DCIT, (Exemption), Cir. -1(1), Kolkata V. Socialist Unity Centre of India Communist, Kolkata

ITA 335/KOL/2022

AI Insights

The case revolves around the denial of exemption under section 13A of the Income Tax Act, 1961 to the Socialist Unity Centre of India Communist, a registered political party, for the Assessment Year 2012-13. The Assessing Officer denied the exemption on the grounds that the party failed to submit the required contribution report in Form 24A to the Election Commission of India by the due date. However, the ld. CIT(A) reversed this decision, noting the reasonable cause for the delay, including the death of the responsible official and the party's belief that the report was filed on time. The revenue appealed against this decision, which was upheld by the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132583 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-06-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 02-06-2022
• Other Referred Cases: CIT vs. Gujarat Oil & Allied Industries, CIT vs. Godha Chemicals (P.) Ltd., Church's Auxiliary For Social Action vs. DGIT (Exemptions), PCIT vs. Surya Merchants Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961, Representation of the People Act, 1951
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A. SENGUPTAL
• Keywords: Bonafide belief; Reasonable cause
• Section: 143(3); 142(1); 250; 201; 143(2); 139(1)

Judgement Text

| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER & SHRI SONJOY SARMA, HON’BLE JUDICIAL MEMBER I.T.A. No. 335/Kol/2022 Assessment Year: 2012-13 DCIT, (Exemption), Circle-1(1), Kolkata Vs Socialist Unity Centre of India Communist 48, Lenin Sarani Kolkata - 700013 [PAN : AAFAS9043P] अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Shri A. Senguptal, A/R Revenue by : Shri P.P. Barman, Addl. CIT, Sr. D/R सुनवाई कᳱ तारीख/Date of Hearing : 20/06/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 21/08/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The present appeal is directed at the instance of the revenue against the order of the National Faceless Appeal Centre, (hereinafter the “ld. CIT(A)”) dt. 30/03/2023, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2012-13. 2. The assessee has raised the following grounds of appeal:- “1. The Ld. CIT(A) has erred in allowing exemption inspite of the express provisions of the second proviso to section 13A which mandates that no exemption under section 13A shall be available if the assessee fails to submit contribution report under sub-section (3) of section 29C of the Representation of the People Act, 1951 for a financial year? 2. The CIT(A) has erred in allowing the exemption u/s 13A of the Act to the assessee political party inspite of the fact that the assessee has not filed the contribution report in Form No. 24A to the Election Commission of India within the due date of filling of return which is mandatory provision for availing exemption u/s 13A of the Act. 3. That the appellant craves for leave to amend, alter, modify, substitute, add or abridge any or all of the grounds of appeal during any stage of appeal.” 2 I.T.A. No. 335/Kol/2022 Assessment Year: 2012-13 Socialist Unity Centre of India Communist 3. Facts in brief are that the assessee is a political party registered u/s 29A of the Representation of the People Act, 1951. Income Tax return for Assessment Year 2012-13 filed on 29/09/2012 declaring total income at Nil. Subsequent to the selection of the case for scrutiny through CASS, notice u/s 143(2) and 142(1) of the Act, were duly served on the assessee. The ld. Assessing Officer examined the facts of the case in order verify as to whether the assessee has complied to the provisions u/s 13A of the Act. The ld. Assessing Officer observed that if a political party fails to furnish the contribution report in Form 24A to the Election Commission of India (ECI) within the due date of filing of return u/s 139(1) of the Act, then as provided under the 2 nd proviso to Section 13A of the Act, exemption u/s 13A of the Act will not be available to it. The ld. Assessing Officer further observed that due date of filing of return of income for Assessment Year 2012-13 was 30/09/2012 but no such report on Form 24A was submitted till that date. It was stated by the assessee that the report was duly filed but the stamped receipt could not be obtained and that the person who was looking after this work of filing Form 24A, Shri Ratan Mukherjee, passed away on 31/07/2013. For this reason, Form 24A was again submitted to the ECI under cover of its letter dated 27/03/2015. However, the ld. Assessing Officer was not satisfied with these submission and he concluded the assessment proceedings u/s 143(3) of the Act vide order dt. 30/03/2015, denying exemption u/s 13A of the Act and assessed the total income of the assessee at Rs. 2,02,25,290/-. 3.1. Aggrieved, the assessee preferred appeal before the ld. CIT(A) and succeeded as ld. CIT(A) held that there was reasonable cause on 3 I.T.A. No. 335/Kol/2022 Assessment Year: 2012-13 Socialist Unity Centre of India Communist part of the assessee because the person who was in-charge of the necessary compliance passed away and the assessee was under bonafide belief that the said report on Form 24A has already been filed. The ld. CIT(A) also held that delay in submission of audit report should not lead to denial of exemption if there are sufficient reasons for failure to comply on time. The ld. CIT(A) relied on various decisions in support of its findings. 4. Aggrieved the revenue is in appeal before this Tribunal. 5. The ld. D/R vehemently argued supporting the order of the ld. Assessing Officer. 6. On the other hand, the ld. Counsel for the assessee, relied on the findings of the ld. CIT(A) and also referred to the judgment of the Hon’ble High Court of Gujarat in the case of CIT vs. Gujarat Oil & Allied Industries reported in [1993] 201 ITR 325 (Gujarat), in support of its contention that submitting of report along with return is merely directory in nature and it calls for only substantial compliance. Reliance was also placed on the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Godha Chemicals (P.) Ltd. reported in [2013] 39 taxmann.com 98 (Rajasthan) and decision of the Hon’ble Delhi High Court in the case of Church’s Auxiliary For Social Action vs. DGIT (Exemptions) reported in [2010] 325 ITR 362 (Delhi). The ld. Counsel for the assessee also took us through the affidavit filed by the Member of the assessee society describing the facts of the case and stating that contribution in excess of Rs.20,000/- aggregated to only Rs.34,00,746/- and the major sum has been received through account payee cheque only. 4 I.T.A. No. 335/Kol/2022 Assessment Year: 2012-13 Socialist Unity Centre of India Communist 7. We have heard rival contentions and perused the material placed before us. We notice that the assessee is a political party duly registered u/s 29A of the Representation of the People Act, 1951. The due date of filing of return of income for Assessment Year 2012-13 was 30/09/2012 and the assessee had filed the return on 29/02/2012 i.e., well before the due date provided u/s 139(1) of the Act. The ld. Assessing Officer has denied the exemption on the ground that the assessee failed to submit a report as provided sub-Section (3) of Section 29C of the Act to be filed on Form 24A providing name and complete addresses of the contributing persons giving donation in excess of Rs.20,000/-, their PAN, amount and mode of contribution and such report has to be filed with the ECI before the due date of filing of the return of income as provided u/s 139(1) of the Act failing which, the exemption u/s 13A of the Act is denied. Before us it is stated by the ld. Counsel for the assessee that it duly filed the Form 24A for FY 2011-12 with ECI and the same was filed through a letter dt. 27/09/2012, but proof in the form of stamped receipt of the ECI was not available. It was also submitted that the person looking after the said compliance, Shri Ratan Mukherjee, passed away on 31/07/2013 and the assessee was under the bonafide belief that the said report has been duly filed on 27/09/2012. Thereafter during the course of assessment proceedings, Form 24A was again filed on 27/03/2015 and a copy of the receipt from ECI was submitted before the assessing authorities. These facts have been stated in an affidavit filed by Mr. Ajoy Chatterjee, member of the assessee political party, and the same is reproduced for ready reference:- 5 I.T.A. No. 335/Kol/2022 Assessment Year: 2012-13 Socialist Unity Centre of India Communist “ AFFIDAVIT I, Ajoy Chatterjee, son of Late Shri Manimoy Chatterjee, aged about 68 years, by occupation social worker, by faith Hindi, do solemnly affirm and say:- 1. I am a member of the Socialist Unity Centre of India (Communist) (hereinafter referred to as "the respondent-assessee"). I am acquainted with the facts and circumstances of this case and am competent and duly authorized to affirm this affidavit on behalf of the respondent-assessee. 2. I say that during the previous year ended March 31, 2012, the respondent-assessee received donations and contributions from different States, Fronts and Individuals aggregating to Rs.2,65,26,455/-. Contributions in excess of Rs.20,000/- from any person during the said previous year aggregated to Rs.34,00,746/- in respect of which the respondent-assessee was required to submit a report in Form 24A to the Election Commission of India. 3. I say that the respondent-assessee was all along under the impression that such report in Form No. 24A for the financial year ended March 31, 2012 had been duly filed in the office of the Election Commission of India and that a copy of such report had also been filed along with the return of income of the respondent-assessee for the Assessment Year 2012-13 on September 29, 2012 itself. The respondent-assessee has in its records a copy of its covering letter dated September 28, 2012 addressed to the Election Commission of India in this behalf but no receipted copy thereof. 4. I say that in course of the assessment proceedings for the Assessment Year 2012-13, a question arose as to whether the respondent-assessee had filed report in Form 24A in the office of the Election Commission of India for the financial year ended March 31, 2012. The respondent-assessee bona fide represented that report in Form 24A was filed in the office of the Election Commission of India. The Assessing Officer upon enquiry from the Election Commission of India informed the respondent-assessee that Form 24A for the financial year ended March 31, 2012 relevant to the Assessment Year 2012- 13 had not been filed in the office of the Election Commission of India. 5. I say that Shri Ratan Mukherjee, a member of the West Bengal State Committee of the respondent-assessee, who used to look after such compliance had passed away on July 31, 2013 and as such the respondent- assessee was handicapped in the matter. In such circumstances, on March 30, 2015 the respondent-assessee filed with the Election Commission of India under cover of its letter dated March 27/30, 2015 copy of its letter dated 6 I.T.A. No. 335/Kol/2022 Assessment Year: 2012-13 Socialist Unity Centre of India Communist September 28, 2012 along with copies of all the documents referred to therein including report in Form 24A as available in its records. After such filing, on March 30, 2015 itself the respondent-assessee submitted to the Assessing Officer receipted copy of its letter dated March 27/30, 2015 addressed to the Election Commission of India under cover of which the aforesaid filing was made. The respondent-assessee requested the Assessing Officer to make the assessment in terms of section 13A of the Income Tax Act, 1961, but, the request was not acceded to by the Assessing Officer. Copies of the letter dated March 30, 2015 submitted to the Deputy Commissioner of Income Tax (Exemption), Circle-1, the respondent-assessee's letter dated March 27/30, 2015 submitted to the Election Commission of India together with all its enclosures are annexed hereto and collectively marked "A". 6. The statements contained in paragraphs 1 to 5 are true to my knowledge.” 8. From perusal of the above contents of the affidavit and also taking into note the findings of the ld. CIT(A), audited financial statements, we notice that during the year, the assessee has received donations of Rs.34,00,746/- in excess of Rs.20,000/- from ten individuals. Majority of the said sum has been through account payee cheque. From 24A dt. 28/09/2012 is placed on record which the assessee has claimed through an affidavit to have filed before the due date of filing of return of income. But due to lack of receipt copy, the same has again been filed with the ECI on 27/03/2015 and the copy of the same has been placed before the Assessing Officer. We find that firstly the assessee has stated through an affidavit that there was reasonable cause due to which it was not in the possession of the receipt copy of Form 24A filed on 24/09/2012 and also the person in- charge of this work passed away in July, 2013. Further the said copy has been filed with the ECI and the copy of the same was placed before the Assessing Officer who ought to have taken note of the same. Hon’ble Courts have consistently held that filing of such report in merely directory in nature and it calls for only substantial compliance. 7 I.T.A. No. 335/Kol/2022 Assessment Year: 2012-13 Socialist Unity Centre of India Communist 9. Hon’ble High Court of Allahabad in the case of PCIT vs. Surya Merchants Pvt. Ltd., reported in [2016] 387 ITR 105 (Allahabad), has held that furnishing of audit report along with the return of income is a directory requirement and it would stand satisfied if audit report is furnished during assessment proceedings. Similar view was taken in the case of Church’s Auxiliary For Social Action (supra) as well as in the case of Gujarat Oil & Allied Industries (supra). 10. Respectfully following the ratio laid down by the Hon’ble Courts in the decisions referred hereinabove, we are inclined to hold that if return of income has been filed before the due date prescribed u/s 139(1) of the Act, delay in submission of Form 24A cannot lead to denial of exemption if there is sufficient reason for the delay in such compliance. Considering the reasons mentioned in the affidavit and also considering the facts that the said Form 24A has been filed before the completion of assessment proceedings, we fail to find any infirmity in the view taken by ld. CIT(A). Accordingly, all effective grounds raised by the revenue are dismissed. 11. In the result, appeal of the revenue is dismissed. Order pronounced in the Court on 21 st August, 2023 at Kolkata. Sd/- Sd/- (SONJOY SARMA) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 21/08/2023 *SC SrPs 8 I.T.A. No. 335/Kol/2022 Assessment Year: 2012-13 Socialist Unity Centre of India Communist आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Assessee 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata