ARYA VIDYA SABHA, RAIGARH,RAIGARH V. INCOME TAX OFFICER, EXEMPTION WARD, BILASPUR, BILASPUR

ITA 465/RPR/2024

AI Insights

The case involves Arya Vidya Sabha, a charitable trust running schools and other facilities, which appealed against the decision of the ADDL/JCIT(A)-5, Chennai, who dismissed their appeal as not maintainable. The original issue arose from the denial of exemption under Sections 11 and 12 of the Income-tax Act, 1961, due to the late filing of 'Form 10B'. The Tribunal found that the CIT(Appeals) erred in dismissing the appeal on maintainability grounds and directed a re-examination of the claim for deduction of expenses if the exemption under Section 11 was not granted.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35714 (ITAT-RAIPUR)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 21-11-2024
• Assessment Year: 2022-2023
• Appeal Filed On: 25-10-2024
• Other Referred Cases: Association of Indian Panelboard Manufacturer v. Deputy Commissioner of Income-tax [2022] 143 taxmann.com 418 (Ahmedabad - ITAT), Shree Banke Bihari Charitable Trust Vs. ACIT, Circle-1(1), Raipur, ITA No.374/RPR/2024, Shri Jain Shwetamber Murtipujak Sangh Vs. ITO (Exemption), Ward-1, Raipur, ITA Nos. 15 & 16/RPR/2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAL AGRAWAL
• Assessee Lawyers: R.B DOSHI
• Keywords: Condonation of delay; Opportunity of being heard; Revenue expenditure; Charitable institution
• Section: 250; 143(1); 11; 12A; 12; 119(2)(b); 10B

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.465/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2022-23 Arya Vidya Sabha Village: Raipur, Post-Salakhiya, Lailunga, Raigarh (C.G.)-496 115 PAN: AAAAA7049L .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer (Exemption) Ward-Bilaspur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, CA Revenue by : Shri Mohal Agrawal, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 21.11.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 25.11.2024 2 Arya Vidya Sabha Vs. ITO (Exemption), Bilaspur ITA No. 465/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee society is directed against the order passed by the ADDL/JCIT(A)-5, Chennai, dated 29.08.2024, which in turn arises from the intimation passed by the A.O under Sec.143(1) of the Income-tax Act, 1961 (in short ‘the Act’) dated 31.03.2023 for the assessment year 2022-23. The assessee society has assailed the impugned order on the following grounds of appeal before us: “1. Ld. CIT(A) erred in upholding the action of A.O/CPC in denying exemption u/s.11 & 12 to the appellant. The adjustment/addition made by the A.O and confirmed by the Ld. CIT(A) is arbitrary, illegal and is not justified. 2. Without prejudice to above, Ld. CIT(A) erred in not allowing administrative/establishment expense and upholding action of the A.O in bringing to tax the receipts of appellant. 3. The appellant reserves the right to amend, modify or add any of the ground/s of appeal.” 2. Succinctly stated, the assessee society which is a charitable trust running some Schools, Goushala and Vriddhashram is registered u/s. 12A of the Act. The assessee society filed its return of income for A.Y.2022-23 on 16.08.2022 declaring an income of Rs.Nil (after claiming exemption u/s.11 of the Act). The return of income filed by the assessee society was processed vide an intimation u/s. 143(1) of the Act, dated 31.03.2023, wherein its claim for exemption u/s.11 of the Act was declined for the 3 Arya Vidya Sabha Vs. ITO (Exemption), Bilaspur ITA No. 465/RPR/2024 reason that though it had furnished “Form 10B” in the Income Tax Portal on 12.08.2022 but had failed to approve the same. The assessee society after declining of its claim for exemption had after undone the aforesaid lapse on its part submitted a returned reprocess request but the CPC, Bengaluru even after reprocessing the return raised the demand. 3. Aggrieved, the assessee society carried the matter in appeal before the ADDL/JCIT(A)-5, Chennai who dismissed the appeal as not maintainable. The ADDL/JCIT(A) was of the view that as he did not have any power u/s.119(2)(b) of the Act to condone the delay involved in filing of “Form 10B”, therefore, the appeal filed by the assessee society before him was not maintainable. For the sake of clarity, the observations of the ADDL/JCIT(A) are culled out as under: “4. Decision: 4.1. Notice u/s. 250 were issued to the appellant on 20.10.2023, 19.02.2024 and 14.08.2024. In response to the notice, the Appellant filed its submissions on 28.02.2024 and 20.08.2024. Ihe appeal is adjudicated on the merits of the case based on the submission] made by the Appellant and the contents of the grounds of appeal and the statement of facts submitted along with form no.35. 4.2 All the grounds of the appeal pertain to disallowance of exemption u/s 11 for reasons of delay in filing of Form 10B and hence are adjudicated unanimously. 4.3 The Exemption u/s 11 will be given only if the appellant filed Form 10B before filing the Return of income. In this case, Form 10B has not been filed by the appellant within the due date for filing the Return of income. While the due date was 31.10.2022, the Form 10B had been filed only on 10.05.2023. 4 Arya Vidya Sabha Vs. ITO (Exemption), Bilaspur ITA No. 465/RPR/2024 Hence, the denial of claim of exemption u/s 11 by the CPC in intimation u/s 143(1) is justified. 4.4 At this juncture it is pertinent to take note of the judgement of the H'ble Ahmedabad Tribunal in the case of Association of Indian Panelboard Manufacturer v. Deputy Commissioner of Income-tax [2022] 143 taxmann.com 418 (Ahmedabad - ITAT) [22-07-2022] wherein on similar circumstances the H'ble Tribunal had rendered its decision in favour of revenue while analysing the provisions of Section 119 of the Income-tax Act, 1961 with regard to the power of Central Board of Direct Taxes issuing instructions to subordinate authorities on the issue of condonation of delay in filing Form No. 10B for Assessment year 2018-19. In that case, the assessee was a charitable institution registered under section 12AA, claimed exemption under section 11. On filing original return of income, assessee was communicated by Assessing Officer that assessee had not filed Audit Report. Immediately thereafter, assessee filed Audit Report in Form 10B by uploading same in electronic mode. Central Processing Centre denied exemption under section 11 for want of submission of Form No.10B within due date. On appeal, Commissioner (Appeals) held that Form 10B shall be submitted electronically with effect from 1-4-2016 applicable for assessment year 2016-17 and as per CBDT Circular No. 273, dated 3-6-1980, CBDT had authorized jurisdictional Commissioner/Director of Income-tax to condone delay in filing Form 10B, and Commissioner (Appeals) did not have any power under section 119(2)(b) to condone delay in filing Form 10B. Thus, Commissioner (Appeals) dismissed assessee's appeal holding that assessee had remedy before jurisdictional Commissioner/Pr. Commissioner/Director of Income-tax for condoning delay in filing Form 10B and claiming benefit of section 11. It was noted that assessee was well aware that there was a delay in filing Form 10B, however assessee seemed to have not made any application for condonation of delay in filing Form 10B before concerned Pr. Commissioner/Commissioner/Director of Income-tax as provided under section 119(2)(b). Therefore, on the question of whether there was no infirmity in order passed by Commissioner (Appeals), the H'ble Tribunal held \"Yes\" in Paras 6.2 and 6.3 of its order in favour of revenue. 4.5 The above factual matrix and the decision rendered by the H'ble Tribunal in the case of Association of Indian Panelboard Manufacturer v. Deputy Commissioner of Income-tax [2022] 143 taxmann.com 418 (Ahmedabad - ITAT) [22-07-2022] perfectly fits into the instant case of our appellant. As per 5 Arya Vidya Sabha Vs. ITO (Exemption), Bilaspur ITA No. 465/RPR/2024 CBDT Circular No. 273, dated 3-6-1980, CBDT had authorized only the jurisdictional Commissioner/Director of Income-tax to condone delay in filing Form 10B, and Commissioner (Appeals) did not have any power under section 119(2)(b) to condone delay in filing Form 10B. 4.6 Further, the power of condonation of delay in filing Form 10B rests with CIT (Exemption) only and not with the CIT(Appeals) or Addl. CIT (Appeals). Reliance is placed on the judgement of the H'ble Ahmedabad Tribunal in the case of Association of Indian Panelboard Manufacturer v. Deputy Commissioner of Income-tax [2022] 143 taxmann.com 418 (Ahmedabad - ITAT) [22-07-2022]. Therefore, this appeal is not maintainable before the Addl. CIT (Appeals).” 4. The assessee society being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 5. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 6. We have heard the Ld. Authorized Representatives of both the parties, and find substance in the claim of the Ld. AR that as the assessee society as per Section 246(1)(a) of the Act remained well within its right to assail before the ADDL/JCIT(A) the declining by the A.O/CPC, Bengaluru of its claim for exemption u/s.11 of the Act while processing its return of income u/s.143(1) of the Act, therefore, there was no justification for him to have dismissed the appeal by treating the same as not maintainable. We 6 Arya Vidya Sabha Vs. ITO (Exemption), Bilaspur ITA No. 465/RPR/2024 find substance in the claim of the Ld. AR that the assessee society had not approached the ADDL/JCIT(A) for condonation of the delay involved in filing of “Form 10B” but had challenged the declining of its claim for exemption u/s.11 of the Act vide intimation issued u/s.143(1) of the Act by the A.O/CPC. At the same time, we are unable to persuade ourselves to subscribe to the Ld. AR’s contention that as filing of “Form 10B” was merely a procedural requirement, therefore, the CIT(Appeals) ought to have considered the same and allowed the consequential claim of exemption raised by the assessee society in its return of income u/s. 11 of the Act. We, say so, for the reason that as observed by the CIT(Appeals), and rightly so, the legislature in all its wisdom had provided for a remedy for seeking condonation of the delay involved in filing of “Form 10B” by filing an application with the CIT u/s. 119(2)(b) of the Act. 7. Be that as it may, we concur with the Ld. AR that in case the assessee society was to be held as ineligible for claiming exemption u/s.11 of the Act then, the A.O/CPC for deducing its “true income” ought to have allowed its claim for deduction of expenses. We find that a similar issue had been dealt with by the ITAT, Raipur in the case of Shree Banke Bihari Charitable Trust Vs. ACIT, Circle-1(1), Raipur, ITA No.374/RPR/2024, dated 24.10.2024, wherein the Tribunal after relying on its earlier order in the case of Shri Jain Shwetamber Murtipujak 7 Arya Vidya Sabha Vs. ITO (Exemption), Bilaspur ITA No. 465/RPR/2024 Sangh Vs. ITO (Exemption), Ward-1, Raipur, ITA Nos. 15 & 16/RPR/2022, dated 22.05.2023, had held as under: “12. Apropos the Ld. AR’s contention that after declining of the assessee’s claim of exemption u/s.11 of the Act, the AO ought to have allowed its claim for deduction of expenses, I find substance in the same. I find that a similar issue had been dealt with by the ITAT, Raipur in the case of Shri Jain Shwetamber Murtipujak Sangh Vs. ITO (Exemption), Ward- 1, Raipur, ITA Nos. 15 & 16/RPR/2022, dated 22.05.2023, wherein the Tribunal after necessary deliberations had held as under: “15. Be that as it may, as the assessee-trust does not cumulatively satisfy the set of conditions specified in Para 4(i) of the CBDT Circular No.10 (supra), and also had not filed any application for condonation of delay u/s.119(2)(b) of the Act as provided in Para 4(ii) of the said circular, therefore, there remains no occasion for condoning the delay involved in filing of Form 10B by the assessee beyond the stipulated time period. I, thus, on the basis of my aforesaid observations, find no infirmity in the view taken by the lower authorities who had rightly declined the assessee's claim for exemption u/s.11 of the Act. However, I may herein observe that the A.O after declining the assessee's claim for exemption u/s.11 of the Act could not have summarily held its gross receipts of Rs.24,83,562/- as its income. In sum and substance, the A.O after treating the assessee as an unregistered trust was obligated to have considered its claim for deduction of expenses as were raised in the income and expenditure account. Accordingly, on the basis of my aforesaid deliberations, I though uphold the declining of the assessee's claim for exemption u/s.11 of the Act, but at the same time, restore the matter to the file of the A.O with a direction to consider the assessee's claim for deduction of expenses as debited in the income and expenditure account, i.e. to the extent the same are allowable under the Act. Needless to say, the A.O shall grant a reasonable opportunity of being heard to the assessee in the course of set-aside proceedings.” As the facts and the issue involved in the present appeal remain the same as was there before the Tribunal in the aforesaid case (supra), therefore, I respectfully follow the same. Accordingly, on similar terms, I restore the aforesaid issue to the file of the A.O with a direction to verify the maintainability 8 Arya Vidya Sabha Vs. ITO (Exemption), Bilaspur ITA No. 465/RPR/2024 of the assessee’s claim for deduction of the aforesaid expenses aggregating to Rs. 3,22,267/- (supra).” 8. As the facts and the issue involved in the present appeal remains the same as were there before the Tribunal in the aforesaid cases (supra), therefore, we respectfully follow the same. Accordingly, on similar terms, we restore the aforesaid issue to the file of the CIT(Appeals) with a direction to verify as per the extant law the allowability of the assessee society claim for deduction of revenue expenditure in order to deduce its true income in a commercial manner. Thus, the Grounds of appeal Nos. 1 & 2 raised by the assessee society are allowed for statistical purposes in terms of our aforesaid observations. 9. In the result, the appeal of the assessee society is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in open court on 25th day of November, 2024. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; Ǒदनांक / Dated : 25th November, 2024. ***SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. The Pr. CIT, Raipur-1 (C.G) 9 Arya Vidya Sabha Vs. ITO (Exemption), Bilaspur ITA No. 465/RPR/2024 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "