PADMASHALI YUVAK SAMAGH, MUMBAI V. CIT , MUMBAI

ITA 1786/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7261 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 27-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Assessee Lawyers: SUBRAMANIAN
• Keywords: Set aside
• Section: 10B; 139(1); 154; 2; 139; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC-I MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1786/MUM/2019 ASSESSMENT YEAR: 2014-15 PADMASHALI YUVAK SAMAGH, PLOT NO. 41, KESHAR BAUG SANDANAND JADHAC MARG KESH NAIGAUM, DADAR (EAST), MUMBAI - 400014 VS. DEPUTY COMMISSIONER OF INCOME TAX, CPC PAN NO. AABTP2887P APPELLANT RESPONDENT ASSESSEE BY : MR. SUBRAMANIAN, A R REVENUE BY : M S . SMITA VERMA, D R DATE OF HEARING : 12 /01/2021 DATE OF PRONOUNCEMENT : 27/01/2021 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2014-15. THE APPEAL IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-1, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ORDER U/S 154 OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : 1. THE LEARNED CIT (A) HAS ERRED IN DISALLOWING TH E EXEMPTION CLAIMED U/S 11 (1) (A) OF RS. 1712592 AND THE AMOUNT WHICH WAS SET APART U/S 11 (1) (A) AMOUNTING TO RS. 437842 ON THE GROUND THAT THE APPE LLANT HAS NOT SATISFIED ITA NO. 1786/M/2019 PADMASHALI YUVAK SAMAGH 2 SECTION 11 & 12 ALTHOUGH APPELLANT HAS SATISFIED AL L THE CONDITION OF SECTION 11 & 12. THE APPELLANT CRAVES, LEAVES TO ADD AMEND AND WITHDRAW ANY GROUND OF APPEAL BEFORE THE ORDER IS PASSED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2014-15 ON 30 TH SEPTEMBER, 2014 DECLARING TOTAL INCOME AT RS. NIL. THE SAID RETURN WAS PROCESSED U/S 143 (1) OF THE ACT, BY DISALLOWING CLAIM OF EXEMPTION U/S 11 A ND DETERMINING THE TOTAL INCOME AT RS. 35,44,930/-. THE APPELLANT FILED RECT IFICATION APPLICATION U/S 154 OF THE ACT. THE DEPUTY COMMISSIONER OF INCOME TAX ( CPC), BANGALORE (HENCEFORTH AO) REJECTED THE REQUEST FOR RECTIFI CATION VIDE ORDER DATED 8 TH NOVEMBER, 2016. 4. AGGRIEVED BY THE ORDER OF THE AO, THE APPELLANT FILED AN APPEAL BEFORE THE LD. CIT (A). WE FIND THAT VIDE ORDER DATED 15.01.2019, THE LD. CIT (A) DISMISSED THE APPEAL FILED BY THE ASSESSEE BY OBSERVING THAT: 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, ORAL CONTENTIONS AND WRITTEN SUBMISSIONS OF THE ASSESSEE, MENTION OF THE AO IN THE IMPUGNED ORDER AND MATERIAL AVAILABLE ON RECORD. IN THIS CAS E THE APPELLANT HAD FILED RECTIFICATION APPLICATION U/S 154 OF THE ACT TO THE AO (CPC), WHICH WAS REJECTED BY THE AO OBSERVING THAT THERE WAS NO PRIM A FACIE ERROR IN THE ORDER WHICH WAS SOUGHT TO BE RECTIFIED. IN THE SAID ORDER OF THE AO IT HAS BEEN NOTED IN THE E-FILED RETURN OF INCOME, THE ASSESSEE HAD C LAIMED EXEMPTION U/S 11 BUT HAS NOT FURNISHED DETAILS OF THE AUDIT IN THE S CHEDULE OF AUDIT INFORMATION AND THAT IN THE RECTIFICATION APPLICATION, THE APPE LLANT HAD MADE FRESH CLAIM OF INCOME WHICH COULD NOT BE MADE IN THE RECTIFICATION REQUEST. DUE TO THESE REASONS, RECTIFICATION APPLICATION WAS REJECTED BY THE AO (CPC). IT IS MENTIONED IN THE SUBMISSION OF THE ASSESSEE THAT DU E TO OVERSIGHT THE ITA NO. 1786/M/2019 PADMASHALI YUVAK SAMAGH 3 AUDITORS NAME WAS NOT MENTIONED IN THE ITR-7. IT I S FURTHER SEEN THAT THE APPELLANT IN THEIR SUBMISSION HAVE DETAILED THE PRO VISIONS OF SEC. 12A(1)(B) AND HAVE CONTENDED THAT THE TRUST HAS GOT ITS ACCOU NTS AUDITED AND AUDITORS HAVE FILED THE AUDIT REPORT IN FORM 10 B ON 29.09.2 014 AND THE RETURN OF INCOME WAS FILED ON 30.09.2014. THE APPELLANT HAS F URTHER CONTENDED THAT NON-MENTION OF THE NAME OF THE AUDITOR IN THE RETUR N OF INCOME IS PURELY TECHNICAL IN NATURE AND THEREFORE THE LEARNED AO SH OULD NOT HAVE REJECTED THE APPLICATION U/S 154 OF THE ACT. IN REGARD TO SUCH C ONTENTION OF THE ASSESSEE IT IS STATED THAT THE APPELLANT IN THEIR SUBMISSION HA S NOWHERE BROUGHT OUT ANY MISTAKE APPARENT FROM RECORD IN THE ORDER U/S 143 ( 1) WHICH WAS SOUGHT TO BE RECTIFIED BY THE APPLICATION U/S 154 MADE TO THE AO (CPC). IT HAS FURTHER MENTIONED THAT WHAT COULD BE RECTIFIED BY THE AO IS MISTAKE APPARENT FROM RECORD WHICH HAS CREPT UP IN ANY ORDER PASSED BY HI M WHICH IS APPARENT FROM RECORDS. AS CAN BE SEEN FROM THE FACTS OF THE CASE MENTIONED ABOVE, AS ALSO FROM THE SUBMISSIONS OF THE ASSESSEE THAT THERE WAS NO MISTAKE CREPT UP IN THE ORDER/INTIMATION PASSED U/S 143 (1) OF THE ACT WHICH COULD HAVE BEEN RECTIFIED U/S 154 OF THE ACT. IT IS FURTHER MENTION ED THAT THE INSTANT APPEAL IS NOT AN APPEAL AGAINST THE ORDER/INTIMATION U/S 143 (1) OF THE ACT AND THERE IS NO MISTAKE APPARENT FROM RECORD IN SUCH ORDER WHICH COULD HAVE BEEN RECTIFIED BY THE AO U/S 154 OF THE ACT. FURTHER IN THE PROCEEDINGS U/S 154 OF THE ACT, NO NEW FACTS, CLAIMS ETC. COULD BE CONSIDE RED FOR GIVING EFFECT. UNDER THESE FACTS AND CIRCUMSTANCES, THE CONTENTION AND S UBMISSIONS OF THE ASSESSEE ARE NOT FOUND TO BE ACCEPTABLE AND ARE THE REFORE REJECTED. THE GROUND OF APPEAL RAISED IS THEREFORE DISMISSED. 5. BEFORE US, THE LD. COUNSEL FOR THE APPELLANT SUB MITS THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2014-15 ON 30.09.20 14 DECLARING TOTAL INCOME AT RS. NIL. THE SAID RETURN WAS PROCESSED U/S 143 ( 1) BY THE ASSISTANT COMMISSIONER OF INCOME TAX (CPC) DETERMINING TAX PA YABLE AT RS. 10,77,730/-. ITA NO. 1786/M/2019 PADMASHALI YUVAK SAMAGH 4 THE APPELLANT FILED A RECTIFICATION APPLICATION AGA INST THE ABOVE ORDER, WHICH WAS REJECTED BY THE DY. COMMISSIONER OF INCOME TAX, CPC WITH THE FOLLOWING OBSERVATIONS:- ON VERIFICATION, IT IS SEEN THAT THERE IS NO PRIMA FACIE ERROR IN THE ORDER WHICH YOU HAVE SOUGHT TO RECTIFIED. THEREFORE, YOUR APPLICATI ON FOR RECTIFICATION U/S 154 IS REJECTED FOR THE FOLLOWING REASONS: AS SEEN FROM THE E-FILED RETURN OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE HAS CLAIMED EXEMPTION U/S 11 BUT HAS NOT FURNISHED DETA ILS OF AUDIT IN THE SCH, AUDIT INFORMATION IN VIEW OF THE ABOVE, THIS RECTIFICAT ION REQUEST IS REJECTED. THE LD. COUNSEL SUBMITS THAT THE AO HAS PASSED THE ORDER U/S 143 (1), DISALLOWING ALL THE EXPENDITURE CLAIMED IN THE RETU RN OF INCOME OF RS. 17,12,592/- AND AMOUNT SET APART OF RS. 4,37,842/- ; IN SHORT THE AO HAS BROUGHT TO TAX THE ENTIRE INCOME (WITHOUT DEDUCTION OF EXPENDITURE) AND RAISED THE DEMAND OF RS. 10,77,730/-. IT IS STATED BY HIM THAT THE APPELLANT TRUST GOT ITS ACCOUNTS AUDITED AND THE AUDITORS HAVE FILED TH E AUDIT REPORT IN FORM 10B ON 29.09.2014 AND THE RETURN OF INCOME WAS FILED ON 30.09.2014. IT IS STATED THAT WHILE FILING THE RETURN OF INCOME THE ASSESSEE BY OVERSIGHT DID NOT MENTION THE NAME OF THE AUDITORS IN ITR 7. THUS, IT IS SU BMITTED THAT THE SAME BEING A MISTAKE APPARENT FROM RECORD, IT IS AMENABLE TO REC TIFICATION U/S 154 OF THE ACT. IN THIS REGARD, RELIANCE IS PLACED BY HIM ON THE OR DER OF THE ITAT H BENCH, MUMBAI IN THE CASE OF KASTURI FOUNDATION VS. DCIT (ITA NO. 3663/MUM/2019) FOR AY 2016-17. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) SUBMITS THAT THE APPELLANT IN THEIR SUBMISSION IN APPLICATI ON U/S 154 HAS NO WHERE ITA NO. 1786/M/2019 PADMASHALI YUVAK SAMAGH 5 BROUGHT OUT ANY MISTAKE APPARENT FROM RECORD IN TH E ORDER U/S 143 (1) WHICH WAS SOUGHT TO BE RECTIFIED BY APPLICATION U/S 154 M ADE TO THE AO (CPC). THUS, IT IS SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT ( A) BE AFFIRMED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE REASONS FOR OUR DECISION A RE GIVEN BELOW:- IN THE INSTANT CASE, THE APPELLANT TRUST GOT ITS A CCOUNTS AUDITED AND AUDITORS HAVE FILED THE AUDIT REPORT IN FORM 10B ON 29.09.2014. THE RETURN OF INCOME WAS FILED ON 30.09.2014. IT IS THE CONTENTIO NS OF THE APPELLANT THAT NON- MENTIONED OF THE NAME OF THE AUDITOR IN THE RETURN OF INCOME IS PURELY TECHNICAL IN NATURE AND THE AO SHOULD NOT HAVE REJE CTED, THE APPLICATION U/S 154 OF THE ACT. IN KASTURI FOUNDATION (SUPRA) RELIED ON THE LD. COUNSEL, FOR THE AY 2016 - 17, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARI NG NIL INCOME AFTER CLAIMING EXEMPTION U/S 11 OF THE ACT. WHILE PROCESSING THE R ETURN OF INCOME U/S 143 (1) OF THE ACT, THE AO (CPC) DISALLOWED AN AMOUNT OF RS . 20,01,732/- AND TREATED IT AS INCOME OF THE ASSESSEE. AGAINST THE INTIMATION I SSUED U/S 143 (1) OF THE ACT, THE ASSESSEE MADE AN APPLICATION FOR RECTIFICATION U/S 154, STATING THAT SINCE 85% OUT OF THE INCOME RECEIVED HAS BEEN APPLIED FOR THE OBJECTS OF THE TRUST, EXEMPTION U/S 11 OF THE ACT IS AVAILABLE. THE AFORE SAID APPLICATION U/S 154 OF THE ACT WAS DISMISSED BY THE AO (CPC). THE TRIBUNAL VIDE ORDER DATED 11.11.2020 HELD THAT: 3. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. UNDISPUTED FACTS ARE, THOUGH, THE ASSESSEE HAD FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER DISPUTE ON 12 TH SEPTEMBER 2016, ITA NO. 1786/M/2019 PADMASHALI YUVAK SAMAGH 6 HOWEVER, HE HAS FILED THE AUDIT REPORT ELECTRONICAL LY ON 21ST SEPTEMBER 2016. OF COURSE, THE AUDIT REPORT WAS APPROVED BY THE TRU STEES ON 18TH MAY 2017. BUT, FACT REMAINS THAT THE ASSESSEE HAD FILED THE A UDIT REPORT MUCH PRIOR TO THE DUE DATE OF FILING OF RETURN OF INCOME UNDER SE CTION 139(1) OF THE ACT. THE CLAIM OF THE ASSESSEE THAT IT HAS APPLIED 85% OF IT S RECEIPTS TOWARDS THE OBJECTS OF THE TRUST HAS NOT BEEN DISPUTED BY THE D EPARTMENTAL AUTHORITIES AT ANY STAGE. DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT IS ONLY FOR THE REASON THAT AUDIT REPORT IN FORM NO.10B OF THE ACT WAS FILED BELATEDLY. PERTINENTLY, IN CIRCULAR NO.10./2019, THE CBDT HAS CLARIFIED THAT FOR THE ASSESSMENT YEAR 201617 AND 201718, IN ALL CASES W HERE THE AUDIT REPORT FOR THE YEAR UNDER CONSIDERATION HAS BEEN OBTAINED BEFORE FILING OF THE RETURN OF INCOME AND HAS BEEN FURNISHED SUBSEQUENT TO FILI NG OF RETURN OF INCOME, BUT BEFORE THE DATE SPECIFIED UNDER SECTION 139 OF THE ACT, SUCH DELAYED FILING SHOULD BE CONDONED. IN THE FACTS OF THE PRESENT CAS E, THE CLAIM OF THE ASSESSEE THAT IT HAS OBTAINED THE AUDIT REPORT PRIOR TO THE DATE OF FILING OF RETURN OF INCOME AND HAS FILED AUDIT REPORT BEFORE THE DUE DA TE OF RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT HAS NOT BEEN CONTRO VERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THE LEARNED COMMISSION ER (APPEALS) HAS ALSO UPHELD THE DISALLOWANCE OF EXEMPTION BY SIMPLY STAT ING THAT IT IS NOT A RECTIFIABLE MISTAKE UNDER SECTION 154 OF THE ACT. I N OUR VIEW, WHEN THE ASSESSEE HAS COMPLIED WITH THE STATUTORY PROVISIONS IN TERMS OF THE CBDT CIRCULAR, THE DELAY IF ANY, IN FILING THE AUDIT REP ORT SHOULD HAVE BEEN CONDONED. IN VIEW OF THE AFORESAID, WE DELETE THE D ISALLOWANCE MADE AND ALLOW ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 1 1 OF THE ACT. GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7.1 THE ABOVE ORDER OF THE TRIBUNAL IS APPLICABLE T O THE INSTANT CASE. FOLLOWING IT, WE SET ASIDE THE ORDER OF THE LD. CIT (A). ITA NO. 1786/M/2019 PADMASHALI YUVAK SAMAGH 7 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.01.2021. SD/- SD/- (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 27.01.2021 ALINDRA, P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI