Uttrakhand Shiksha Bharti Society , Nanital V. The Income Tax Officer (Exemptions), Dehradun

ITA 29/DDN/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1321 (ITAT-DEHRADUN)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 15-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRINTED FROM ITATORDERS.INPRINTED FROM ITATORDERS.INPRINTED FROM COUNSELVISE.COM
• Keywords: Opportunity of being heard; Reasonable cause; Benefit of exemption; Condonation of delay; Revised return; Set aside
• Section: 12; 11; 143(3); 12AA; 201; 139(1); 139(4); 113; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DEHRADUNBENCH: DEHRADUN ] BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER ITA No.29/DDN/2021 Assessment Year: 2016-17 Uttrakhand Shiksha Bharti Society,01, Peters Field, Balika Vidya Mandir, Mallital, Nainital, PAN: AAATU2461K Versus Income Tax Officer, (Exemption) Dehradun. (Appellant) (Respondent) Assessee by : Shri Pawan Nath, C. A.; Department by : Shri N.C. Upadhyay, Sr. D.R. Date of hearing : 22.06.2022 Date of order : 30.06.2022 ORDER PER N.K. CHOUDHRY, J.M. This appeal has been preferred by the Assessee against the order dated 30.07.2021, impugned herein, passed by the ld. Commissioner of Income Tax (Appeals), Haldwani (in short Ld. Commissioner) for the assessment year 2016-17. 2. The Assessee has raised the following grounds of appeal:- “1. Because, the Ld. CIT Appeal erred in law as well on facts, not appreciating the correct factual and legal position in relation to Form 10 read with Rule 17(2) and section 11(2), 13(9) of the Act. 2. Because, the Ld. CIT Appeal erred in not appreciating the provision [2] of section 139(9) of the Act, as applicable in the instant case, with reference to Form 10 of the Income Tax Rules. 3. Because, the Ld. CIT Appeal erred in facts in not considering the written submissions and evidence placed on record during Appeal proceeding vis a vis Form 10 and prevailing online technical issues. 4. Because, the Ld. CIT-Appeal erred in holding that the purpose of accumulation as stated i.e., Education, is not a specified purpose for accumulation of Income. 5. The Assessee crave leave to amend or add any other ground of appeal.” 3. Brief facts, relevant for adjudication of the instant appeal are that the Assessee, being a registered society u/s. 12AA of the Act had claimed exemption u/s. 11 read with section 12A/12AA and section 13 of the Act. The case of the Assessee was selected for scrutiny through CASS and the Assessing Officer during the assessment proceedings on perusal of income and expenditure account of the Assessee for the year under consideration, found that the gross receipts of the Assessee was Rs.3,42,41,610/- against which the Assessee has applied income to the tune of Rs.1,22,28,155/- making surplus of Rs.2,20,13,455/-. Consequently, there was short fall of Rs.1,68,77,213/- from the threshold limit of 85% of utilization of income by the Assessee. Therefore, considering the shortfall as deemed application, filing of form No. 10 was mandatory condition as per section 11(2) of the Act, which prescribes that the statement of accumulation must be submitted before the due date specified in sub-sec. (1) of section 139 for furnishing the return of income for the previous year whereas in this case the Assessee had filed the same only on 24.03.2018 along with the revised return of income. 3.1 On being asked by the Assessing Officer, the Assessee submitted that because as prescribed under Rule 17 of the Income- tax Rules, 1962 (in short ‘the Rules’) as amended w.e.f. [3] 01.04.2016, the e-filing of Form No. 10 was introduced first time only. The Assessee was unaware about the exact procedure of e- filing of Form No. 10 and therefore, could not file during the filing of original income tax return. However, the same was filed during the filing of revised Income-tax Return for the year under consideration on dated 24.03.2018. 3.2 It was also claimed by the Assessee that the defect in filing the return – non-submission of Form No. 10 within the stipulated time frame u/s. 139(1) of the Act, being curative in nature, stands cured while filing the same with the revised return u/s. 139(4) of the Act. The Assessee, in support of its contentions, also relied upon various case laws. 3.3 The Assessing Officer, though considered the claim of the Assessee and the submissions made, but did not get impressed and rejected the claim of the Assessee and added the amount of Rs.1,68,77,213/- as shortfall, in the income of the Assessee on the ground that there is no mention in section 13(9) of the Act about the revised return filing u/s. 139(4) of the Act, regarding which the Assessee has contended in his submissions. The Assessee has failed to file the declaration in Form No. 10 in time and as per section 13(9) of the Act, the accumulation of Rs.1,68,77,213/- is not being treated as deemed application for the A.Y. under consideration. 4. The Assessee being aggrieved with the assessment order dated 27.11.2018 passed u/s. 143(3) of the Act by the Assessing Officer, preferred first appeal before the ld. Commissioner, who vide impugned order affirmed the assessment order and dismissed the appeal of the Assessee by concluding as under : [4] “4.8 In this case the assessment order u/s 143(3) was passed on 27-11-2018. On 20-12-2018 the CBDT issued Circular No.- 7/2018 delegating power to the Commissioner of Income Tax to condone the delay in filing Form-10 and Form 9A for AY:2016-17. Accordingly the appellant had filed application on 28-12-2018 to the Principal Commissioner of Income Tax for condoning of delay in submitting Form-10. The Pr CIT vide order dated 10-07-2019 rejected the appellant application of condonation of delay in filing the Form-10. 4.9 Considering the above facts and discussion it is held that the Assessing Officer has rightly disallowed the amount of Rs. 1,68,77,213/- being set apart for specified purpose in terms of provision of section 11(2) and 11(5) of the Act, as the appellant failed to comply the conditions prescribed in the Act i.e. failed to submit Form 10 within stipulated time and no specific purpose has been mentioned. This ground of appeal is dismissed. In effect, the appeal is dismissed.” 5. The Assessee being aggrieved with the impugned order is in appeal before us. At the outset, it was submitted by the Assessee that vide Finance Act, 2015, the amendment has been made in section 11 & 13 of the Actw.e.f. 01.04.2016 applicable from A.Y. 2016-17 onwards. As per the amended provisions of the Act read with Rule 17 of the Rules, 15% of the income can be accumulated indefinitely by the trust and 85% of the income can be accumulated for not exceeding five years subject to the condition inter-alia that such persons submits prescribed Form No. 10 electronically to the Assessing Officer within the due date specified u/s. 139(1) of the Act. 5.1 The CBDT vide its circular No. 7/2018 issued on dated 20.12.2018 authorised the Commissioners of Income Tax to admit belated applications in Form No. 9A and Form No. 10 in respect of A.Y. 2016-17 where such Form No. 9A and Form No. 10 are filed after the expiry of time allowed under the relevant provisions of the Act. It was further instructed that the Commissioners will, while entertaining such belated applications in Form No. 9A and Form No. [5] 10 satisfy themselves that the Assessee was prevented by reasonable cause from filing application in Form No. 9A and Form No. 10 within the stipulated time. Further, in respect of Form No. 10, the Commissioners shall also satisfy themselves that the amount accumulated or set apart has been invested or deposited in any one or more of the form or modes specified in subsection (5) of section 11 of the Act. 5.2 In the instant case, the Assessee before the authorities below claimed that the provisions for filing of Form No. 10 electronically have been inserted first time only and made applicable from A.Y. 2016-17 onwards and the Assessee being ignorant qua the insertion of the latest provisions, could not file Form No. 10 along with return filed u/s. 139(1) of the Act, however, subsequently filed the same along with revised return u/s. 139(4) of the Act, i.e., before due date of filing of revised return and even before the date of assessment order dated 27.11.2018. 5.3 The Assessee further claimed as per verdict of Hon’ble Apex Court in the case of CIT vs. Nagpur Hotel Owners Association (2001) 247 ITR 201 (SC), Form No. 10 can be furnished by the Assessee upto the stage of completion of assessment u/s. 143(3) of the Act. Further, in the case of CIT vs. G.M. Knitting Industries Pvt. Ltd. (2015) 376 ITR 456 (SC), it has been held that the report can be filed at any stage upto the assessment even though certificate in Form 10CCB along with return of income has not been filed but the same was filed before the order of assessment was made. 5.4 The CBDT, in order to give relief to the Assessees who have suffered genuine hardships, by issuing Circular No. 7/18 dated 20.12.2018 authorised the Commissioners of Income-tax to pass an appropriate order for condonation of delay upon receiving [6] application. It is a fact that many persons did not file Form No. 10 electronically and therefore, the CBDT in order to redress the difficulties of the stakeholders was constrained to issue various Circularsi.e. 7/2018 , 30/2019, 03/2020 and 06/2020, which goes to show the CBDT has considered the non-filing of Form No. 10 electronically as a general genuine cause and therefore, tried to support the Assessees who have made default in one or the other way. 5.5 The Assessee further claimed for legal compliance, the Assessee has to depend upon the legal advice of the Chartered Accountants or Advocates for filing of ITR and related forms. The assessment year 2016-17 being the first year of insertion of new provision for filing of Form No. 10 electronically, some of the stake holders including the Assessee herein due to unawareness escaped to file Form No. 10 electronically within the stipulated time and therefore, cannot be penalised for the inadvertent mistake on the part of its advisors. 5.6 Even otherwise, no direct or indirect benefit has been taken by the Assessee or direct or indirect losses has been occurred to the Revenue and there is no concealment of income or furnishing of inaccurate particulars of income, therefore, the Assesseedeserves lenient treatment as the filing of Form No. 10 within the time is directory but not mandatory. 6. On the contrary, the ld. DR vehemently supported the orders passed by the authorities below and submitted that filing of Form No.10 from 01.04.2016 onwards is mandatory in nature and in the absence of Form No. 10 filed electronically, the Assessee is not entitled for any benefit u/s. 11 of the Act. [7] 7. Heard the parties and perused the material available on record. We have given our thoughtful consideration to the rival claims. It is not in controversy that an amendment in section 11 and 13 of the Act was made vide Finance Act, 2015 applicable from 01.04.2016 (A.Y. 2016-17 onwards), whereby filing of Form No. 10 electronically to the Assessing Officer within the due date specified u/s. 139(1) of the Act, has been made as a condition for accumulation of income u/s. 11 and 13 of the Act. 7.1 The CBDT while considering the representations received by the Board/Field Authorities qua delay in filing of Form No. 9A and Form No. 10 for A.Y. 2016-17, issued a Circular No. 7/2018 dated 20.12.2018 and empowered the Commissioners of Income Tax to admit belated applications in Form No. 9A and Form No. 10 qua A.Y. 2016-17 where the same are filed after the expiry of time allowed under the relevant provisions of the Act. It was further instructed to the Commissioners of Income Tax, to satisfythemselves that the Assessee was prevented by reasonable cause from filing an application in Form No. 9A and Form No. 10 within the stipulated time. 7.2 The Hon’ble Apex Court in the case of CIT vs. Nagpur Hotel Owners Association (supra) allowed the filing of Form No. 10 upto the stage of completion of assessment u/s. 143(3) of the Act and the Hon’ble Allahabad HighCourt in the case of CIT vs. Panama Chemical Works (2000) 113 taxman 717 also held that filing of the audit report during the assessment proceedings by the Assessee amounts to substantial compliance with the statutory requirement. 7.3 The Hon’ble Gujarat High Court in the case of Nimittaben and Bhatt vs. CIT(Exemption) Ahmedabad { R/Special Civil Application No. 8977 of 2022 decided on 22.12.2020} while considering the decision of the same high Court in the case of CIT vs. Gujarat Oil and Allied Industries Ltd., (1993) 201 ITR 325 (Guj)wherein it [8] washeld“that the provision regarding furnishing of audit report with the return has to be treated as procedural proviso. It is directory in nature and its substantial compliance would suffice. The benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the Assessee to produce the audit report during the assessment proceedings by assigning sufficient cause.’ condoned the delay and quashed the impugned orders wherein exemption u/s. 12 was denied on non-filing of Form No. 10 within time prescribed or filing of Form No. 10 belatedly. 7.4 No doubt, lack of knowledge of law is not an excuse, however, respectfully following the dictums of the Hon’ble Higher Courts and considering the peculiar facts that the provision for filing of the Form No. 10 was inserted newly and made applicable from A.Y. 2016-17 onwards, which in the instant case is under consideration and therefore the Assessee committed error which prima facie seems to be bonafide and unintentional. Even otherwise the Assessee rectified its mistake by filing form No. 10 electronically along with revised return of income u/s. 139(4) of the Act, which goes to show that the Assessee has used its due diligenceand made available the form No. 10 to the Assessing Officer during the assessment proceedings itselfand therefore the Assessee can not be penalized. On the aforesaid analyzations, we are of the view that the Assessing Officer should have taken into consideration the form No. 10 filed on dated 24.03.2018. Consequently, the assessment order along with impugned order is set aside and the case is remanded to the file of the Assessing officer for decision afresh by taking into consideration the FORM 10 filed along with the revised return of income, suffice to say while affording proper and reasonable opportunity of being heard to the Assessee. [9] 8. In the result appeal filed by the Assessee stands allowed for statistical purposes. Order pronounced in open Court on 30/06/2022. Sd/- Sd/- (ANIL CHATURVEDI) (N.K. CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated :.30.06.2022 . *MEHTA*