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Facts
The assessee, a charitable trust, claimed accumulation of Rs. 99 lakhs under Section 11(2) but failed to file Form No. 10 by the due date. The AO added back the entire amount to the assessee's total income for non-compliance. The CIT(A) upheld the AO's order ex-parte.
Held
The Tribunal noted that Form 10B was filed and the utilization of funds was explained. However, the appeal before the CIT(A) was ex-parte, denying the assessee a reasonable opportunity. Therefore, the appeal order was set aside.
Key Issues
Whether the addition of the accumulated sum to the total income was justified due to the non-filing of Form 10 and whether the ex-parte order by CIT(A) denied a reasonable opportunity.
Sections Cited
11(2), 11(2)(c), 11(5), 139(1), 143(3), 250, 10(23C)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRIAMARJIT SINGH & SHRI ANIKESH BANERJEE
PER ANIKESH BANERJEE, J.M:
Instant appeal of the assessee was filed against the order of theLearned National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2017-18, date of order22.01.2024.The impugned order emanated from the order of the Learned Income-tax Officer, Exem.Ward 1(4), Mumbai (in short, ‘the A.O.’) passed under section 143(3)of the Act, date of order20/12/2019.
2 ITA No.1321 /Mum/2024 Kedarnath Vidya Prasarini 2. The assessee has taken the following grounds of appeal:-
“1. He Learned Income Tax Officer has erred in adding Rs.99,00,000/- to the total returned income of the assessee and the addition be deleted. 2. The Assessee craves leave to add, alter, amend, and / or modify the grounds of appeal.”
The brief facts of the case are that the assessee is a charitable trust. During the impugned assessment year, assessee filed the belated return. The assessee claimed Rs.99 lakhs towards accumulation / set apart under section 11(2), but failed to file the requisite prescribed form before due date specified under section 139(1) of the Act as envisaged in section 11(2)(c) of the Act. But the auditor filed the report under Form No.10B and has quantified the accumulation to the tune of Rs.70 lakhs as has been invested in the mode specified under section 11(5) and the balance amount of Rs.20 lakhs remained to be invested. In assessment, the Ld.AO added back the same with the total income of the assessee for violation of section 11(2)(c) of the Act for non submission of Form No.10. Aggrieved, the assessee filed an appeal before the ld. CIT(A). But the Ld.CIT(A) passed an exparte order and upheld the assessment order. Being aggrieved on the appeal order, the assessee filed an appeal before us.
When the appeal was called for hearing, none was present on behalf of the assessee. No adjournment petition was filed. The case was previously fixed on dated 13/06/2024 but none was present. The matter is adjourned and fixed on 25/07/2024. Considering the issue, we proceed to dispose of the appeal exparte qua for assessee after hearing the Ld.DR.
3 ITA No.1321 /Mum/2024 Kedarnath Vidya Prasarini 5. We heard the submission of the ld.DR, considered the documents available in the record and perused the orders of the revenue authorities. The assessee is a charitable trust. During the impugned assessment year, the assessee accumulated towards the accumulation / set apart funder under section 11(2) of the Act. The assessee submitted form 10B and the explanation was given for utilization of the fund under section 11(5) of the Act. The onlyfault from the end of the assessee was non-submission of Form No.10 read with section 139(1)and the entire accumulation / set apart fund is added back with the total income of the assessee. The issue is clearly depicted in the assessee’s financial statement. The filing of the form No.10 is not mandatory, but a procedural system which helps the Ld.AO to ascertain the utilization of fundsas per the Act. The Ld.CIT(A) passed an order exparte and has taken the same view as per the Ld.AO. The relevant paragraph of the appeal order is reproduced as below:-
“9. In the present case it is seen that:
(i) Firstly, appellant has failed to furnish the statement in prescribed form to the AO stating that the purpose and period of accumulation / set apart.
(ii) Secondly, appellant has failed to invest/deposit the entire money accumulated/set apart in the forms or modes specified in sub-section (5) (ii) Thirdly, as there is no statement filed, therefore the third conditions for filing before due date is also violated.
The appellant has failed to comply with the conditions prescribed in section 11(2) of the Act for accumulation/set apart. Further, it is seen that appellant has not submitted any reason for not filing the statement in prescribed form within the due date of filing u/s 139(1) of the Act. The Form no. 10 required assessee to
4 ITA No.1321 /Mum/2024 Kedarnath Vidya Prasarini submit many crucial particulars like details of amount, purpose and period of proposed accumulation or setting apart, whether these were invested or deposited in any of the specified modes, whether it has given statement regarding accumulation or setting apart of an amount as required u/s 10(23C),- which are relevant to determine eligibility to the exemption or otherwise. Thus, assessee's failure to file the declaration in Form - 10 denied the AO crucial data and particulars to decide eligibility to the exemption. Therefore, the claim of appellant was denied. In view of the above, I am of the view that AO was right in adding back Rs.99,00,000/- to income of appellant. Therefore, the order of the AO is upheld and contention of appellant is rejected.”
We find that the assessee has submitted all documents before the ld.AO, explained the issue and the calculation was given related to accumulated fund / set apart by submitting Form 10B. But the appeal was exparte and reasonable opportunity was denied to the assessee. In our considered view, the appeal order is set aside, and the appeal is remitted back to the file of Ld. CIT(A). Here we direct the assessee to file Form 10 as per the provisions of section 11(2)(c) of the Act read with section 139(1) of the Act and also, the assessee should be diligent and co-operative in the appeal proceedings for quick disposal of the appeal. Needless to say, the assessee should get a reasonable opportunity of hearing in set aside appeal proceeding, and the documents needs to be filed in his support, should be allowed to file before the ld.CIT(A).
5 ITA No.1321 /Mum/2024 Kedarnath Vidya Prasarini 8. In the result, appeal bearing ITA No.1321/Mum/2024 is allowed for statistical purpose.
Order pronounced in the open court on 29th day of July, 2024. Sd/- sd/- (AMARJIT SINGH) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,दिन ांक/Dated: 29/07/2024 Pavanan Copy of the Order forwarded to: अपील र्थी/The Appellant , 1. प्रदिव िी/ The Respondent. 2. आयकरआयुक्त CIT 3. दवभ गीयप्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, 4. Mumbai ग र्डफ इल/Guard file. 5.
BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai