ANIDA ADARSH KELVANI UTEJAK MANDAL,AMRELI V. ITO (EXEMPTION), WARD-2, RAJKOT, RAJKOT

ITA 380/RJT/2023

AI Insights

The case involves Shri Anida Adarsh Kelavani Utejak Mandal, a public charitable trust, which appealed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal pertained to the rejection of a rectification application under section 154 of the Income Tax Act, 1961, concerning the assessment year 2013-14. The trust had initially filed a return declaring nil income, which was processed by the CPC, Bengaluru, leading to a demand due to non-consideration of exemption under section 11 of the Act. The trust's rectification application was rejected as it was filed beyond the four-year limit, which the trust contested, citing lack of proper intimation. The Tribunal's decision emphasized the principles of natural justice and the need for rectification of genuine mistakes in tax assessments.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 27276 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 07-11-2023
• Other Referred Cases: M.S.Gill vs The Chief Election Commission, A.K. Kraipak vs UOI, GIT vs. Shelly Products, S. R. Koshti vs. GIT, Ester industries vs. CIT, CIT vs. Pruthvi Brokers & Shareholders (P.) Ltd., The Deputy Commissioner of Income-tax, Circle-2(1)(1), Ahmedabad vs. Greenland Infracon P. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR GUPTA
• Assessee Lawyers: MEHUL RANPURA
• Keywords: Revised return; Principle of natural justice; Charitable institution
• Section: 154; 143(1); 12AA; 139(1); 10B

