SHRIMATI SARASWATI MANUJA EDUCATION AND WELL LIVING SOCIETY,NEW DELHI vs. ITO WARD EXEMPTION 2(2), NEW DELHI
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT:
1 ITA no. 663/Del/2023 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT: JUDICIAL MEMBER ITA No. _663/DEL/2023 [Assessment Year: 2020-21
Shrimati Saraswati Manuja Education Vs ITO, Ward exemption 2(2), And Well Living Society, New Delhi. 61, Pocket C-II, Mausam Apartments West Enclave, Pitampura, New Delhi PIN: 1100 34 PAN: AACAS9677A APPELLANT RESPONDENT
Assessee represented by Shri V. Rajakumar, Adv. Department represented by Shri Om Prakash, Sr. DR Date of hearing 22.05.2023 31.05.2023 Date of pronouncement
O R D E R This appeal, by the assessee, is directed against the order of the
learned Commissioner of Income-tax (Appeals), National Faceless
Appeal Centre (NFAC), Delhi, dated 06.03.2023, pertaining to the
assessment year 2020-21. The assessee has raised following grounds of
appeal:
“On the facts and in the circumstances of the case and in law, the
2 ITA no. 663/Del/2023 NFAC, Delhi erred in confirming the action of the Centralized Processing Centre (CPC), Bengaluru in:- I. determining the taxable income of Rs.8,86,857/- in terms computation as made by the CPE: II. adding Rs.8,86,857/- by wrongly invoking section 11(3) of the Act; III. charging tax and also levying interest u/s. 234B and 234C of the Act.
The above action being arbitrary, misconceived, erroneous and unjust and so must be quashed with directions for appropriate relief.”
The facts giving rise to the present appeal are that assessee is a
trust and has filed its return of income on 23.11.2020 for the assessment
year 2020-21. Vide order dated 08.10.2021, ADIT, Centralized
Processing Centre (CPC) processed the return of income under Section
143(1) of the Income-Tax Act, 1961 as the assessee claimed capital gain
of Rs.8.86 lacs and the duly reflected in the return of income at Column
No.4(vi) as a part of accumulation set apart for the year under
consideration out of income earned on account of capital gain during the
3 ITA no. 663/Del/2023 year, hence, the return was chargeable under Section 11(3) of the Act.
Therefore, appellant claimed that the income was not chargeable under
the said section and the same is set apart under Section 11(2) of the Act
as admitted at in Column No.4(vi) of the order under Section 143(1) of
the Act. Accordingly, ADIT, CPC, Bangaluru treated it as reflected
mistake at Column No.5(ii) as an addition under Section 11(3) of the
Act.
Being aggrieved with the action taken by the learned ADIT, CPC,
Bangaluru, assessee went in appeal before the learned Commissioner of
Income-Tax(Appeals), who dismissed the appeal. Before the learned
Commissioner of Income-Tax(Appeals), following statement of facts
and grounds of appeal were raised:
(a) Statement of Facts:
“The appellant is an educational society duly registered under Section 12A(a) of the Income-Tax Act, 1961. During the year under consideration it earned long term capital gain on the sale of a plot. The gain so earned was accumulated u/s. 11(2) of the Act which was allowed by the A.O. However, while submitting the return, the income so earned inadvertently appeared in the additions u/s. 11(3) of the Act through wrong punching. The CPC thus wrongly repeated this disallowance although the appellant
4 ITA no. 663/Del/2023 had submitted audit report in form 10B which correctly depicted the true position.
(b) Ground of appeal:
“on the facts and in the circumstances of the case and in law, the computation as made by the (CPC) is erroneous in so far as it has – i. Determined the taxable income at Rs.8,86,857;, ii. Added Rs.8,86,857 by wrongly invoking section 11(3) of the Act; iii. Charged tax and also levied interest u/s.234B and 234C of the Act; Above actions are arbitrary misconceived, erroneous and unjust and so must be quashed with directions for relief.”
During assessment proceedings before the learned Commissioner
of Income-Tax(Appeals), various notices of hearing under Section 250
of the Income-Tax Act, 1961 were issued to the appellant from time to
time including notices dated 15.09.2022, 15.11.2022 (system generated)
and latest hearing notice on 22.02.2022. In response to these notices,
assessee relied vide submissions dated 15.11.2022 and same has been
reiterated in the latest submission filed on 23.03.2023. On perusal of all
these submissions, it was observed that assessee has himself accepted
that mistake was committed while filing statutory return of income by
admitting that the same capital gain as income under Section 11(3) of
5 ITA no. 663/Del/2023 the Act, when the same is indeed set apart for a specified purpose
“Setting up free coaching cum Study Centre for BPL Card Holders and
Other admitted in Form 10B, thereby, the amount set apart is not to be
treated as income, though, the same was mistakenly admitted as income
of the appellant’s trust under Section 11(3) of the Act in the return of
income. After overall careful consideration of the facts of the case,
ADIT, CPC, Bangaluru rejected the plea of the assessee.
Further, learned ADIT in his order, pointed out that assessee has
admitted during the year a sale transaction of trust property for a total
consideration of Rs.14.95 lcas, resulting in a gain of Rs.8.86 lacs which
was supported to be set apart intended for specified purposes as
mentioned in the Form 10. It is relevant to point out here that an Audit
Report in Form 10B was filed digitally signed on 26.10.2020 reflecting
the claim as eligible u/s/ 11(2) of the Act. Considering the due date of
filing of the return of income being as available up to 15.02.2021 for the
very same assessment year i.e. 2020-21, nothing would have been
prevented the assessee from filing a revised return to this extent as
6 ITA no. 663/Del/2023 deemed fit as claimed by the assessee. Considering these valuable facts
involving assessee’s non-revising of the return of income having
sufficient time, the claim of the assessee as made before the ADIT,
CPC, Bangaluru, the application under Section 154 of the Income-Tax
Act, 1961 as well as the grounds raised in this appeal against order u/s.
143(1) of the Act are neither justified nor acceptable to exclude the
appellant’s claim u/s. 11(3) of the Act as not taxable income because the
gain first goes to the set apart u/s. 11(2) of the Act and after that flows
to specified investment u/s. 11(5) of the Act and failing which again it
falls back as taxable income u/s. 11(3) of the Act.
In view of these facts, situations and circumstances, taxability of
such specified amounts in due course of its receipts anytime up to five
years, the same would be the legal responsibility of the assessee to make
such an apt and proper claim with the fulfillment of relevant provisions
of the Income-Tax Act, 1961 as enshrined in section 11(2) read with
provisions u/s. 11(5) and 11(3) of the Act. Keeping in view all these
aspects, learned Commissioner of Income-Tax(Appeals) dismissed the
7 ITA no. 663/Del/2023 appeal of the assessee as not maintainable.
Aggrieved against the order of learned Commissioner (Appeals),
assessee is in appeal before me. At the time of hearing, learned counsel
for the assessee attended the hearing and submitted that it was a bona
fide mistake on the part of the assessee. He further submitted that
thereafter, Form No. 10B was uploaded mentioning the relevant details
that the books of accounts have to be kept by the head of office and the
branches of the abovementioned trust.
On the other hand, learned Departmental Representative opposed
the arguments advanced by the learned counsel appearing for the
assessee and support the orders of the authorities below.
I have heard the rival contentions and perused the material
available on record. In the present case, where the impugned addition
was made on the basis that the assessee failed to file requisite report as
required in Form No.10B.
Keeping in view the aforesaid facts and circumstances, I am of the
considered view that the learned authorities below ought to have
8 ITA no. 663/Del/2023 considered and verify the facts as well as the bona fide mistakes. I,
therefore, set aside the orders of the authorities below and restore the
issue to the file of the Assessing Officer to verify the grievance of the
assessee. If, it is found correct, the issue may be decided in accordance
with law.
In the result, the appeal of the assessee is allowed for statistical
purposes.
Order pronounced in open court 31 .05.2023.
Sd/- (KUL BHARAT) JUDICIAL MEMBER Dated: 31st May, 2023 Mohan Lal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
