss.10A/10AA of the Act, determined its income at Rs.14,32,820/-.
Considering the fact that the revised return of income was filed by the assessee society beyond the stipulated time period, I confine my adjudication by focusing on the original return of income that it had filed on 10.02.2019, wherein after claiming exemption u/ss.10A/10AA of the Act of Rs.14,32,822/, it had disclosed its income at Rs. Nil.
As observed by me hereinabove, in absence of any material having been placed on record by the assessee society to substantiate its claim of exemption u/ss. 10A/10AA of the Act, I find no infirmity in the view taken by the CIT(Appeals), who had rightly approved the view taken by the A.O and declined the said claim for exemption raised by the assessee society.
Apropos the assessee’s claim that as it is an educational institution, therefore, its income as per the mandate of Section 10(23C)(iiiad) of the Act is exempt, I am afraid that the same cannot be accepted for two fold reasons, viz. (i) that as the aforesaid claim of the assessee society would require to look into the facts beyond those available on record, i.e. as to whether or not the assessee society is existing solely for the educational purpose and not for the purpose of profit, therefore, as stated by the Ld. DR, and rightly so, the admission of the said additional ground is liable to be declined on the said count itself; (ii) alternatively, that for claiming exemption u/s. 10(23C)(iiiad) of the Act, the assessee society as per Section 139(4C)(c) of the Act was required to have filed its return of income for the subject year under sub-section (1) of Section 139 of the Act i.e. within the “due date” therein contemplated, which in the present case had not been done as the original return of income was belatedly filed on 10.02.2019 i.e. much beyond the stipulated time period contemplated under the said provision, therefore, for the said reason also its claim for exemption is even otherwise not admissible. Accordingly, the additional ground of appeal raised by the assessee society does not merit admission and, thus, rejected.
Before parting, I may herein observe that the Hon’ble Apex Court in 22. the case of Goetze (India) Ltd. Vs. CIT (2006) 284 ITR 323 (SC), had observed, that the A.O cannot allow a deduction other than that claimed by the assessee, except for, where the same had been raised based on a revised return of income filed by the latter. As in the present case before me, the assessee society had voluntarily disclosed gross income of Rs.14,32,822/- (supra) in its original return of income, therefore, no infirmity emerges from the orders of the lower authorities who had rightly assessed the assessee society on the said amount of income. Although I am not oblivion of the fact that the Hon’ble Apex Court in the case of Goetze (India) Ltd. Vs. CIT (supra) had carved out an exception that the assessee can raise a claim before the Tribunal, but I am afraid that nothing has been brought on record by the Ld. AR which would substantiate that the assessee society is entitled to raise a claim for exemption u/ss. 10A/10AA of the Act.
Be that as it may, I am of a firm conviction that as no infirmity arises from the well-reasoned orders of the lower authorities who had rightly assessed the assessee society at the income returned by it, therefore, I uphold the same. Thus, the Grounds of appeal No(s). 1 to 3 raised by the assessee society are dismissed in terms of the aforesaid observations.