Judgement Text

" Page | 1 ITA No.380/RJT/2023 Anida Adarsh Kelavani Utejak Mandal IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.380/RJT/2023 (Ǔनधा[रणवष[ / Assessment Year: (2013-14) (Physical Hearing) Shri Anida Adarsh Kelavani Utejak Mandal, Via-Kunkavav, Anida, Anida, Amreli - 360360 Vs. The ITO, Ward – 2, Rajkot èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AABTS1538A (Assessee) (Respondent) Assessee by : Shri Mehul Ranpura, AR Respondent by : Shri Dheeraj Kumar Gupta, Sr. DR Date of Hearing : 09/07/2024 Date of Pronouncement : 08/10/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AYs) 2013-14, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘NFAC/Ld. CIT(A)’], dated 22.09.2023, which in turn arises out of an assessment order passed by the Assessing Officer (in short ‘AO’) u/s 154 of the Income tax Act, 1961, dated 29.05.2019. Page | 2 ITA No.380/RJT/2023 Anida Adarsh Kelavani Utejak Mandal 2. The grounds of appeal raised by the assessee are as follows: “1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2. The Id. Commissioner of Income- tax(Appeals), National Faceless Appeal Centre, Delhi erred on facts as also in law in holding that AO's action of rejecting rectification application is as per law, in total disregards to the facts of the case and issue involved in rectification. The AO be directed to rectify the mistake apparent from record as pointed out by the assessee. 3. The Id. CIT(A) / NFAC erred on facts as also in law in not deciding ground of appeal related to not giving benefit of expenses of Rs.39,35,810/- incurred towards the object of trust u/s.11 of the Act against income of Rs.39,45,087. The AO action of disallowing of claim u/s.11 of the Act is totally unjustified on facts as also in law and therefore disallowance deserves to be deleted and may kindly be deleted. 4. Your Honour's assessee craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.” 3. Brief facts of the issue in dispute are stated as under. The assessee under consideration, has filed the rectification application under section 154 of the income tax Act, before the CPC, Bengaluru,( assessing officer), stating that is a mistake in the processing u/s 143(1) of the Act, by CPC, Bengaluru, where a demand of Rs.13,39,860/- was raised. The assessee has e-filed its original return of income for A.Y 2013-14 u/s 139(1) of the Act, on 17-08-2013, declaring total income at Rs. NIL. The Return of income was processed by CPC, Bengaluru and intimation issued u/s 143(1) of the Act, wherein CPC has not considered the exemption claimed u/s 11 of the Income Tax Act. On verification of the case records and details submitted by the assessee it was noticed by the assessing officer, that the assessee is AOP(Trust) and also registered u/s 12AA of the Income Tax Act. On further verification of the application it was noticed that while filing the return of income, the assessee- trust had not mentioned the 12AA registration number in the return of income, hence at Page | 3 ITA No.380/RJT/2023 Anida Adarsh Kelavani Utejak Mandal the time of processing the return of income u/s 143(1) on 17.03.2015, the CPC has not allowed the exemption claimed u/s 11 of the Act. 4. The assessing officer noticed that the assessee has made an application under section 154 of the Income tax Act, on 15.05.2019, which is made after expiry of four years from the end of the financial year in which the order is made. In view of the above, the application under section 154 of the Income Tax Act, dated 15.05.2019, for rectification u/s 154 of the Act, was rejected, by the assessing officer. 5. Aggrieved by the order of the CPC, Bengaluru,( assessing officer), the assessee carried the matter in appeal before Ld. CIT(A), who has confirmed the action of the assessing officer. The ld CIT(A) observed that AO has rejected the rectification application filed u/s 154 of the Act, by the assessee, primarily on the ground that the rectification application was made after 4 years of the passing of the order, therefore, the action of the AO is as per the provisions of the law, hence, ld. CIT(A) dismissed the appeal of the assessee. 6. Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before us. 7. The Learned Counsel for the assessee submitted that assessee, could not make application in time as the assessee came to know, the impugned order (processing the Return of Income u/s 143(1) of the Act on 17.03.2015), on 13.07.2018, through first notice of recovery of outstanding demand. Therefore, ld. Counsel argued that the date of intimation u/s 143(1) of the Act may be treated as 13.07.2018 (recovery Page | 4 ITA No.380/RJT/2023 Anida Adarsh Kelavani Utejak Mandal notice date), and assessing officer, may be directed to rectify the mistake in accordance with law. 8. However, on the other hand, Ld. Sr. DR for the Revenue stated that assessee filed the rectification application, after the expiry of 4 years, therefore, assessee’s claim should not be admitted. 9. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. The assessee, a public charitable trust, is assessed to tax by the Income Tax Officer (Exemption), Ward-1, Rajkot (hereinafter referred to as the \"AO\") and is registered under the Bombay Public Trusts Act, 1950 with Charity Commissioner, Rajkot and also registered u/s 12A(a) of the Income Tax Act, 1961 (hereinafter referred to as the \"Act\") vide registration No. 66/A-85/CIT.R dated 21.10.1978. The trust is engaged in the educational activities irrespective of cast, creed, religious and community and without motive of profit since its inspection. The Ld. Counsel for the assessee, also took us through the paper book page no.33 wherein the assessee filed a request letter before the AO (Exemption) to provide original or certified copy of intimation u/s 143(1) of the Act. The contents of the request letter dated 08.06.2019, are reproduced below: “Re: Order u/s.154 of the I.T.Act.1961 dated 29.05.2019. Sub: Request to provide original or certified copy of intimation u/s.143(1) of the I.T.Act,1961 for A.Y.2013-14. ----------------------------------------------------------------------------------- In connection with the above, we submit as under: 1.0 We have been served with the your above mentioned order u/s.154 of the Income-tax Act,1961 [hereinafter referred as to the \"Act\"] rejecting applications Page | 5 ITA No.380/RJT/2023 Anida Adarsh Kelavani Utejak Mandal filed on 15.05.2019 & 16.05.2019 for rectifying mistake apparent from records on the alleged ground that we have made application after expiry of four year from the end of the financial year in which intimation/order u/s. 143(1) of the Act is passed. 2.0 In this connection, it is submitted that the we have neither received any commutation from the department nor received intimation u/s. 143(1) of the Act. You are therefore, requested to provide the original or certified copy of intimation of the same so that necessary compliance can be made in the matter. 3.0 In view of the above, you are requested to keep the recovery proceeding in abeyance and provide the intimation u/s. 143(1) of the Act and oblige.” 10. Therefore, we find that there was genuine difficulty before the assessee, to make the rectification application, under section 154 of the Income Tax Act, within the time limit of four years. Hence, we note that rectification application was filed, after expiry of 4 years, due to the circumstances, beyond the control of the assessee. The Learned Counsel for the assessee submitted that no intimation u/s 143(1) of the Act, was received by the assessee, therefore assessee was not aware about passing of order against him, u/s 143(1) of the Act. The assessee came to know about passing the intimation order u/s 143(1) of the Act, when it received the demand notice for recovery of demand. However, the assessee has replied to the Assessing Officer stating that assessee is not liable to pay the demand, the letter is placed at paper book page no.7 of the assessee`s paper book. We note that soon after getting intimation order u/s 143(1) of the Act, the assessee filed the rectification application u/s 154 of the Act for AY.2013-14, explaining the reasons, which are placed at paper book page nos.31 to 32. The contents of the application for rectification are reproduced below: “1. At the outset it is submitted that we have been served with the letter dated 13.07.2018 & 01.05.2019 requiring us to pay the demand of Rs. 13,39,860/-raised by the Online Processing Centre (CPC) through ITD system or submit copy of rectification application if any. In this connection, we have vide letter dated Page | 6 ITA No.380/RJT/2023 Anida Adarsh Kelavani Utejak Mandal 15.05.2019 submitted that the above demand was raised on account inadvertent error / mistake which had crept in while finalization of audit report in Form 10B which has already been rectified and revised Form 10B has been uploaded. 2. Facts of the case are that we are a trust registered u/s 12A(a) of the Act vide registration No. 66/A-85/CIT.R dated: 21.10.1978. In the return of income filed for the AY 2013-14, we had shown gross receipts of Rs. 39,45,087/- and claimed the expenses incurred for the object of the trust at Rs. 39,35,810/-and balance amount was accumulated for application towards the objects of the trust in subsequent years. Thus, the gross total income of the trust after claiming exemption u/s 11 of the Act was NIL. 3. However, while finalization of the audit report in Form 10B an error had crept in wherein the amount of Rs. 28,453/- was reported against the amount of income of the previous year applied towards the objects of the trust rater than the actual expenses incurred of Rs. 39,35,810/-. Thus due to such error 7 mistake, erroneous gross income was raised and accordingly incorrect demand was raised of Rs. 13,39,860/-. 4. Thus, immediately when the error 7 mistake was spotted, the audit report in Form 10B was immediately rectified and revised form 10B was filed which was in real terms final and accurate. 5. It is also to submit that we are maintaining regular books of account and all the income and expenses of the trust are duly vouched and recorded in the books of account which are not at all in doubt at any stage of the proceedings. 6. Furthermore, it is submitted that the action of the CPC in raising the above- mentioned demand is totally incorrect and invalid as the taxes are only to be levied on real income. However, when the income is NIL, levy of taxes is not justified. In the present case, the income was only momentary 7 notional as the same represented error 7 mistake in the reporting which was immediately revised to NIL. 7. It is trite that the authorities under the Act are under sacrosanct obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, mis-conception or not being properly instructed, is over assessed, the authorities under the Act are required to ensure that only legitimate tax dues are collected. This is the view which flows from judgments including GIT vs. Shelly Products (2003) 261 ITR 367 (SO, S. R. Koshti vs. GIT (2005) 276 ITR 165 (Gui), Ester industries vs. CIT(2009) 185 TAXMAN 266 (Delhi) and CIT vs. Pruthvi Brokers & Shareholders (P.) Ltd. [20121 349 ITR 336 (Bom). The essence of these decisions are that mere admission on the part of the assessee with respect to an addition/disallowance in its original return or in revised return would not ipso facto bar an assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. The Revenue authorities cannot enforce untenable actions of the assessee against it which led Page | 7 ITA No.380/RJT/2023 Anida Adarsh Kelavani Utejak Mandal to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed in correctly owing to its own mistake. 8. Reliance is placed on the decision given by the Hon'ble income Tax Appellate Tribunal, \"C\" Bench, Ahmedabad in case of The Deputy Commissioner of Income-tax, Circle-2(1)(1), Ahmedabad vs. Greenland Infracon P. Ltd. Needless to mention that the decision of jurisdictional high court is binding in nature and therefore you are requested to rectify the mistake apparent from record and reduce the demand rose erroneously. 9.Considering the above facts on record, it is clear that the demand raised by CPC is incorrect which needs to be rectified and the same may kindly be rectified at an earliest and oblige.” 11. We note that the assessee, vide its letter dated 15.05.2019, filed statement of income, acknowledgement of ROI, Form 10B, certificate u/s 12A before the department, hence, such genuine assessee should not be penalized because of technicalities, as we have narrated above. Under the circumstances the date of deemed date of intimation u/s 143(1) of the Act may be treated as 13.07.2018, being the first notice for recovery proceedings and the petition dated 16.05.2019, being application u/s 154 of the Act, of the assessee needs to be considered. We note that the Hon’ble Supreme Court in M.S.Gill vs The Chief Election Commission 1978 AIR SC 851 held “The dichotomy between administrative and quasi-judicial function vis-à-vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak vs UOI AIR 1970 SC 150) which makes the water-shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice. Page | 8 ITA No.380/RJT/2023 Anida Adarsh Kelavani Utejak Mandal 12. Considering these facts, and circumstances, we direct the assessing officer to consider the rectification application of the assessee, filed under section 154 of the Income tax Act, dated 16.05.2019 and rectify the mistake apparent from record in accordance with law. 13. In the result, the appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 08/10/2024 Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date: 08/10/2024 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "