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Facts
The assessee, a registered society, filed its original return and later a revised return claiming set-aside income of Rs. 6,00,000/- along with Form 10 and audit report. The CPC disallowed the claim because Form 10 was filed belatedly. The CIT(A) upheld the disallowance.
Held
The Tribunal noted that the assessee fulfilled the conditions of CBDT Circular No. 07/2018 regarding condonation of delay for filing Form 10. It found that the CIT(A) should not have rejected the appeal solely on the ground of belated filing. The issue was restored to the AO for fresh examination on merits.
Key Issues
Whether the belated filing of Form 10 for claiming set-aside income by a charitable trust can be condoned, especially in light of CBDT circulars addressing practical difficulties in e-filing.
Sections Cited
Section 11, Section 12A, Section 143(1), Section 119(2)(b)
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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
ORDER DR. MITHA LAL MEENA, A.M.: The appeal by the assessee is directed against the order of the Ld. Commissioner of Income Tax, Appeal, ADDL/JCIT (A) Patna [hereinafter referred to as “the JCIT appeal”] dated 24.01.2025 with respect to assessment year 2018-19 challenging therein confirmation of addition of Rs. 6,00,000/- without appreciating facts of the case.
Having heard both the sides and perusal of record, we find that the Ld. CIT(A) has rejected appeal of the assessee by observing that the provisions of Section 143(1) makes it clear that the CPC had the power to compute the total income (or loss) after making adjustments for any incorrect claim in the return.
1. Asst. Year: 2017-18 2 The incorrect claim had further been explained as a claim, on the basis of an entry, in the return of an item, which is consistent with another entry of the same or some other item in such return. Now if a claim of set apart of income is made after the due date, it becomes inconsistent with such entry of. Hence it cannot be said that the CPC cannot made adjustments in arriving the correct amount of total income.
The Ld. CIT(A) has discussed that the appellant had not filed form 10 within the time framed as provided in the Act, the only ground raised by the appellant is hereby dismissed.
The Ld. AR for the assessee has submitted that the appellant assessee is a registered society u/s 12A of the Income Tax Act, 1961. It has filed its return of income on 31.08.2018 which was processed u/s 143(1). The society has revised its return of income on 31.03.2019 along with form 10 and audit report u/s 10B claiming set apart income of Rs. 6,00,000/- for which it has passed a resolution on 20.08.2018 and made FDR as required by the Act while processing the revised return u/s 143(1) vide intimation dated 09.02.2020. The CPC has disallowed the appellant’s claim for set apart of Rs. 6,00,000/- considering the fact that form 10 was filed belatedly.
1. Asst. Year: 2017-18 3 5. The Ld. AR argued that the Commissioner of Income Tax, while interpreting such belated applications in form 9A and form no. 10 satisfied this that the assessee was apprehended by reasonable cause from filing of applications in form no. 9A and form no. 10 within the stipulated time. Further, with respect of form no. 10, the Commissioner was also satisfied this that the amount accumulated or set apart has been invested or deposited in any one or more of the forms or modes specified in sub-Section “5” of Section 11 of the Act. The AR submitted that in the various judgments delivered by the Tribunal and the various High Courts, it is held that filing of form no. 10 and form no. 10B were considered as procedural part of compliance to support the substantive law.
The Ld. AR argued that the judgment of Hon’ble Apex Court in the case of “CIT and others Vs. Wipro Ltd reported in 2022, 327 ITR (SC)” is not applicable in the present case. As in that case, the issue involved was pertaining to exemption to 100% Export Oriented Unit. Sub Section 8 grants a right to the assessee to withdraw himself from the provisions of Section 10B. Thus, Sub Section 8 of Section 10B deals in entire different set of facts. He further submitted that keeping in view of the practical difficulties and technical glitches of e-filing site an amended provision of law to make it more beneficial to the public at large. The CBDT has issued various circulars directing the Asst. Year: 2017-18 4 authorities to condone the delay by way of taking liberal views. In support, he placed reliance on the judgment delivered by ITAT Jaipur Bench in the case of “Rajasthan Medical Relief Society Vs. ITO (2024) 70 CCH 0289 JaipurTrib.”
The Central Board of Direct Taxes vide circular no. 07/2018 dated 20.12.2018 issued clarification as under:
1. “Representatives have been received by the Board/ field authorities stating that the Form No. 9A and Form No. 10 could not be filed in the specified time for AY 2016-17, which was the first year of e-filing of these forms. It has been requested that the delay in filing of Form No. 9A and Form No. 10 for AY 2016-17 may be condoned u/s 119(2) (b) of the Act.
Accordingly, in supersession of earlier Circular/Instruction issued in this regard, with a view to expedite the disposal of applications filed by the trusts for condoning the delay and in exercise of the powers conferred u/s 119(2)(b) of the Act, the Central Board of Direct Taxes hereby authorizes the Commissioners of Income-tax, to admit belated applications in Form No. 9A and Form No. 10 in respect of AY 2016-17 where such Form No. 9A and Norm No. 10 are filed after the expiry of the time allowed under the relevant provisions of the Act.
The Commissioners will, while entertaining such belated applications in Form No. 9A and Form No. 10, satisfy themselves that the assessee was prevented by reasonable cause from filing of applications in Form No. 9A and Form No. 10 within the stipulated time. Further, in respect of Form No. 10 the Commissioners shall also Asst. Year: 2017-18 5 satisfy themselves that the amount accumulated or set apart has been invested or deposited in anyone or more of the forms or modes specified in sub section 5 of section 11 of the Act.
As is evident from the above circular that this was the first year from which the assessees trust were required to file the form no. 10 online and considering that aspect of the matter board as per power vested u/s 119(2)(b) of the Act condone such delay and the power was given to the Commissioner of Income Tax, while doing so only condition was required to be seen that the assessee has sufficient reasons and the amount has been invested as per the modes prescribed. Here after the decision of the ld. CIT(A) only issue to be decided that whether the delayed filed form on 20.02.2018 be condoned or not. Since, the assessee fulfils the conditions as prescribed as per circular no. 07/2018 we direct the ld. AO considered the claim of the assessee for an amount of Rs. 5,00,00,000/- in accordance with the provision of section 11(2) of the Act. Based on this observation the solitary ground of appeal raised by the assessee is allowed.
In view of above, we request your goodself to allow set apart claim of Rs. 6,00,000/- and oblige.”
The Ld. DR has placed reliance on the impugned order, however, he failed to rebut the contentions raised by the assessee and to furnish any contrary judgment.
Asst. Year: 2017-18 6 9. The coordinate bench on parity of facts in the case of “Vidhya Pracharini Sabha, Udaipur Vs. ACIT” in dated 12.11.2024 has observed as under:
“As is evident from the above circular that this was the first year from which the assessees trust were required to file the from no. 10 online and considering that aspect of the matter board as per power vested u/s 119(2)(b) of the Act condone such delay and the power was given to the Commissioner of Income Tax, while doing so only condition was required to be seen that the assessee has sufficient reasons and the amount has been invested as per the modes prescribed. Here after the decision of the ld. CIT(A) only issue to be decided that whether the delayed filed form on 20.02.2018 be condoned or not. Since, the assessee fulfils the conditions as prescribed as per circular no. 07/2018 we direct the ld. AO considered the claim of the assessee for an amount of Rs. 5,00,00,000/- in accordance with the provision of section 11(2) of the Act. Based on this observation the solitary ground of appeal raised by the assessee is allowed.”
In the present case, the assessee fulfils the conditions prescribed as per CBDT circular no. 07/2018 though the assessee could not file the form no. 10 within the stipulated time. The CBDT also mentioned that where there is a delay of up to 365 days in filing form no. 9A and form no. 10 for assessment year 2018-19 or any subsequent year, the Commissioner of Income Tax are Asst. Year: 2017-18 7 here by authorised to adverse such belated applications for condonation of delay u/s 119(2) of the Act and decide on merits.
Considering the factual matrix of the case, practical difficulties and technical glitches on e-filing site and CBDT circulars, we appreciate the grievance of the assessee as genuine. In our view, the Ld. CIT(A) ought to have not rejected the appeal of the assessee on account of not filing form no. 10 within the time framed and decide the appeal on merits of the case in the larger interest of justice.
We, therefore, consider it deem appropriate to restore the issue of set apart of income of Rs. 6,00,000/- to the file of the JAO to examine afresh after granting adequate opportunity of hearing to the assessee with reference to the claim made by the assessee. The assessee shall cooperate in the fresh proceedings before the JAO.
Accordingly the matter is restored to the file of the JAO to decide the issue in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purpose.