SHRI NAMDEO MOTIRAM MANGAONKAR CHARITABLE TRUST, MUMBAI V. COMMISSIONER OF INCOME TAX (APPEALS) NFAC, DELHI, DELHI

ITA 2363/MUM/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9225 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-10-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 15-09-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Charitable institution; Opportunity of being heard; Condonation of delay; Set aside
• Section: 154; 11; 12A; 143(1)

Judgement Text

1 ITA 2363/Mum/2022 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) I.T.A No.2363/Mum/2022 (Assessment year 2017-18) Shri Namdeo Motiram Mangaonkar Charitable Trust, 501/A, Shivhara, Carter Road No.2, Borivali East-400 066 M/s UBR Legal Advocates, 806, 8 th Floor, D Square Building Opp. Goklibai School, Vile Parle (West), Mumbai-400 056 PAN : AAHTS1970N vs Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi Assessee represented by Shri Bharat Raichandani Revenue represented by Shri Rajendra Chandekar Date of hearing 01/11/2022 Date of Pronouncement 01/11/2022 ORDER The Appellant, Shri Namdeo Motiram Mangaonkar Charitable Trust (hereinafter referred to as the ‘assessee’) by filing the present appeal, sought to set aside the impugned order dated 26/07/2022 passed by National Faceless Appeal Centre, Delhi [hereinafter referred to as the ‘CIT(A)’] qua the assessment order for Assessment Year 2017-18 on the grounds interalia that :- “A. At the outset the appellants submit that the impugned order passed by the appellate authority is incorrect on facts as well as on law. The appellant does not agree and counters each and every finding of the appellate authority which is 2 ITA 2363/Mum/2022 against the appellant. Nothing stated in the said order shall be deemed to be true or accepted as true for want of specific denial, unless so stated or admitted in the present appeal memo. The appellate authority has passed the impugned order without application of mind. The impugned order has been passed with a biased mind. There is no free and fair adjudication. The impugned order lacks bonafide. Therefore, the impugned order is liable to be set aside. B. Without prejudice to the submissions made herein, it is submitted that the impugned order is totally misconceived, in so much so that it is based on erroneous decision made on various assumptions and presumptions. Hence, the impugned order is liable to be set aside. C. The appellate authority has erred in passing the impugned order without giving any consideration to submissions made by the appellant. The appellate authority has passed the impugned order on the basis of the submission which were never made by the appellant. The relevant portion of the impugned order is reproduced below for ready reference: "The worthy Pr. CIT (Exemptions) had through his order dated 30.06.2021 condoned the delay. On the basis of this order, a rectification order dated 27.07.2021 was passed by the jurisdictional assessing officer and the demand raised u/s 143(1) was reduced to nil. In view of this factual position it was prayed that the above appeal may please be treated as withdrawn. Copy of the reply dated 04.01.2022 along with copy of the rectification order u/s 154 as already submitted earlier is being uploaded again for convenience in reference. Also evidence of having uploaded the above reply on 04.01.2022 is also being uploaded. In view of the above, the appeal filed by the assessee may please be treated as withdrawn. Copy of 143(1) against which appeal was filed was uploaded along with the appeal memo. This is again being uploaded as directed in the Annexure to the present notice." D. The above submission was never advanced by the appellant. The above submission does not form part of any of the submissions, written submissions, grounds of appeal or other documents filed by the appellant. On this ground alone, the impugned order is liable to be quashed and set aside. E. In law as well, the appellate authority has erred in disallowing the claim u/s 11(2) of the Income Tax Act, 1961. The appellant respectfully states that Form 10 was already available on record. Non submission of form 10 along with return of income was, at best, a technical fault which is procedural in nature which by itself cannot and should no have deprived the appellant - assessee of the deduction which is legitimately and legally available. The Central Board of Direct Taxes had issued circular No. 7/2018 dated 20/12/2018 for A.Y.2016-17 for condonation of delay U/s 119(2) of the Income tax act, 1961 in filing of the form no. 10 and form 3 ITA 2363/Mum/2022 no. 9A for A.Y 2016-17. Vide circular no. 30/2019 [F. No. 197/55/2018-ITA-l dated 17/12/2019 the benefit of the condonation of delay in filing form no. 10 and form no. 9A was extended to A.Y 2017-18. F. The appellate authority erred in not condoning the delay, if any, in filing of Form 10. The appellant submits that the condonation was subject to verification of the requirement of U/s 11 (5) of the Income Tax Act, 1961. In the case of appellant, the investment details were available on record, as the appellant had filed Form No. 10B alongwith the return of income. It is respectfully submitted that even, in the absence of Form no. 10 the details of accumulation as required by the form no. 10 were on record consequent to availability of Form no. 10. Further, The income tax department had also issued circular no. 273 dated 03/06/1980. The purpose of the said circular is to expedite the disposal of applications filed by trusts for condoning the delay, the Board had passed a general order under section 119(2)b by which the Commissioners have been authorised to admit belated applications under section 11(2) read with rule 17. Also, reliance is placed on Circular no. 14-XL-35. Dated 11/04/1955 which we have advanced in previous replies. G. Further, the appellant relies upon Dattatraya Gopal Shtte v CIT [1984] 150FTR 460) (Bom.), wherein, the above circular was referred to with the observation that the circulars are binding upon the officers and the officers must carry their duties as per circular. H. The appellate authority has erred, in law, in not considering the decisions of various courts: a) Maharaj Jain v. Deputy Commissioner of Income Tax (Exemptions) [2019]110 taxmann.com 11 (madras) wherein it has been held as under: Where in order to claim benefit of section 11(2), assessee-trust filed form No. 10 belatedly and, thus, same was rejected by assessing officer, it could not be concluded that when assessee was entitled to statutory benefit, it was incumbent upon concerned authority to examine admissibility of benefit than no foreclose assessee on technicalities and, therefore, impugned order was to be set aside with a direction to Assessing officer to take note to Form no. 10 accompanied with Board Resolution and, thereupon, take a decision on merits of case. b) [2013]37 taxmann.com 12 (Delhi - Trib) in the ITAT Delhi Bench E' Moti Ram Gopi Chand Charitable Trust v. Additional Commissioner of income tax, Range -2, Muzaffarnagar which held : Irregularity and delay in filing form no. 10 for claiming exemption under section 11 can be condoned and exemption can be allowed to assessee society where amount of investment in next year exceeds upset amount. c) [2001]114 Taxmann.com 255(SC) Supreme court of India Commissioner of Income tax v. Nagpur Hotels Owners' Association which held: The assesee was an association of hotel owners which was registered under the Societies Registration Act 1860. The object of the association was to co-ordinate 4 ITA 2363/Mum/2022 the activities of hotel owners and to help them in their business. The assessee claimed exemption under section 11. The Assessing Officer held that the object of the assessee was not charitable but was to carry on the profit-making activities and, hence, it was not entitled to exemption under section 11. The Assessing officer also held that the assessee had not applied for accumulation of its income for charitable purposes as required under section 11(2) within the time specified in rule 17 of the Income-tax Rules, 1962; hence, he assessed the total income of the association to tax under the Act. On appeal, the appellant authority confirmed the said order On second appeal, the Tribunal held that the assesse's objectives were charitable and, hence the relief sought for by & the assesse could not be refused on that ground. The Tribunal looked that the time-limit fixed under rule17 could not be insisted upon by the assessing authority because that the said rules could have a fixed time-limit for filing an application under section 11(2). The Hon'ble High court affirmed the order of the Tribunal. I. In view of the above, the appellant submits that the imposition of penalty is wholly illegal and unwarranted. No penalty can be imposed on the appellant. J. The appellants crave leave to refer and rely upon any case law and/or judgment, as and when produced.” 2. Briefly stated, facts necessary for adjudication of the issues at hand are : Assessee being a charitable trust registered with the Directorate of Income- tax (Exemption), Mumbai under section 12A of the Income-tax Act, 1961 (in short, ‘the Act’) filed return of income by claiming exemption under section 11(2) of the Act by declaring Nil income. Assessee failed to file Form No.10 alongwith the income-tax return which was filed electronically on 20/12/2018. So Central Processing Centre (CPC) did not consider Form No.10 physically filed by the assessee and processed the return under section 143(1) of the Act by disallowing claim of Rs.23,53,647/- under section 11(2 of the Act and thereby raised the demand. 3. Assessee carried the matter before the Ld.CIT(A) by filing appeal who has dismissed the same on the premise that the appeal has become infructuous. 5 ITA 2363/Mum/2022 Feeling aggrieved, the assessee has come up before the Tribunal by way of filing present appeal. 5. We have heard the learned representatives of the parties to the appeal, perused the orders passed by learned lower Revenue Authority and documents available on the record in the light of the facts and circumstances of the case. 6. Bare perusal of the order passed by the Ld.CIT(A) and the grounds raised by assessee go to prove that Ld.CIT(A) has passed the order, may be due to inadvertence, on some different premise that “in view of the rectification order passed under section 154, appeal filed by the assessee is to be treated as withdrawn by recording following findings:- "The worthy Pr. CIT (Exemptions) had through his order dated 30.06.2021 condoned the delay. On the basis of this order, a rectification order dated 27.07. 2021 was passed by the jurisdictional assessing officer and the demand raised u/s 143(1) was reduced to nil. In view of this factual position it was prayed that the above appeal may please be treated as withdrawn. Copy of the reply dated 04.01.2022 along with copy of the rectification order u/s 154 as already submitted earlier is being uploaded again for convenience in reference. Also evidence of having uploaded the above reply on 04.01. 2022 is also being uploaded.” 7. The Ld.AR for the assessee contended that, may be due to inadvertence, the Ld.CIT(A) has decided the appeal on wrong facts as the assessee has never moved an application under section 154 nor has it filed, any such submissions dated 17/01/2022 before Ld.CIT(A). This factual position has not been controverted by the Ld.DR for the Revenue. It goes to prove that the grounds raised by the assessee has never been decided by the Ld.CIT(A), rather, wrongly dismissed the appeal as withdrawn having been become infructuous. To impart justice and to decide the issue once for all, I hereby remit the case back to Ld.CIT(A) to decide afresh on merits, after providing opportunity of being heard to the assessee. 6 ITA 2363/Mum/2022 8. Resultantly, appeal filed by the assessee is allowed for statistical purpose. Sd/- (KULDIP SINGH) JUDICIAL MEMBER Mumbai, Dt : 01 November, 2022 Pavanan Copy to : 1. The appellant 2. The respondent 3. The CIT concerned 4. The CIT(A) 5. DR,SMC Bench 6. Guard File (True copy) By order Dy.Registrar / Asstt.Registrar ITAT, Mumbai Benches