Income Tax Officer Ward-1 (Exemptions) , Mangalore V. M/s Saint Agnes Society , Mangalore

ITA 1098/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3425 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 04-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SURYAVAMSHI
• Assessee Lawyers: V SRINIVASAN
• Keywords: Rectification of order; Charitable institution; Reasonable cause
• Section: 11; 139; 92E; 115JB

Judgement Text

ITA.1098/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'A', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.1098/BANG/2018 (ASSESSMENT YEAR : 2014-15) INCOME-TAX OFFICER, WARD -1 (EXEMPTIONS), MANGALURU .. APPELLANT V. M/S. SAINT AGNES SOCIETY, 15-18-1014, ST. AGNES CONVENT, BENDORE, MANGALURU .. RESPONDENT PAN : AAATS5368M ASSESSEE BY : SHRI. V. SRINIVASAN, ADVOCATE REVENUE BY : SHRI. VIKRAM SURYAVAMSHI, ADDL. CIT HEARD ON : 20.02.2019 PRONOUNCED ON : 25.02.2019 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE CIT (A), MANGALURU, DT.24.01.2018, FOR THE ASSESSME NT YEAR 2015-16. ITA.1098/BANG/2018 PAGE - 2 02. FOLLOWING GROUNDS ARE RAISED BY THE REVENUE : 03. THE MAIN GROUSE OF THE REVENUE IS THAT THE APPE AL WAS WRONGLY ALLOWED BY THE CIT (A) DESPITE THE FACT THA T THE ASSESSEE HAD FILED FORM NO.10 AFTER A LAPSE OF THE STATUTORY PERIOD. 04. IT WAS CONTENDED BY THE LD. DR THAT THE RETURN OF INCOME WAS FILED ON 16.09.2015 AND FORM NO.10 WAS FILED ON 19. 12.2015 AND THEREFORE THE EXEMPTION CANNOT BE GRANTED TO THE AS SESSEE FOR NOT FILING FORM 10 WITHIN THE STATUTORY PERIOD. 05. PER CONTRA THE LD. AR RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE MATTER OF CIT V. NAGPU R HOTEL OWNERS ASSOCIATION [247 ITR 201] WHEREIN THE HONB LE SUPREME COURT HAD DECIDED IN PARA 6 AS UNDER : ITA.1098/BANG/2018 PAGE - 3 6. IT IS ABUNDANTLY CLEAR FROM THE WORDINGS OF SUB-SE CTION (2) OF SECTION 11 THAT IT IS MANDATORY FOR THE PERSON CLAI MING THE BENEFIT OF SECTION 11 TO INTIMATE TO THE ASSESSING AUTHORIT Y THE PARTICULARS REQUIRED UNDER RULE 17 IN FORM NO. 10 OF THE ACT. I F DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER DOES N OT HAVE THE NECESSARY INFORMATION, QUESTION OF EXCLUDING SUCH I NCOME FROM ASSESSMENT DOES NOT ARISE AT ALL. AS A MATTER OF FA CT, THIS BENEFIT OF EXCLUDING THIS PARTICULAR PART OF THE INCOME FRO M THE NET OF TAXATION ARISES FROM SECTION 11 AND IS SUBJECTED TO THE CONDITIONS SPECIFIED THEREIN. THEREFORE, IT IS NECESSARY THAT THE ASSESSING AUTHORITY MUST HAVE THIS INFORMATION AT THE TIME IT COMPLETES THE ASSESSMENT. IN THE ABSENCE OF ANY SUCH INFORMATION, IT WILL NOT BE POSSIBLE FOR THE ASSESSING AUTHORITY TO GIVE THE AS SESSEE THE BENEFIT OF SUCH EXCLUSION AND ONCE THE ASSESSMENT I S SO COMPLETED, IN OUR OPINION, IT WOULD BE FUTILE TO FI ND FAULT WITH THE ASSESSING AUTHORITY FOR HAVING INCLUDED SUCH INCOME IN THE ASSESSABLE INCOME OF THE ASSESSEE. THEREFORE, EVEN ASSUMING THAT THERE IS NO VALID LIMITATION PRESCRIBED UNDER THE A CT AND THE RULES, EVEN THEN, IN OUR OPINION, IT IS REASONABLE TO PRESUME THAT THE INTIMATION REQUIRED UNDER SECTION 11 HAS TO BE FURNISHED BEFORE THE ASSESSING AUTHORITY COMPLETES THE CONCER NED ASSESSMENT BECAUSE SUCH REQUIREMENT IS MANDATORY AN D WITHOUT THE PARTICULARS OF THIS INCOME, THE ASSESSING AUTHO RITY CANNOT ENTERTAIN THE CLAIM OF THE ASSESSEE UNDER SECTION 1 1, THEREFORE, COMPLIANCE OF THE REQUIREMENT OF THE ACT WILL HAVE TO BE ANY TIME BEFORE THE ASSESSMENT PROCEEDINGS. FURTHER, ANY CLA IM FOR GIVING THE BENEFIT OF SECTION 11 ON THE BASIS OF INFORMATI ON SUPPLIED SUBSEQUENT TO THE COMPLETION OF ASSESSMENT WOULD ME AN THAT THE ASSESSMENT ORDER WILL HAVE TO BE REOPENED. IN OUR O PINION, THE ACT DOES NOT CONTEMPLATE SUCH REOPENING OF THE ASSE SSMENT. IN THE CASE AT HAND IT IS EVIDENT FROM THE RECORDS OF THE CASE THAT THE RESPONDENT DID NOT FURNISH THE REQUIRED INFORMATION TILL AFTER THE ASSESSMENTS FOR THE RELEVANT YEARS WERE COMPLETED. IN THE LIGHT OF THE ABOVE, WE ARE OF THE OPINION THAT THE STAND OF THE REVENUE THAT THE HIGH COURT ERRED IN ANSWERING THE FIRST QUESTIO N IN FAVOUR OF THE ASSESSEE IS CORRECT, AND WE REVERSE THAT FINDIN G AND ANSWER THE SAID QUESTION IN THE NEGATIVE AND AGAINST THE A SSESSEE. IN VIEW OF OUR ANSWER TO THE FIRST QUESTION, WE AGREE WITH MR. VERMA THAT IT IS NOT NECESSARY TO ANSWER THE SECOND QUESTION ON THE FACTS OF THE CASE. ITA.1098/BANG/2018 PAGE - 4 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD FILED THE FORM 10 ON 19.12.2015 BE FORE THE RETURN OF INCOME IS PROCESSED BY THE CPC AND THEREAFTER TH E AO HAD DISALLOWED THE CLAIM IN THE RECTIFICATION ORDER PAS SED ON 21.07.2017. IN ANY CASE BEFORE THE PROCESSING OF THE RETURN OF INCOME, THE FORM 10 WAS DULY FILED BY THE ASSESSEE THOUGH BELATEDLY. 07. IN OUR VIEW, DELAY IN FILING THE FORM 10 SHOULD NOT BE AN INHIBITION IN ADJUDICATION OF THE TAXABLE LIABILITY OF THE ASSESSEE. NONETHELESS AS THE ASSESSEE HAD FILED THE FORM BEFO RE THE PROCESS OF THE RETURN OF INCOME, NO PREJUDICE CAN BE SAID TO H AVE CAUSED TO THE REVENUE. IN VIEW OF THE ABOVE AND IN VIEW OF THE J UDGMENT OF THE HONBLE SUPREME COURT IN THE MATTER OF NAGPUR HOTEL OWNERS ASSOCIATION (SUPRA), WE ARE OF THE OPINION THAT THE APPEAL FILED BY THE REVENUE IS WITHOUT ANY MERIT AND DESERVES TO BE DISMISSED. WE DO SO. HOWEVER THIS TRIBUNAL HAD EXAMINED THE EF FECT OF REQUIREMENT OF LAW WITH REGARD TO FORM 10 IN THE MA TTER OF THE INCOME TAX OFFICER ... VS M/S CATHOLIC DIOCESE OF K ARWAR , ... ON 29 AUGUST, 2018 ITA.599/BANG/2018 , WHEREIN IT WAS HE LD AS UNDER : 09. THE LAW HAS BROUGHT IN THE AMENDMENT IN RULE 1 2(2) THE PROVISO TO THE FOLLOWING EFFECT : PROVIDED THAT WHERE AN ASSESSEE IS REQUIRED TO FURN ISH A REPORT OF AUDIT SPECIFIED UNDER SUB-CLAUSE (IV), (V), (VI) OR (VIA) OF CLAUSE (23C) OF SECTION 10, SECTION 10A, CLAUSE (B) OF SUB-SECTION (1) OF SECTI ON 12A, SECTION 44AB, SECTION 80-IA, SECTION 80-IB, SECTION 80-IC, SECTIO N 80-ID, SECTION 80JJAA, SECTION 80LA, SECTION 92E SECTION 115JB OR TO GIVE A NOTICE UNDER CLAUSE (A) OF SUB-SECTION (2) OF SECTION 11 OF THE ACT, HE SHA LL FURNISH THE SAME ELECTRONICALLY.] ITA.1098/BANG/2018 PAGE - 5 10. IN VIEW OF THE AMENDMENT BROUGHT IN RULE12 (2) OF RULES AND UNDER CLAUSE (C) TO SECTION 11( 2) , LAW HAS MANDATORY TO FILE F ORM 10 ELECTRONICALLY. HOWEVER PRIOR THERETO UNDER RULE 17, NOTICE WAS REQ UIRED TO BE GIVEN AND DELIVERED BEFORE THE EXPIRY OF THE TIME ALLOWED UND ER SUB-SECTION (1) OF SECTION 139 FOR FURNISHING THE RETURN OF INCOME AND THERE WAS NO REQUIREMENT OF FILLING THE FORM ELECTRONICALLY. IN THE LIGHT OF THE ABOVE AND THE CONJOINT READING OF RULE 17, RULE 12( 2 ) AND FORM 10, IT IS ABUNDANTLY CLEAR THAT IF THE ASSESSE E WISHES TO TAKE THE BENEFIT OF SECTION 11(2), IT IS ESSENTIAL FOR THE ASSESSEE TO FURNISH AND DELIVER THE NOTICE IN THE REQUISITE FORM 10 TO THE AO BEFORE THE EXPIR Y OF THE PERIOD PROVIDED U/S.139(1) OF THE ACT. HOWEVER BY VIRTUE OF AMENDME NT TO RULE 12(2), IT WAS ONLY PROVIDED THAT THE ASSESSEE IS REQUIRED TO SUBM IT ELECTRONICALLY THE FORM 10 TO THE AO. 11. IN THE PRESENT CASE, THE FORM 10 HAS NOT BEEN F ILED BEFORE THE AO ON OR BEFORE THE DUE DATE FOR FILING THE RETURN U/S.139(1 ) AS ON ITA.599/BANG/2018 PAGE - 10 30.09.2014, FURTHER THE ASSESSEE HAS NOT FILED THE FORM ELECTRONICALLY. LASTLY THE FORM SUBMITTED BY THE AS SESSEE WAS INCHOATE AS IT IS LACKING THE NECESSARY PARTICULARS IN RESPECT OF INC OME FOR WHICH THE BENEFIT WAS SOUGHT U/S.11(2) OF THE ACT. UNDER THE RELEVANT FORM 10 (SUPRA), IT WAS NECESSARY FOR THE ASSESSEE TO GIVE THE SPECIFIC DET AILS OF THE AMOUNT FOR WHICH THE ASSESSEE WAS SEEKING THE BENEFIT U/S.11(2) OF T HE ACT. HOWEVER THE NEEDFUL HAS NOT BEEN DONE AND THE CIT (A) BASED ON THE JUDG MENT OF THE HON'BLE SUPREME COURT IN THE MATTER OF CIT V. NAGPUR HOTEL OWNERS' ASSN [(2001) 247 ITR 201] AND MORE PARTICULARLY IN VIEW OF THE E NTRY MADE IN THE CONCERNED COLUMN OF THE IT RETURN, HAD ALLOWED THE BENEFIT U/S.11(2) OF THE ACT. 12 . IN OUR CONSIDERED OPINION, THERE IS NO CHALLEN GE TO THE RULE BEFORE ANY COURT OF LAW, MORE PARTICULARLY RULE 17 AND FORM 10 AS EXISTING ON 01.04.2014. IN THE PRESENT CASE ASSESSEE HAS NOT BE EN ABLE TO ESTABLISH THE REASONABLE CAUSE FOR NOT FILLING THE FORM 10 AND DE LIVERING THE NOTICE AS PER RULE 17 BEFORE THE AO BEFORE THE DATE OF FILING OF THE RETURN OF INCOME. FURTHER THE NOTICE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT ITA.1098/BANG/2018 PAGE - 6 PROCEEDINGS WAS LACKING ESSENTIAL PARTICULARS AS TH E INCOME FOR WHICH THE ASSESSEE HAS SOUGHT THE BENEFIT HAD NOT BEEN DISCLO SED. HOWEVER CONSIDERING THAT THE ASSESSEE BEING A CHARITABLE ORGANISATION A ND HAD DISCLOSED THE ACCUMULATED FUNDS IN PART VI OF COLUMN.9 OF THE IT RETURN, WE DEEM IT APPROPRIATE TO REMAND THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO THE ASSESSEE TO FILE THE CORRECT FORM 10 GIVING THE ENT IRE DETAILS AS REQUIRED IN FORM 10 TO THE AO. IT IS DIRECTED THAT THE AO ITA.5 99/BANG/2018 PAGE - 11 ON FURNISHING THE FORM 10 BY THE ASSESSEE, AO MAY DECI DE THE MATTER AFRESH WITHOUT BEING INFLUENCED BY THE ORDER EARLIER PASSE D BY THE AO. HENCE RESPECTFULLY FOLLOWING THE ORDER OF THE COORD INATE BENCH AND HONBLE SUPREME COURT, WE DISMISS THE APPEAL OF THE REVENUE AS, ASSESSMENT WERE ALREADY COMPLETED UNDER SECTION 143 ( 1) OF THE ACT. 08. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH DAY OF FEBRUARY, 2019. SD/- SD/- (A. K. GARODIA) ( LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 25.02.2019 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.