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Facts
The assessee, a charitable trust, filed its Income Tax Return (ITR) and Form 10B for AY 2022-23 belatedly. The CPC processed the return under Section 143(1) and disallowed the exemption claimed under Section 11 due to late filing, leading to a substantial demand. The Ld. CIT(A) upheld this disallowance.
Held
The Tribunal noted that the CIT(E) had subsequently condoned the delay in filing Form 10B, and the Jurisdictional AO had passed a rectification order under Section 154, allowing the Section 11 exemption and determining nil taxable income. Consequently, the Tribunal found the appeal infructuous and allowed the assessee's claim.
Key Issues
Eligibility for Section 11 exemption for a charitable trust despite belated filing of ITR and Form 10B, and condonation of delay for Form 10B.
Sections Cited
Section 11, Section 12A(1)(ac)(i), Section 2(15), Section 80G(5)(i), Section 143(1), Section 139(1), Section 139(4A), Section 119(2)(b), Section 250, Section 154, Section 80P
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE, SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.925/Del/2024 (ASSESSMENT YEAR 2022-23) Shree Bankey Bihari ADIT Educational Society CPC, Bengaluru Ghaziabad Vs. 0.5KM, towards Hapur from Masuri Canal Masuir Dasna Ghaziabad (U.P.) PAN-AADTS 4243G (Appellant) (Respondent)
Assessee by Shri P. K. Gaur, CA Respondent by Shri Dharm Veer Singh, CIT-DR Date of Hearing 06/05/2024 Date of Pronouncement 29/05/2024
ORDER PER S.RIFAUR RAHMAN, AM: 1. This appeal has been filed by the Assessee against the order of Learned Commissioner of Income Tax (Exemptions)-, New Delhi [“Ld. CIT(E)”, for short], dated 25/04/2024 for Assessment Year 2022-23. 2. The brief facts of the case are, the assessee is a trust filed its return of income for Assessment Year 2022-23 on 24/12/2022
2 ITA No.925/Del/2024 Shree Bankey Bihari Educational Society declaring income at Rs. NIL. The due date for filing of return of income for the impugned Assessment Year is on 07/11/2022. The Form-10B was filed on 24/12/2022. The return was processed u/s 143(1) on 14/08/2023 and raised the demand of Rs.7,76,22,820/. The CPC has disallowed the claim of the assessee u/s 11 for the reason that the assessee has filed the return of income late and not filed Form-10B on time as per the provisions. 3. Aggrieved with the above order, the assessee preferred an appeal before Ld. CIT(A) and filed detailed submissions before him the same is reproduced below: “5. Submissions of the appellant: 1) That the appellant has e filed its ITR of the AY 2022-23 on 24.12.2022 vide acknowledgement no. 863822731241222 on 24.12.2022 declaring income of Rs. Nil and also e-filed audit report on Form 10B vide acknowledgement no. 863623370241222 on 24.12.2022. 2) The main object of the society is advancement of education, medical relief for general public and to open, run and manage schools, college and educational institutions of all types of education and to open, run and manage medical centres/ hospitals/ medical camps to provide medical relief for general public on charitable basis. The society has set up a college in village Dasna Masuri to impart dental education in BDS and MDS degree. The college is approved by the Dental Council of India, New Delhi and is affiliated with Chaudhary Charan Singh University, Meerut. The society is also running a hospital to provide medical facilities to general public on charitable basis i.e. either at nominal cost or free of cost to poor people. The society also regularly arrange medical camps in the rural areas in Ghaziabad, Pilkhuwa, Muradnagar, Modinagar etc. to provide free medical facilities to the poor people of the village.
3 ITA No.925/Del/2024 Shree Bankey Bihari Educational Society 3) The society is registered u/s 12A(1)(ac) (i) of the Income Tax Act. Unique registration number is AADTS4243GE20210 is valid from AY 2022-23 to AY 2026-27. 4) The society is registered u/s 80G(5)(i) of the Income Tax Act, Unique registration number is AADTS4243GF20011 is valid from AY 2022-23 to AY 2026-27. 5) The society carries education activity, relief of the poor which are of the charitable nature as defined in Sec. 2(15) of the Act and claimed exemption u/s 11 of the Act during the relevant year. 6) The total receipts of the society during the year under consideration was Rs. 14,72,43,667/- and amount applied for charitable purposes in revenue nature was Rs. 14,23,55,603/- and net surplus comes to Rs.48,88,064/- which is claimed exemption u/s 11 in ITR for set apart for future. 7) That the society has received an intimation u/s 143(1) dated 14.08.2023 for AY 2022-23 where the Department has completely ignored Rs. 14,23,55,603/- i.e. the amount applied for charitable purposes in revenue nature and net surplus of Rs. 48,88,064/- which is claimed as exemption u/s 11 in ITR and processed the return by imposing tax on total receipts of the society i.e. on Rs. 14,72,43,667/- and imposed a tax liability of Rs. 6,26,70,684/- and interest thereon of Rs. 1,38,01,265/-. Hence, total Net amount payable is 7,76,22,820/- as per the intimation. 8) That as per the Income Tax Act, due date to file tax audit under Form 10B is 30th September of the relevant year and last date to file corresponding ITR is 31st October of the relevant year. For the AY 2022-23 the society has authorized 2 trustees namely Mr. G.S. Sharma (Chairman of the Society) and Mr. Manoj Gupta (General Secretary of the Society) to look over the work of accounts finalization and signing of the balance sheet. However, when the accounts were put up before the members of the society for finalization and signing of the accounts there were unavoidable differences among the members of the society due to which the books of accounts could not be signed and finalized by the management of the society before the specified date. Later on, after the resolution of the differences the accounts got signed on 23rd December, 2022 and thereafter ITR and audit report were also submitted on 24th December, 2022 by the auditor of the society. The senior accountant of the society Ms. Jyoti Verma has filed an affidavit in this regard. 9) That the society is running since 2001 for past more than 20 years and been regularly being assessed to tax and regularly complied the provisions of income tax and disposed its tax liability in a timely manner. However, due to some unavoidable differences during the AY 2022-23, the return and tax audit report could not be submitted within the specified.”
4 ITA No.925/Del/2024 Shree Bankey Bihari Educational Society 4. After considering the detailed submissions of the assessee Ld. CIT(A) rejected the claim of the assessee by relying on the decision of the ITAT Mumbai Bench in the case of Janki Vaishali Co-operative Housing Society Limited in ITA No.944/Mum/2022 for Assessment Year 2018-19. The decision relied by the Ld. CIT(A) is not relating to Section-11 but relating to issues involved in 80AC and 80P. 5. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal:- “1. That the order passed u/s 250 by Ld CIT Appeals is arbitrary, excessive, unjustified and illegal on the facts and in the circumstances of the case and is liable to be set aside as the AO denied claim of exemption u/s 11 merely on the ground that the assessee has not e-filed the audit report in form 10B at least one month prior to the due date of furnishing return u/s 139(1) and taxed the total receipts of Rs. 14,72,43,667/- whereas the assessee applied amount for charitable purposes in revenue nature of Rs. 14,23,55,603/- and net surplus comes to Rs.48,88,064/- which is claimed exemption u/s 11 in ITR for set apart for future. 2. That the order passed u/s 250 by Ld CIT Appeals is totally wrong, baseless and irrelevant because the facts of the case are different than the facts on which the order is passed. The assessee is a trust/society registered u/s 12A(1)(ac)(i) and 80G(5)(i) of the Income Tax Act and claimed exemption u/s 11 whereas the Ld CIT Appeals has assumed that the assessee is a co-operative society and has claimed deduction u/s 80P(2)(d) i.c. deduction in respect of interest received from deposits kept in co-operative banks. The appeal should be set aside.” 6. At the time of hearing, the Ld. AR submitted as under:- “1. The Appellant Society had filed its return of income on 24.12.2022 declaring nil taxable income after claiming application of income u/s 11 of the Act of Rs.14,23,55,603/- against receipt of Rs.14,72,43,667/-. Audit Report in Form 10B had also been filed by the Appellant Society alongwith the return of income on 24.12.2022.
5 ITA No.925/Del/2024 Shree Bankey Bihari Educational Society 2. That the CPC, Bangaluru had processed the return and had issued Intimation dated 14.08.2023 wherein claim for exemption u/s 11 of the Act was rejected on the ground that audit report had not been filed before one month from the due date for filing return of income u/s 139(1) of the Act. 3. That the Appellant Society had filed appeal before CIT(A) against the aforesaid Intimation. The Appeal was decided by Addl./JCIT (A)-3, Hyderabad vide his order dated 12.02.2024 wherein by wrongly referring to provisions of section 80P of the Act he had rejected the contention of Appellant Society. The present appeal has been filed against the aforesaid order of Addl./JCIT(A). 4. The Appellant Society, apart from following the process of filing appeal against Intimation u/s 143(1) of the Act, had also filed an application before CIT, Exemption, Lucknow for condonation of delay in filing the report in Form 10B. Hon'ble CIT(E) vide his order dated 25.04.2024 has granted condonation of delay in filing Form 10B for assessment year under reference. A copy of aforesaid order is being submitted herewith as Annexure-A. 5. That the Appellant Society pursuant to the aforesaid order of CIT(E), Lucknow had filed a rectification application before the jurisdictional AO requesting him to grant exemption u/s 11 of the Act determining taxable income at nil. The AO Exemption Circle, Ghaziabad, the jurisdictional AO has passed an order dated 06.05.2024 pursuant to condonation of delay allowing exemption u/s 11 of the Act and determining taxable income at nil as declared by the Appellant Society in its return of income. A copy of the aforesaid order is being submitted herewith as Annexure-B. 6. In view of the facts of the case, it is submitted that since Intimation u/s 143(1) dated 14.08.2023 has already been rectified by the JAO and exemption u/s 11 has been duly allowed, the present appeal has become infructuous This Hon'ble Bench of Tribunal may pass the order accordingly. 7.It may further be added that apart from the fact that the issue has already been decided in favour of the Appellant Society by way of rectification order passed by the JAO, otherwise also the appeal of the Appellant deserve to succeed in view of Instruction of CBDT dated 23.04.2019, copy of which has already been submitted in the Paper Book and various decisions of Hon'ble Benches of ITAT, including the decision of ITAT Delhi Bench in ITA No.2161/DEL/2022 dated 13.10.2022 in the case of Conference of Religious India v. Ward Exemption 1(3) wherein facts of the case were similar to the facts of the case of the Appellant Society. A copy of the aforesaid decision is being submitted herewith as Annexure-C.”
6 ITA No.925/Del/2024 Shree Bankey Bihari Educational Society 7. On the other hand, the Ld. DR submitted that the assessee has filed its return of income and Form 10B in delay. He submitted that the assessee has not finalized its account and he relied on the findings of the lower authorities.
In rejoinder, the Ld. AR submitted that return of income was filed u/s 139(4A) and submitted that the decision of Ld. CIT(A) cannot be relied because the decision is based on the Section 80P and there is no relevance in the present case.
Considered the rival submissions and material placed on record. We observed that assessee has filed its return of income on 24/12/2022 and the return should have been filed on or before 07/11/2022 (extended due date). The assessee has also filed Form -10B on 24th December, 2022. We observed from the facts on record and also in the similar facts on record the ITAT, SMC Delhi Bench has considered the similar issue and decided the issue in favour of the assessee by observing as under:- “7. Strong reliance was placed on the instruction of CBDT F. No.173/193/2019 –ITA –I dated 23.04.2019 wherein the CBDT has clarified with regard to the time allowed for filing of the return of income subsequent to the insertion of clause (ba) in sub section 1 of section12A of the IT Act which includes the IT return filed within the time allowed u/s. 139 of the Act. The contention of the assessee were dismissed by the CIT(A) who was of the firm belief that return has been filed beyond due date as mandated in section 139 (1) of the Act. The CIT(A) also dismissed the claim of the assessee that it is squarely covered by the CBDT instruction (supra) and the CIT(A) accordingly dismissed the appeal of the assessee.
7 ITA No.925/Del/2024 Shree Bankey Bihari Educational Society
Before me the Counsel reiterated what has been stated before the lower authorities and once again relied upon the CBDT circular (supra). The DR strongly supported the findings of the CIT(A).
I have given a thoughtful consideration to the orders of the authorities below. The undisputed facts are that the assessee filed its return of income on 23.02.2021. It is also not in dispute that the due date for this assessment year has been extended till 15.02.021. This means that there was a delay of 7 days but considering the pandemic period and the decision of the Hon’ble Supreme Court by which the Hon’ble Supreme Court has extended the period of limitation across board, I am of the opinion that the delay of 7 days deserves to be condoned. In any case the return was filed before 31.03.2021 which is the last date for filing a belated return of income. It would be pertinent to refer to the above CBDT Circular which is as under :-
8 ITA No.925/Del/2024 Shree Bankey Bihari Educational Society
9 ITA No.925/Del/2024 Shree Bankey Bihari Educational Society
In my considered opinion the language of the aforementioned Circular is very clear and unambiguous in so far as the return of income filed u/s. 139 of the Act is concerned. Section 139 has several sub sections (1), (2), (3), (4), (4a), (5). I am of the considered view that if the return is filed within the specified time limit of sub section of 139 would be eligible for the benefit given by the above mentioned CBDT circular and should avail the benefit of exemption u/s. 11 of the Act. In my considered opinion the CIT(A) erred in misinterpreting the aforementioned circular and, therefore, to that extent the order of the CIT(A) is erroneous and deserves to be set aside the grievance of the assessee is allowed.
The second substantive grievance of the assessee is that the delay has not been condoned inspite of CBDT circular No.06/2020 dated 19.02.2020. The above said circular is as under :-
In the light of the mandate of the CBDT in the aforementioned circular I direct the CIT(A) exemption to consider the return of the assessee and allow the benefit as per the provisions of the law.
Respectfully following the above decision, we are inclined to 10. allow the claim raised by the assessee and it is also brought to our
12 notice that the assessee has obtained the condonation of delay in filing Form-10B u/s 119(2b) from the office of the CIT (Exemptions), Lucknow dated 25/04/2024, the same is placed on record. Based on the above development, it is submitted before us that the Jurisdictional AO has already passed the rectification order u/s 154 of the Act. The appeal filed by the assessee is against the order passed u/s 143(1) of the Act since the grievance of the assessee is already addressed by the jurisdictional AO, the present appeal itself becomes infructuous. 11. In the result, the appeal filed by the Assessee is allowed. Order pronounced in open Court on 29th May, 2024.
Sd/- Sd/- (VIMAL KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 29/05/2024 Pk/sps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI