M/s Nattoja Foundation Trust , Dakshina Kannada V. Joint Commissioner of Income Tax (E) Range, Hubli

ITA 2615/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4543 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 18-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: V SRINIVASAN
• Keywords: Charitable institution; Reasonable cause
• Section: 273B; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI A.K.GARODIA, ACCOUNTANT MEMBER ITA NOS.2615 TO 2617/BANG/2018 ASSESSMENT YEARS : 2013-14 TO 2015-16 M/S NATTOJA FOUNDATION TRUST, #122-112, SHREE CHAKRA, BAPPALIGE, PUTTUR, DAKSHINA KANNADA 574 201. PAN AABTN 3493 K. VS. THE JT. COMMISSIONER OF INCOME-TAX, EXEMPTION RANGE, HUBBALLI. APPELLANT RESPONDENT APPLICANT BY : SHRI V SRINIVASAN, ADVOCATE RESPONDENT BY : SMT. PADMA MEENAKSHI, JCIT (DR) DATE OF HEARING : 26.08.2019 DATE OF PRONOUNCEMENT : 28.08.2019 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THR EE ORDERS, ALL DATED 26/6/2018 OF THE CIT(APPEALS)-10, BENGALU RU, RELATING TO ASSESSMENT YEARS 2013-14, 2014-15 AND 2015-16. IN BOTH THESE APPEALS, THE ASSESSEE HAS CHALLENGED THE IMPOSITION OF PENALTY ON THE ASSESSEE U/S 272A(2)(E) OF THE INCOME-TAX ACT,1 961 ['THE ACT' FOR SHORT]. 2. UNDER THE PROVISIONS OF SECTION 139(4A) OF THE A CT, EVERY ASSESSEE WHICH HAS RECEIPTS OF INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OR OTHER LEGAL OBLIGATION HAS TO FILE R ETURN OF INCOME IRRESPECTIVE OF ITS TAX LIABILITY, IF ITS INCOME EX CEEDS MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, BEFOR E GIVING EFFECT ITA NOS.2615 TO 2617/BANG/2018 PAGE 2 OF 6 TO THE PROVISIONS OF SECTIONS 11 AND 12 OF THE ACT. THE ABOVESAID PROVISIONS READ AS FOLLOWS: 139(4A) EVERY PERSON IN RECEIPT OF INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OR OTHER LEGAL OBLIGATION WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR IN P ART ONLY FOR SUCH PURPOSES, OR OF INCOME BEING VOLUNTAR Y CONTRIBUTIONS REFERRED TO IN SUB-CLAUSE (IIA) OF CL AUSE (24) OF SECTION 2 , SHALL, IF THE TOTAL INCOME IN RESPECT OF WHICH HE IS ASSESSABLE AS A REPRESENTATIVE ASSESSEE (THE TOTAL INCOME FOR THIS PURPOSE BEING COMPUTED UNDER THIS A CT WITHOUT GIVING EFFECT TO THE PROVISIONS OF SECTIONS 11 AND 12 ) EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, FURNISH A RETURN OF SUCH INCOME OF THE PREVIOUS YEAR IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND ALL THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APP LY AS IF IT WERE A RETURN REQUIRED TO BE FURNISHED UNDER SUB - SECTION (1). ADMITTEDLY, THERE WAS A DELAY IN FILING THE RETURN OF INCOME BY THE ASSESSEE, THOUGH IT IS UNDISPUTED THAT THE INCOME O F THE ASSESSEE WAS NOT CHARGEABLE TO TAX IN VIEW OF THE PROVISIONS OF SECTION 10(23C)(IIIAD) OF THE ACT IN BOTH THE ASSESSMENT YE ARS. FOR ASSESSMENT YEAR 2013-14, THE DUE DATE FOR FILING RE TURN OF INCOME WAS 30/9/2013 BUT THE RETURN OF INCOME WAS FILED ON 6/12/2016. FOR ASSESSMENT YEAR 2014-15, DUE DATE FOR FILING RE TURN OF INCOME WAS 30/9/2015 BUT THE RETURN OF INCOME WAS FILED ON 16/12/2016. 3. UNDER SECTION 272A(2)(E) OF THE ACT, FAILURE TO FILE RETURN OF INCOME IN TERMS OF SECTION 139(4A) OF THE ACT IS LI ABLE TO PENALTY OF RS.100/- FOR EVERY DAY OF DELAY. HOWEVER, U/S 273B OF THE ACT, NO PENALTY U/S 272(A)(2)(E) OF THE ACT CAN BE LEVIED, IF FAILURE TO FILE RETURN OF INCOME WAS DUE TO REASONABLE CAUSE. THE REASONABLE CAUSE PLEADED BY THE ASSESSEE FOR CONSIDERATION BY THE REVENUE AUTHORITIES WAS THAT THE PRESIDENT OF THE TRUST WAS A VERY SENIOR CITIZEN OF MORE THAN 80 YEARS OF AGE. HE WAS UNDER BONA FIDE BELIEF ITA NOS.2615 TO 2617/BANG/2018 PAGE 3 OF 6 THAT SINCE INCOME OF THE TRUST IS EXEMPT U/S 10(23C )(IIIAD) OF THE ACT, THERE WAS NO REQUIREMENT TO FILE RETURN OF INC OME. WHEN THE CORRECT LEGAL POSITION WAS APPRISED, RETURN OF INCO ME WAS FILED IMMEDIATELY. IT WAS ALSO PLEADED THAT THERE WAS NO TAX LIABILITY AND THAT THE ASSESSEE WAS PRIMARY AND PRE-UNIVERSITY ED UCATION FOR STUDENTS IN RURAL AREA. THE ABOVE PLEA FOR REASONA BLE CAUSE WAS NOT ACCEPTED BY THE REVENUE AUTHORITIES AND HENCE T HE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HEAD THE RIVAL SUBMISSIONS. THE LEARNED COUN SEL FOR ASSESSEE PLACED RELIANCE ON THE DECISION OF THE BEN GALURU BENCH OF TRIBUNAL IN THE CASE OF HTSL COMMUNITY SERVICE TRUS T VS. JDIT(EXEMPTIONS) (2012) 52 SOT 144 (BANGALORE)(URO) WHEREIN ON IDENTICAL REASON, PENALTY-IMPOSED U/S 272(A)(2)(E) WAS DELETED BY THE TRIBUNAL. THE FOLLOWING WERE THE RELEVANT OBSE RVATIONS OF THE TRIBUNAL: IN THE INSTANT CASE, THE ASSESSEE WAS UNDER A BONA FIDE IMPRESSION FOR NOT FILING THE RETURN OF INCOME WITHIN THE PRESCRIBED TIME-LIMIT. THE ASSESSEE DID NOT ACT DISHONESTLY OR NEGLIGENTLY. THE DELAY IN FILING THE RETURN WAS DUE TO A REASONABLE AND GENUINE CAUSE. IT IS AL SO NOT A CASE THAT THE ASSESSEE DID NOT FILE A RETURN OF INCOME AT ALL. DURING THE YEAR PRECEDING THE RELEVA NT ASSESSMENT YEAR, THE ASSESSEE-TRUST WAS FORMED. THE RELEVANT PREVIOUS YEAR WAS THE FIRST YEAR OF ACTIVI TIES OF THE ASSESSEE AND THE ASSESSEE WAS NOT FAMILIAR WITH THE RELEVANT PROVISIONS OF FILING OF RETURN OF INCO ME AND THE PROCEDURE INVOLVED THEREOF. IT WAS UNDER A BONA FIDE BELIEF THAT THE RETURN IS TO BE FILED ONLY AFTER SE CURING RECOGNITION UNDER SECTION 80G. HOWEVER, ON BEING APPRAISED OF THE PROVISIONS OF LAW, RETURN WAS FILE D WITHOUT ANY FURTHER DELAY. SINCE THE ENTIRE INCOME WAS APPLIED TOWARDS THE CHARITABLE ACTIVITIES, NO TAX W AS PAYABLE FOR THE RELEVANT ASSESSMENT YEAR. AS A RESU LT OF LATE FILING OF THE RETURN, THERE WAS NO LOSS OF REV ENUE TO THE GOVERNMENT. THE ASSESSEE HAD NO ULTERIOR MOTIVE TO DEFRAUD THE REVENUE AND HAD NOT ACTED DISHONESTLY O R NEGLIGENTLY. THEREFORE, THERE WAS REASONABLE CAUSE FOR THE DELAY IN FURNISHING THE RETURN OF INCOME. [PARA 8.4] IN VIEW OF THE ABOVE, THE ASSESSEE TRUST IS NOT LIA BLE FOR PENALTY UNDER SECTION 272A(2)(E) FOR DELAY IN FILIN G THE RETURN OF INCOME. [PARA 8.5] ITA NOS.2615 TO 2617/BANG/2018 PAGE 4 OF 6 5. HE ALSO PLACED RELIANCE ON THE DECISION OF ITAT BANGALORE BENCH IN THE CASE OF M/S ROTARY CHARITABLE TRUST VS . JCIT IN ITA NOS.2613 & 2614/BANG/2018 ORDER DATED 12/7/2019 CAN CELLING PENALTY U/S 272A(2)(E), UNDER IDENTICAL FACTS AND C IRCUMSTANCES AS IN THE PRESENT CASE. 6. WE HAVE CONSIDERED THE SUBMISSIONS. WE ARE OF T HE VIEW THAT THE REASONS ASSIGNED IN THE PRESENT CASE ARE I DENTICAL TO THE REASONS ASSIGNED IN THE CASE DECIDED BY THE TRIBUNA L AND REFERRED TO ABOVE. FOLLOWING THE RATIO LAID DOWN THEREIN, W E ARE OF THE VIEW THAT THE PENALTY IMPOSED DESERVES TO BE DELETED. 7. BESIDES THE ABOVE, WE ALSO AGREE WITH THE SUBMI SSION OF THE LEARNED COUNSEL FOR ASSESSEE THAT THE PROVISIONS OF SECTION 139(4A) ARE APPLICABLE ONLY IN CASE WHERE EXEMPTION IS CLAI MED U/S 11 AND 12 OF THE ACT AND NOT IN CASE WHERE INCOME OF AN OR GANIZATION DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT IN VIEW OF THE PROVISIONS OF SEC.10(23C)(IIIAD) OF THE ACT. PROVI SIONS OF SEC.139(4A) MAKES A REFERENCE ONLY TO PROVISIONS OF SEC.11 AND 12 AND NOT TO THE PROVISIONS OF SEC.10(23C(IIIIAD) OF THE ACT. 8. FOR THE REASONS GIVEN ABOVE, WE CANCEL THE PENA LTY IMPOSED AND ALLOW BOTH THE APPEALS OF THE ASSESSEE. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST, 2019. - / - SD/- SD/- ( A.K.GARODI A ) ( N.V. VASUDEVAN) ACCOUNTANT MEMBER V ICE PRESIDENT BANGALORE, DATED, THE 28 TH AUGUST, 2019 / VMS / ITA NOS.2615 TO 2617/BANG/2018 PAGE 5 OF 6 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE ITA NOS.2615 TO 2617/BANG/2018 PAGE 6 OF 6 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SECTION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..