ANJUMAN E KHADIMUL MUSLIMEEN REFAH-E-AAM,KACHIGUDA vs. DCIT., EXEMPTION CIRCLE 1(1), HYDERABAD

At the outset, learned AR submitted that the assessee preferred this appeal with a delay of 471 days. In this connection, assessee filed an affidavit, explaining the reasons for the delay, and prayed that delay in filing the appeal is due to his health conditions and none of the employees of the trust are computer savvy. They did not see the e-mails. It was also submitted that Mr. Syed Badrudding Quadri, who died on 10/09/2020 was in full incharge of account and administration. Due to the above reasons the appeal was filed belatedly. The Chartered Accountant, Mr. Easwaran was also not in the best of health having undergone heart surgery and was not attending office regularly. It was also submitted that the order of the CIT(A) also escaped the attention of the society on account of the above reasons. According to him, due to this reason the assessee could not prosecute the first appellate proceedings and the delay occurred in filing this appeal. Hence, learned AR prayed on behalf of the assessee that the delay in filing the appeal is unintentional and inadvertent due to the circumstances beyond its control. Learned DR vehemently opposed the request made on behalf of the assessee. There is no reason as to why this explanation of the assessee cannot be accepted. We are, therefore, inclined to condone the delay and to give an opportunity to the assessee to present its case on merits so that the cause of justice would be advanced. The delay is, therefore, condoned and we shall now proceed to hear the appeal and dispose of the same on merits.

Brief facts as stated by the assessee and culled out from the record are that the assessee is a Charitable Trust duly recognised under section 12A of the Income Tax Act, 1961 (‘the Act’). The Trust was also registered under 12A vide CIT(A)-2 order dated. 09/01/2001, and since then it has been carrying on Charitable activities which were accepted by the department. The Trust was also registered under the New Regime under section 12A dated 27/11/2021.

For the Assessment Year 2019-2020 the assessee submitted its Return of Income for assessment year 2019-2020 on 15/11/2019 along with the Audit Report in Form 10B enclosing the Financials comprising of Computation of Total Income, reflecting the gross income of the trust, application of Income as per the provisions of Section 11 and returned NIL Income.

An intimation was passed under section 143(1) of the Act for the assessment year 2019-2020 wherein the entire gross receipts of the trust was taxed at Rs. 65,81,440/-. According to the assessee, at the time of processing the return under section 143(1) of the Act the amount applied for Charitable purposes at Rs.54,31,590/-, amount applied on capital account Rs.5,48,330/- and amount accumulated and set apart at Rs. 6,01,520/- were ignored. Learned AR submitted that the order of the CPC was passed on 18/05/2020 after the Return of Income along with Form 10B Audit Report, Financials, Balance Sheet and Income & Expenditure account were filed on 05/11/2019.

Aggrieved, assessee preferred appeal before the learned CIT(A), challenging the intimation passed u/s.143(1) of the Act. Learned CIT(A), however, rejected the claim of the assessee for exemption under section 11 of the Act on the ground that the figures in the return of Income were not properly filled up and there was a mistake in filling up the relevant columns in part A-General which requires the details of registration or approval under the Act, which is mandatory if the assessee required to be registered. Learned CIT(A) also enumerated this sort of mistakes in the impugned order.

Hence, this appeal by the assessee contending that the assessee is eligible for exemption and mere not filling up the columns in the return of income is not at all fatal for grant of examination. Learned AR contended that the exemption cannot be denied to a trust basing merely on the discrepancies which can be rectified as defects, and the too technical approach of the Revenue authorities is contrary to the CBDT Circular No. 14(XL-35) of 1955 dated 11/04/1955 as upheld by the Hon’ble Delhi High Court in the case of Vijay Gupta vs. CIT [2016] 68taxmann.com131 (Delhi) and Hon’ble Madras High Court in the case of Sharp tools vs. PCIT [2020] 113 taxmann.com 63 (Madras).

Per contra, learned DR submitted that as rightly pointed out by the learned CIT(A), it is mandatory on the part of the assessee to fill the mandatory columns if the assessee requires to be registered and there is a clear instruction to the effect that “In case a registration or approval is required under the Income-tax Act, please fill up the relevant details in the respective columns of the table, such as section of the Act, date and number of registration and the registering authority. Please ensure that the date of registration is filled up correctly. Please note that this column is to be filled up mandatorily, if exemption is being claimed u/s. 11, or sub-clauses (iv), (v), (vi) or (via) of 10(23C), 10(23AAA) or 13B.”. He, therefore, submitted that there are no grounds to interfere with the impugned order.

We have gone through the record in the light of the submissions made on either side. It could be gathered from the impugned order that because of certain discrepancies in filling up certain relevant columns which are required to be filled up in case the registration under the Income Tax Act, the relief was denied to the assessee. Assessee is relying on the Circular No. 14(XL-35) of 1955, dated 11/04/1955 in support of his contention that mere discrepancies in filling up the forms shall not lead to the rejection of the claim of the assessee. Further, it is submitted that the delay in filing form 10B under section 119(2)(b) of the Act was condoned by the learned CIT(E) by order dated 18/03/2024. A copy of such an order is filed and forms part of the record.

For the sake of completeness and ready reference, we extract hereunder the relevant portion of the above circular hereunder,-

In the case of Vijay Gupta (supra) and Sharp Tools (supra), the Hon’ble Delhi and Madras High Courts upheld the spirit of this circular and observed that the assessee is liable to tax only upon such receipt as can be included in his total income and is assessable under the Act and in a case where the assessee detracts mistakes due to which the assessee had to pay more tax than he is liable to, it is incumbent upon the authorities to guide the assessee properly and to see that no tax more than authorised by law is levied and collected.

In these circumstances, in view of the fact of condonation of delay in filing form 10B under section 119(2)(b) of the Act by the learned CIT(E) by order dated 18/03/2024 and while giving effect to the above circular, we are of the considered opinion that the impugned order could be set aside and the issue may be restored to the file of the learned CIT(A) to take a fresh look into the matter. We hold and direct so. Grounds are accordingly treated as allowed for statistical purposes.

In the result, appeal of the assessee is treated as allowed for statistical purposes.