Hira Foundation Trust, Bangalore V. Income Tax Officer, (Exemptions), Circle- 1, Bangalore

ITA 406/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2267 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-11-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 18-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Assessee Lawyers: RAGHAVENDRA R CHAKRAVARTHY
• Keywords: Charitable institution; Opportunity of being heard
• Section: 119(2)(b); 143(1)

Judgement Text

ITA NO.406/BANG/2020 M/S. HIRA FOUNDATION TRUST, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.406/BANG/2020 ASSESSMENTYEAR:2014-15 M/S. HIRA FOUNDATION TRUST NO.9, EX-SERVICEMEN COLONY R.T. NAGAR BENGALURU-560 032 PAN NO :AAATH3070R VS. ITO (EXEMPTIONS) CIRCLE-1 BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI RAGHAVENDRA R. CHAKRAVARTHY, A.R. RESPONDENT BY : SHRI PRIYADARSHI MISHRA, D.R. DATE OF HEARING : 09.11.2020 DATE OF PRONOUNCEMENT : 01.12.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 28.2.2020 PASSED BY LD. CIT(A)-14, BENGALURU AND IT RELATES TO THE ASSESSMENT YEAR 2014-15. THE GROUNDS URGED BY THE ASSESSEE RELATE TO DENIAL OF DEDUCTION CLAIMED U/S 11(2) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] RELATING TO ACCUMULA TION OF INCOME. 2. THE ASSESSEE IS A CHARITABLE TRUST AND IT FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING N IL INCOME. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED DEDUCTIO N OF RS.75 LAKHS U/S 11(2) OF THE ACT ON THE PLEA THAT IT HAS ACCUMU LATED ITS INCOME ITA NO.406/BANG/2020 M/S. HIRA FOUNDATION TRUST, BANGALORE PAGE 2 OF 4 IN TERMS OF SECTION 11(2) OF THE ACT FOR APPLICATIO N IN FUTURE. HOWEVER, THE ASSESSEE DID NOT FURNISH FORM NO.10, T HE STATUTORY FORM PRESCRIBED FOR REPORTING ABOUT ACCUMULATION OF INCOME. THIS FORM IS REQUIRED TO BE FURNISHED FOR CLAIMING THE A BOVE SAID DEDUCTION. HENCE, IN THE ABSENCE OF FORM NO.10, TH E CLAIM OF ACCUMULATION OF RS.75 LAKHS WAS REJECTED WHILE PROC ESSING THE RETURN OF INCOME U/S 143(1) OF THE ACT AND A TAX DE MAND OF RS.32.59 LAKHS WAS RAISED UPON THE ASSESSEE. 3. THE ASSESSEE CHALLENGED THE ABOVE SAID ACTION BY FILING THE APPEAL BEFORE LD. CIT(A). IT WAS SUBMITTED THAT TH E PRESCRIBED FORM NO.10 WAS FILED ON 30.1.2020, MUCH BEYOND THE DUE D ATE FOR FILING THE SAME AND ALSO AFTER COMPLETION OF ASSESSMENT PR OCEEDINGS. ACCORDINGLY, IT WAS PLEADED BEFORE LD CIT(A) THAT T HE DEDUCTION TOWARDS ACCUMULATION OF INCOME SHOULD BE ALLOWED. THE LD. CIT(A), HOWEVER, REJECTED THE CONTENTIONS OF THE ASSESSEE W ITH THE FOLLOWING OBSERVATIONS: 4.3 THE CONTENTIONS OF THE APPELLANT HAV E BEEN CONSIDERED CAREFULLY. THE ISSUE IN THISCASE IS THAT THE APPELL ANT HAS BEEN DENIED THE EXEMPTIONS BECAUSE FORM-10 WAS NOT FILED BEFORE THE DUE DATE. THE TIME FRAME IN WHICH THE FO RM10 TO BE FILED IS GOVERNED BY R17 TO THE INCOME TAX RU LES, 1962. RULE 17 PROVIDES THAT THE SAID FORM HAS TO BE FILED BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME AND THERE IS NO PROVISION UNDER THE INCOME TAX ACT WHIC H PROVIDES FOR FILING OF FORM-10 BELATEDLY. IN THE PRESENT CASE, THE APPELLANT HAS FILED FORM-1 0 AFTER THE COMPLETION OF THE ASSESSMENT I.E ON 30/01 /2020. IT IS SEEN THAT THE ASSESSEE FAILED TO UTILIZE THE FUNDS OF AT LEAST 85% OF INCOME DURING THE YEAR AND ACCUMULATION IS ALSO NOT DONE AS PER THE PROCEDURE PRESCRIBED. FILING OF FORM-10 IS NOT A FORMALITY. IT IS REQUIRED TO BE FILED ON OR BEFORE THE DUE DATE FOR FILING RETURN. THE FUNDS SO ACCUMULATED ARE EXP ECTED TO BE INVESTED IN SPECIFIED MANNER. NONE OF THE REQUIREME NTS ARE SATISFIED AS THE ASSESSEE BLATANTLY IGNORED TO FOLL OW THE PRESCRIPTION OF LAW. FILING THE SAME AFTER ASSESSME NT PROCEEDINGS BEFORE CIT(A) WOULD NOT CURE THE DEFECT . ITA NO.406/BANG/2020 M/S. HIRA FOUNDATION TRUST, BANGALORE PAGE 3 OF 4 ACCORDINGLY, I HOLD THAT THE ACCUMULATION OF INCOME CAN'T BE ALLOWED AND THE SAME SHOULD BE BROUGHT TO TAX IN TH E CURRENT YEAR ITSELF. 4.4 FURTHER, THE APPELLANT IN THE PRESENT CASE PRAY ED THAT THE DELAY IN FILING OF FORM-10MAY BE CONDONED. FOR THIS CIRCULAR NO. 273, DATED 3/6/1980 HAS CLARIFIED THAT IN ACCOR DANCE WITH SEC 119(2)(B) OF THE INCOME TAX ACT, 1961, THE CBDT HAS AUTHORIZED COMMISSIONERS TO ADMIT APPLICATIONS UNDE R SEC 11(2) READ WITH RULE 17 OF THE INCOME TAX RULES, 19 62 FROM PERSONS DERIVING INCOME FROM PROPERTY HELD UNDER TR UST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES FOR ACCUMULATI ON OF SUCH INCOME TO BE APPLIED FOR SUCH PURPOSES IN INDIA WHE N THE AFOREMENTIONED APPLICATION ARE FILED BEYOND THE TIM E STIPULATED. THEREFORE, ONLY THE ADMINISTRATIVE COMM ISSIONER HAS THE POWER TO CONDONE THE DELAY IN FILING OF FOR M-10 IN SPECIFIED CIRCUMSTANCES. HENCE, IN THE ABSENCE OF F ILING OF FORM-10 WITHIN THE DUE DATE AND EVEN BEFORE THE COM PLETION OF THE ASSESSMENT, I HOLD THAT THE ASSESSMENT ORDER PA SSED BY THE AO IS SUSTAINED AND ALL THE GROUNDS RAISED BY THE A PPELLANT ARE REJECTED. AGGRIEVED BY THE ORDER PASSED BY LD CIT(A), THE ASS ESSEE HAS FILED THIS APPEAL BEFORE US. 4. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE FROM THE PAPER BOOK FILED BY THE ASSESSEE THAT THE ASSES SEE HAS MOVED AN APPLICATION DATED 19-03-2020 BEFORE THE LD CIT(E XEMPTIONS) REQUESTING HIM TO CONDONE THE DELAY IN FILING FORM NO.10 FOR ACCUMULATION OF INCOME U/S 11(2) OF THE ACT. WE ALSO NOTICE THAT THE LD CIT(EXEMPTIONS), VIDE HIS ORDER DATED 19-05- 2020, HAS CONDONED THE DELAY IN FILING FORM 10 FOR ACCUMULATI ON OF RS.75,00,000/- FOR THE AY 2014-15. 5. ADMITTEDLY, THE APPLICATION HAS BEEN FILED BY THE ASSESSEE BEFORE LD CIT(EXEMPTIONS) AFTER THE DATE OF ORDER O F LD CIT(A) AND THE ORDER OF LD CIT(EXEMPTIONS) HAS ALSO BEEN RECEI VED AFTER THAT DATE ONLY. HENCE, THERE WAS NO OCCASION FOR THE TA X AUTHORITIES TO CONSIDER THESE DOCUMENTS. THE RELIEF SOUGHT BY THE ASSESSEE REQUIRES EXAMINATION OF THESE DOCUMENTS. ACCORDING LY, WE ARE OF ITA NO.406/BANG/2020 M/S. HIRA FOUNDATION TRUST, BANGALORE PAGE 4 OF 4 THE VIEW THAT THIS ISSUE NEEDS TO BE RESTORED TO TH E FILE OF THE AO FOR EXAMINING THE SAME AFRESH. ACCORDINGLY, WE SET ASI DE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE S AME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THIS ISSUE AFR ESH BY DULY CONSIDERING FORM NO.10, ORDER PASSED BY LD CIT(EXEM PTIONS) AND/OR ANY OTHER RELEVANT DOCUMENTS. AFTER AFFORD ING ADEQUATE OPPORTUNITY OF BEING HEARD, THE AO MAY TAKE APPROPR IATE DECISION IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST DEC, 2020 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 1 ST DEC, 2020. VG/SPS 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.