PRESENTATION SOCIETY VASCO DA GAMA GOA, VASCO DA GAMA GOA V. INCOME TAX OFFICER EXEMPTIONS WARD, PANAJI GOA

ITA 26/PAN/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8076 (ITAT-PANAJI)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 07-02-2024
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ATUL JOSHI
• Keywords: Principle of natural justice
• Section: 119(2)(b); 10B; 195; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं . / ITA No.26/PAN/2024 िनधा रण वष / Assessment Year : 2016-17 Presentation Society Vasco Da Gama Goa, H.No.4/153/B(1), C/o. St. Therese’s High School, Mangor Hill, Vasco Da Gama, Goa – 403 802 PAN : AAAAP0698N Vs ITO, Exemption Ward, Panaji Appellant/ Assessee Respondent /Revenue Assessee by Shri Atul Joshi – AR Revenue by Shri N. Shrikant - DR Date of hearing 14/03/2024 Date of pronouncement 28/03/2024 आदेश / ORDER PER SATBEER SINGH GODARA, JM: This assessee’s appeal for assessment year 2016-17, arises against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No.ITBA/NFAC/S/250/2023-24/1058562715(1), dated 07.12.2023, involving proceedings u/s.143(3) of the Income Tax Act, 1961 (in short “the Act”). Heard both the parties at length. Case file perused. 2. The assessee pleads the following substantive grounds in the instant appeal : “1. The Complainant is an Educational Institution, engaged in running Primary & Secondary education in the state of Goa, engaged in the noble cause of education for more than 45 years, However due to some delay in filling relevant forms such as Form No. 10 & Form No. 10B as per Income Tax Act,1961 huge amount of tax has been assessed on the complainant by disallowing accumulation of Income of Rs.40,00,400/- for the Asst, Year 2016-17. ITA No.26/Pan/2024 2 2. The learned Income Tax Officer has summarily rejected accumulation of Income of Rs,40.00,400/- only on ground of delay of 71 days despite being very regular in all other compliances on year to year basis is improper and disproportionate to all norms of natural justice and also against several judicial pronouncements wherein it is held that compliances are only directory in nature and not mandatory. 3. The rejection of accumulation of income of Rs.40,00,400/- is also against application of CBDT Circular No.7/2018 File No-197/55/2018-ITA-1, particularly against the Clauses (5) and (6) of the said Circular, hence the learnt authorities have erred in applying the provisions of the Act against your complainant. 4. The learned assessing officer has not appreciated that the requirement of filling Income Tax Form No, 10B on or before the due date as per Sec 139(1) of Income Tax Act for claiming deductions on account of accumulation of Income was introduced only with effect from the Asst, Year 2016-17, being the first year of Introduction. 5. The Complainant states that the delay in filling forms for Accumulation of Income was not intentional or by any motive to avoid tax and has sufficiently complied with the income tax provisions during the relevant financial year of 2015-16 with a mere delay of 71 days. 6. The complainant states that the mere delay of 71 days has made them suffer Income Tax of over Rupees Fourteen Lakhs ignoring the fact that your Complainant has never breached any provisions of the Income Tax Act, 1961 for over 45 years and also engaged in providing education in the state of Goa. 7. The complainant states that the learned Commissioner of income Tax (Appeals) has erred by not providing any opportunity of hearing before passing adverse order rejecting our appeal. No opportunity of personal or virtual hearing was provided before the impugned order was passed. As such, this order is passed in violation of principles of natural justice. 8. Vide CBDT Circular No, 7/2018 dated 20-Dec-2018. CBDT had authorized the Commissioner of Income Tax to admit belated applications in form no. 10 in respect of AY 2016-17. The complainant had duly made an application for condonation of delay in filing form No, 10. However, Commissioner of Income Tax (Exemptions) has rejected the application for condonation for not satisfying the condition of section 13(9) of the Income Tax Act, 1981 which was only introduced with effect from 01- Apr-2016, However CIT(Exemptions) has erred in appreciating that the aforementioned CBDT Circular specifically empowers the commissioners to condone the delay on account of non- satisfaction of condition u/s 13(9) of the Income Tax Act, 1961. 9. The rejection of Accumulation is against the following Judicial Pronouncements. It was held that assessees are entitled to deduction/exemption, since it is only a procedural matter. 1. Maa Bhagwati Shiksha Samiti vs Commissioner of Income Tax (High Court of Allahabad) (2023) 7 NYP CTR 1767 (All) 2. Hart Gyan Pracharak Trust v/s DOT (ITAT, Ahmedabad dt 16/06/2023) 3. Income Tax Officer (Exemption) vs Ramji Mandir Religious & Charitable Trust (2024) 38 NYP TTJ 6 (Ahd) (ITAT, Ahmedabad dt 20/12/2023) 4. Gujrat High Court Bar Association of Indian Panelboard Manufacturer v/s DCIT-R Tax Appeal No 655 of 2022. ITA No.26/Pan/2024 3 5. Audit Report can be submitted at Appellate Stage, CIT v/s Shahzedanand Charity Trust (1997), 228 ITR 292(PH). 6. Audit Report can be filed at Assessment Stage. CIT v/s Rai Bahadur Motilal Trust (1992) 195 ETR 825 7. Audit Report can be filed at Appeal Stage, Calcutta Calcutta Management Association v/s ITO (1992) 42 ITD 62 Calcutta 8. Audit Report with Return only Procedural Gujarat High Court in CIT v/s. Gujrat Oil & Allied Industries (1993) 201 ITR 325 9. Audit Report not filed with Return, no ground to reject for approval National Horticulture Board v/s CIT (1992) 198 ITR 511 DD 3. Both the learned representatives next took us to the CIT(A) detailed discussion affirming the Assessing Officer’s action as under : “5.0 Appellate Findings: 5.1 I have carefully examined and considered the facts of the case, the findings of the AO contained in assessment order, submission/reply along with case laws and judicial pronouncement filed by the appellant during the appellate proceedings. 5.2 Ground No 1, 2, 3:- Vide these grounds of appeal, the appellant trust challenged the findings of the AO contained in his assessment order. The appellant has stated that it has been regular in filing the ROI and insuring the statutory compliances. The compliance regarding e filing of form 10B Audit report and e filing of form 10 for accumulation of income was introduced for the first time with effect from Ay 2016- 17. Therefore AO is not justified in disallowing of accumulation of income for this year. Further appellant has stated that AO has erred in applying in CBDT Circular no 7/2018 issued for admitting belated application in form no 10 and condonation of delay in e filing of the same. When the appellant has sufficiently complied with the requirements of circular regarding investment of accumulated surplus as provided u/s 11(5) of the IT Act. further appellant has stated that AO has not appreciated that the requirement of filing IT return before due date specified u/s 139(1) on account of accumulation of income or exemption of income applied for charitable purpose was introduced only with effect from assessment year 2018-19. 5.3:- I have duly examined and considered the facts of the case, the findings of the AO on these issues and reply of the appellant filed during appellate proceedings. From the perusal of assessment order it is seen that the appellant Trust is registered u/s 12AA of IT Act vide order of CIT Mysoore(2) dated 07.02.1976. During the assessment proceedings, it was noticed by the AO that appellant trust has filed form 10B on 28.12.2016. The Trust has accumulated Rs.40,00,400/- u/s.11(2) but not filed form 10as required under the Law. The AO had issued show cause notice to the appellant trust on this issue. The AO has noted that the due date for filing ROI electronically for the AY 2016-17 was 17.10.2016 and the appellant trust has submitted on 18.12.2016, it was beyond the due date. Further it has been noted by the AO that Audit report in form 10B was also not submitted within the due date. The AO has noticed that appellant trust has not fried form 10 electronically as required under IT Act for claiming accumulation as per sec 11(2) of IT Act. It is noted by the AO that appellant trust has accumulated Rs. 40,00,400/- as per return submitted during the year. However, it has failed to submit the form 10 within due date u/s.139(1) of the IT Act. AO has concluded that in case form 10 is not submitted before due date, then the benefit of accumulation would not be available and such income will be taxable at the applicable rate. The AO has also noted that sec 11(2) and sec 13(9) was amended from ITA No.26/Pan/2024 4 AY 2016-17 and has concluded that since appellant trust has failed to file form 10 within due time as per amended provision thereby failed to satisfy the condition stipulated in sec 11(2) and 13(9). In view of the above findings The AO has made addition of Rs. 40,00,400/- in the taxable income of the appellant trust. 5.4:- The appellant ahs opposed the finddings of the AO and has argued that AO has not considered the submission the submission of AO filed during assessment proceedings. It has been argued by the appellant that e filing of Form 10 as prescribed under section 11(2) read with rule 17(2) was made mandatory for the first time for AY 2016-17 and due to confusion arising out of first-time introduction of e filing of Form 10 it was delayed and was subsequently filed on 07.12.2018. The appellant trust has been very regular and prompt in filing the ROI and all other statutory form within time. During the AY 2016-17 under question there was change in management of society and new management realised only in November 2016 that the IT return of the society were not filed which was immediately taken up and completed in December 2016 causing a delay of about 2 months. The appellant trust has explained that it had applied for condonation of delay in filing ROI and e filing of Form 10 to the CIT Exemption, Bengluru. However, Cit Exemption has rejected our application for not satisfying the condition of sec 13(9) which were only inserted on 01.04.2016. In support of its contention the appellant trust has cited the decision of Jaya Educational Trust Chennai vs DCIT, ITAT Chennai where in it has been held that in case of bonafide reasons of delay in filing ROI and form 10, assessing officer should condone the delay. 5.5:- On the proper evaluation and appreciation of the findings of the AO contained in his assessment order and reply filed by appellant during the appellate proceeding it is seen that action of the AO in rejecting the claim of carry forward of accumulation of Rs. 40,00,400/- is not in accordance with the law in the light of amended provision in sec 11(2) and sec 13(9) of the IT Act. It is seen that appellant trust has filed the form 10 beyond due time as specified in the emended provision of the Act effective from AY 2016-17. With effect from 1 st April 2016, there has been change in the existing provision and if there is delay in filing form 10, the entire accumulation is liable to be taxed during the year under consideration. Under section 11(2)(c) read with rule 17, any accumulation made under form 10 form 9A shall not be allowed if the respective form is not filed within due date of filing of return u/s 139(1). Further it is also important to note that CBDT vide its circular no. 7/2018 file no 197/55/2018-ITA-1 dated 20.12.2018 has authorised the CIT to condone the delay in filing of form 9A and Form 10 u/s 119(2)(b) only for AY 2016-17. In this regard it is noted that appellant application for condonation of delay has been rejected by the CIT exemption for the Ay under consideration i.e. 2016-17 for not satisfying the condition of sec 13(9) of IT Act. Considering the factual matrix of the present appeal in the light of amended provision of u/s.11(2) read with rule 17(2) it is held that action of the AO in rejecting the, claim of accumulation of Rs.40,00,400/- is correct and in accordance with the provision of the law. Hence, the action of the AO in making addition of Rs.40,00,400/- is sustained. Therefore, these grounds of appeal are dismissed. 6.0: In the result, the appeal is dismissed.” 4. Learned counsel vehemently argued that both the lower authorities have wrongly rejected assessee’s accumulation claim merely because of the fact that it’s Form No.10 had been belatedly filed. He further referred to a catena of case law(s) that such a compliance is merely directory than mandatory in nature. ITA No.26/Pan/2024 5 5. We have given our thoughtful consideration to the assessee’s foregoing vehement contentions and find no merit therein. It is made clear that the assessee had applied for condonation in filing of Form 10 before the CIT (Exemption) in light of the CBDT Circular (supra) which stood rejected by the latter. We wish to emphasize that the CIT (Exemption)’s said refusal does not form subject matter of the instant adjudication before us in second appeal proceedings. The same has admitted attained finality sofaras the instant question of delay in submission of Form No.10 on the assessee’s behest is concerned. It is in these peculiar facts and circumstances, that we see no substance in assessee’s foregoing pleadings that both the learned lower authorities have erred in law and on facts in not granting the impugned accumulation benefit. The assessee fails in its sole substantive ground in very terms. 6. In the result, this assessee’s appeal is dismissed. Order pronounced in the open Court on 28 th March, 2024. Sd/- Sd/- (DR. DIPAK P. RIPOTE) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दनांक / Dated : 28 th March, 2024 Satish* ITA No.26/Pan/2024 6 आदेशक ितिलिपअ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. यथ / The Respondent. 3. The Pr. CIT, concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, Panaji Bench, / DR, ITAT, “Panaji” Bench. 5. गाड फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune