M/S. KUTCH MANDVI BHATIYA MAHAJAN,MANDV-KUTCH vs. THE ITO-WARD-1, RAJKOT

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ITA 154/RJT/2021Status: DisposedITAT Rajkot12 December 2022AY 2016-176 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(Appeals) did not fully consider the facts and the relevant CBDT circular. The matter was restored to the CIT(Appeals) to consider the impact of CBDT Circular No. 6/2020 and the fact that Form 10 was filed within the due date and the return of income was filed within the due date prescribed under Section 139(4).

What were the facts?

The assessee, a registered trust, claimed exemption under Section 11(2) of the Income Tax Act. The exemption was denied because the return of income was filed after the due date, even though Form 10 and Form 10B were filed within the prescribed time.

What were the issues?

Whether the assessee is eligible for exemption under Section 11(2) when the return of income is filed late but Form 10 is filed within the due date, considering CBDT Circular No. 6/2020.

Which sections of the Income-tax Act were involved?

Section 11(2),Section 139(1),Section 139(4),Section 119(2)(b)

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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal

For Appellant: Shri Kalpesh Doshi, A.R
For Respondent: Shri B.D. Gupta, Sr. D.R

आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-

1.

This assessee’s appeal for A.Y. 2016-17, arises from order of National Faceless Appeal Centre (NFAC), Delhi dated 29-09-2021, in proceedings under section 143(1) of the Income Tax Act, 1961; in short “the Act”.

Page No 2 M/s. Kutch Mandvi Bhatiya Mahajan vs. ITO

2. The assessee has raised the following grounds of appeal:-

“1. That the ld. CIT(A) has wrongly confirmed the denial of exemption of Rs.4,90,000/- on account of amount set apart u/s. 11/12 for specified purposes u/s. 143(1) of the I.T. Act. 2. That, the findings of the ld. CIT(A) & Ld. A.O. are not justified and are bad-in law. 3. The appellant craves to add, amend, alter or delete any of the above grounds of appeals.”

3. The brief facts of the case are that the assessee is a Trust registered under section 12A of the Act since 18-06-1984. The return of income was filed by the assessee declaring total income of � 194,500/- on 22-03-2017. Thereafter, the assessee received intimation under section 143(1) of the Act wherein the exemption under section 11(2) of the Act has been disallowed by the Department. The assessee filed appeal before Ld. CIT(Appeals) against such disallowance of exemption under Section 11(2) of the Act, who dismissed the assessee’s appeal on the ground that though form number 10 and form number 10B were filed by the assessee within the due prescribed date i.e. before 17-10-2016, however, the assessee filed the return of income under section 139(1) of the Act on 22-03-2017, while the due date for filing the return of income was 17-10-2016. Accordingly, the Ld. CIT(Appeals) held that the assessee is not eligible for exemption under section 11(2) of the Act and hence dismissed assessee’s appeal with the following observations:

“The date of filing of ITR and Form 10 by the Appellant is tabulated as under: Page No 3 M/s. Kutch Mandvi Bhatiya Mahajan vs. ITO Filing of Forms Due date for filing Date of filing Return of income u/s 17/10/2016 22/03/2017 139(1) Form no. 10 17/10/2016 15/09/2016 Form no. 10B 17/10/2016 28/09/2016

The above table shows that ITR has been filed by the Appellant after the due date. Form 10 and Form 10B too have been filed within the due date of filing of ITR u/s 139(1) of the Act. Appellant has filed copies of Form 10 and Form 10B as per Page 14-16 of written submissions filed. Appellant can avail benefit of exemption u/s 11(2) of the Act if twin conditions are met with i.e. Filing of ITR and Filing of Form 10 before the due date u/s 139(1) of the Act. In the present case the Appellant has filed Form 10 on 15.09.2016 and ITR on 22.03.2017 i.e. Form 10 has been before the due date u/s139(1) of the Act, but ITR has been filed after the due date of filing of ITR u/s 139(1)of the Act. These facts clearly show that the twin conditions for availability the benefit u/s 11(2) of the Act have not been met with by the Appellant. The appeal of the Appellant for AY. 2017-18 was filed before the undersigned on identical issue. That appeal has been disposed off vide order dated 28.09.2021. In the submissions filed for AY. 2017-18, the Appellant has stated that Appellant can avail benefit of exemption u/s 11(2) if twin conditions are met with i.e. Form 10 and ITR have been filed before the due date of filing of ITR u/s. 139(1) of the Act. The said contention of the Appellant made in submissions filed in appeal for AY. 2016-17 are not met with i.e. Twin conditions for availing exemption u/s 11(2) are not met with by the Appellant as ITR has been filed after the due date of filing of ITR u/s 139(1) of the Act (Filed on 22.03.2017, Due date-17.10.2016) and Form 10 has been filed before the date of filing of ITR u/s 139(1) of the Act (Filed on 15.09.2016, Due date-17.10.2016). Thus, as per the Appellant's own submissions filed in appeal for AY. 2017-18, the Appellant is not eligible for exemption u/s 11(2) of the Act as Appellant has not met with the twin conditions. c) In view of the above mentioned facts, it is clear that Appellant had filed its ITR after the due date on 22.03.2017 and Form 10 on 15.09.2016 i.e. before the due date of filing of ITR u/s 139(1) of the Act for AY. 2017-18. Thus, the Appellant does not qualify for exemption u/s 11(2) of the Act. The action of AO in Page No 4 M/s. Kutch Mandvi Bhatiya Mahajan vs. ITO disallowing exemption u/s 11(2) of the Act is hereby sustained and hence, the same is hereby upheld. Grounds of Appeal

Nos. 1 and 2 are dismissed. 7.3 Ground of Appeal No. 3 is routine and general in nature and does not require any separate adjudication.

8. As a result, appeal is dismissed.”

4.

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals). The counsel for the assessee submitted that the case of the assessee is duly covered by CBDT circular number 6/2020 dated 19-02- 2020, wherein CIT has been duly authorised to admit the delay in filing form 10 in cases where the ITR has been filed within 31st March 2017. The relevant extracts of the aforesaid Circular reproduce below for reference:

2.

Accordingly, in continuation of earlier Circulars issued in this regard, with the view to prevent hardship to the assessee and in exercise of powers conferred under section 119(2)(b) of the Act, the CBDT has decided that where the application for condonation of delay in filing Form 9A and Form 10 has been filed, and the Return of Income has been filed on or before 31st March of the respective assessment years i.e. Assessment Years 2016-17, 2017-18 and 2018- 19, the Commissioners of Income-tax (Exemptions) are authorised u/s 119(2)(b) of the Act, to admit such belated applications for condonation of delay in filing Return of Income and decide on merit.

4.1 Accordingly, the counsel for the assessee submitted that as per the above Circular, the assessee trust has duly filed return of income for assessment year 2016-17 on 22-03-2017, which as per the Circular is before Page No 5 M/s. Kutch Mandvi Bhatiya Mahajan vs. ITO 31st March 2017. The counsel for the assessee submitted that for the purpose of availing the benefit of exemption, assessee trust is required to fulfil two conditions: firstly filing of form 10 and filing of ITR on or before 31-03- 2017. The assessee has filed audit report in form 10B on 28-09-2016 and income tax return on 22-03-2017 and therefore, the assessee has duly complied with the provisions of law. Accordingly, the counsel for the assessee submitted that though the above Circular was brought to the notice of Ld. CIT(Appeals), however, in the appellate order there is no discussion in respect of the same and the assessee’s appeal has been dismissed without considering the same.

5.

In response, DR relied upon the observations made by Ld. CIT(Appeals) in the appellate order.

6.

We have heard the rival contentions and perused the material on record. In our considered view, we observe that Ld. CIT(Appeals) has not completely appreciated the facts of the present case and did not consider the Circular cited by the assessee in the appellate proceedings. We observe that in the case of Jaya Educational Trust[2021] 130 taxmann.com 225 (Chennai - Trib.), the ITAT held that where AO denied exemption under section 11 to assessee Trust on ground that it had not filed its return of income and required From No. 10 within due date of furnishing return under section 139(1), since assessee had given reasonable cause for not filing return within due date and application for condonation of delay for same was pending disposal before CBDT and, further, assessee had filed return of income within due date specified under section 139(4) and also filed Form Page No 6 M/s. Kutch Mandvi Bhatiya Mahajan vs. ITO No. 10 electronically before completion of assessment, assessee could not be denied exemption under section 11 of the Act. In light of the CBDT Circular number 6/2020 dated 19-02-2020 mentioned above and the judicial precedents on the subject, in the interests of justice, we are restoring the matter to the file of Ld. CIT(Appeals) to consider the impact of CBDT circular number 6/2020 dated 19-02-2020 on the instant facts and taking into consideration the fact that the assessee has filed form 10 within the prescribed due date and also filed return of income within the due date prescribed under section 139(4) of the Act, after giving due opportunity of hearing to the assessee.

7.

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

Order pronounced in the open court on 12-12-2022

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