Shri Modi Samaj Vikas Trust, Sabarkantha V. The ITO (Exemp.), Palanpur

ITA 409/AHD/2022

AI Insights

The case involves Shri Modi Samaj Vikas Trust, which appealed against the order of the Commissioner of Income Tax (Appeals), Ahmedabad, concerning the denial of exemption under section 11(2) of the Income Tax Act, 1961 for the Assessment Year 2015-16. The trust had claimed an exemption of Rs. 8,09,518 for income accumulated for specific purposes, which was initially denied by the Central Processing Cell (CPC) due to the non-filing of Form No. 10 with the return of income. The CIT(A) upheld this decision, leading to the trust's appeal to the Tribunal. The Tribunal, referencing a similar case and various CBDT circulars, found that the trust's belated filing of Form No. 10 should not disqualify it from the exemption, especially as the form was filed before the completion of the assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135620 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 27-10-2022
• Other Referred Cases: Shree Harsaniji Public Charitable Trust v. Income-tax Officer (Exemption)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay
• Section: 154; 11; 139; 143(1)

Judgement Text

आयकर आयकरआयकर आयकर अपी अपीअपी अपीलीय लीयलीय लीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद यायपीठ यायपीठ यायपीठ यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ SMC” BENCH, AHMEDABAD SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 409/AHD/2022 िनधा रण िनधा रणिनधा रण िनधा रण वष वष वष वष /Asstt. Year: 2015-2016 Shri Modi Samaj Vikas Trust, 11 Giriraj Society, At and Post Talod Taluka, Dist. Sabarkantha, Gujarat-383215. PAN: AAFTS3761D Vs. I.T.O, Exemption, Palanpur (Applicant) (Respondent) Assessee by : Shri Sanjay R. Shah, A.R Revenue by : Shri SanjayKumar, Sr. D.R सुनवाई क तारीख/Date of Hearing : 09/01/2023 घोषणा क तारीख /Date of Pronouncement: 06/04/2023 आदेश आदेशआदेश आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals), Ahmedabad, dated 30/08/2022 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2015-16. 2. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the exemption/deduction claimed under section 11(2) of Act for Rs. 8,09,518/- only. ITA no.409/AHD/2022 A.Y. 2015-63 2 3. The facts in brief are that the assessee is a trust registered under section 12 of the Act since A.Y. 2005-06. The assessee in the return filed for the year under consideration claimed exemption of Rs. 8,09,518/- under section 11(2) of the Act on account of amount accumulated for specific purpose. The Central Processing Cell (CPC) of Income tax in the intimation processed under section 143(1) of the Act disallowed the impugned exemption/deduction on the ground Form 10 was not furnished along return of income. 4. The aggrieved assessee preferred an appeal before the learned CIT(A). The National Faceless Appeal Center (NFAC) confirmed the intimation order by observing as under: 5. I have considered the submission made before me. The main contention of the assessee is that the denial of exemption claimed u/s.11(2) should be revoked now that it had filed the Form 10 on 07.12.2018 thereby fulfilling the requirements. However, it is seen that this Form No. 10 is filed much late beyond the stipulated time and there has been no condonation on this delay by the designated authority i. e. CIT(Exemption), Ahmedabad. The argument put forward by the Assessee before the undersigned also do not hold ground in the absence of such an order. Moreover, the plea that prior to 2016-17, there was no requirements to file Form 10 electronically as per Rule 17 of the I. T. Rules also does not come to the rescue of the appellant, since it is only electronic filing which has been introduced w. e. f. 2016-17 but the requirement to file Form 10 so as to get exemption u/s. 11(2) of the I. T. Act was there even in the impugned year i. e. AY 2015- 16. There is no denying the fact that such Form 10 was not filed before the AO(CPC) who has thereafter rightly denied the exemption u/s. 11. In the letter filed before me on 29.12.2020 it was stated that the assessee is in the process of filing application before DIT(Exemption) Ahmedabad for condonation of delay in filing Form 10 in terms of CBDT Circular No. 7/2018 dated 20.12.2018. It is seen that for the 3 subsequent AYs i. e. 2016-17, 2017-18 and 2018-19 the assessee has been granted condonation the delay in filing Form 10 by the DIT/ClT(Exemption). However, for the impugned AY 2015-16 no such order granting condonation is filed before me, hence relief as prayed cannot be granted. The case laws cited also do not have a bearing on the issue in hand. The assessee does not fulfill the requirement set out for granting of relief in terms of section 11 of the I. T. Act i. e. the filing of Form 10, even if not electronically. In view of the same, Grounds of Appeal No. 1 to 4 cannot be granted, and are therefore dismissed. 5. Being aggrieved by the order of the learned CIT(A)-NFAC, the assessee is in appeal before me. ITA no.409/AHD/2022 A.Y. 2015-63 3 6. The learned AR for the assessee before me filed paper book running from pages 1 to 65 and contended that the assessee cannot be denied the benefit exemption under section 11 of the Act merely there was delay in filing the requisite form. 7. On the other hand, the learned DR vehemently supported the order of the authorities below. 8. I have heard the rival contentions of both the parties and perused the material available on record. Admittedly, the assessee has not filed Form-10 with respect to accumulation of income along with return of income filed u/s 139 of the Act, but the same was e-filled belatedly as on 27 th December 2018. The CPC in the intimation order under section 143(1) of the Act, dated 11 th October 2016 denied the exemption claimed under section 11(2) of the Act in the absence of Form-10 which also confirmed by the learned CIT(A)-NFAC. Thus, the question before us is whether the assessee can be denied the benefit of section 11 of the Act merely for the reason that Form-10 was filed belatedly i.e. after filing of return of income. The question in similar facts and circumstances has been answered in the favour of the assessee by the coordinate bench of this Tribunal in the case of S hree Harsaniji Public Charitable Trust v. Income-tax Officer (Exemption) reported in 142 taxmann.com 456 wherein it was held as under: 8. We have given our thoughtful consideration and perused the material available on record. At the first instance, the assessee was denied deduction under section 11(2) for the reason that Form No. 10 was not accompanied along with return of income, thereby 143(1) intimation was passed. It is thereafter the assessee uploaded Form No. 10 by online on 2-1-2017 and filed its rectification application on 6-10-2017. The same was processed by DCIT(CPC) by order dated 31-10-2019 holding that, "on verification it was seen that there was no prima facie error in the order sought to be rectified. Therefore, the rectification petition was rejected". Thus, DCIT(CPC) has not even discussed why 154-petition has been rejected specially in a case where Form No. 10 has been filed belatedly, especially when CBDT's Circular No. 723 dated 3-6-1980 is very much there, and also supported judgments of Apex Court and other High Courts were there. Aggrieved against the same, when the assessee filed further appeal before the ld.CIT(A), NFAC, there also ld.CIT(A) reproduced the entire submission of the assessee into 12 pages, but passed cryptic order by simply dismissing the appeal of the assessee on the ground that no mistake apparent from record. Thus, ld.CIT(A), NFAC miserably failed in adjudicating the appeal filed before it, without application of mind as well as not considering the written submissions placed before it, and passed the impugned order. 9. As rightly pointed out by the ld.AR, there are circulars issued by the CBDT as early as 1955 wherein the officers have been directed not to take advantage of ignorance of an assessee as to ITA no.409/AHD/2022 A.Y. 2015-63 4 their right, and one of the duties of the officers is to assist a taxpayer in every reasonable way particularly in the matter of claiming of refund or relief. Thus, the Officers should take the initiative in guiding a taxpayer. This attitude would in the long run benefit the department because it would inspire confidence in assessee that he may be sure of getting a square deal from the department. 10. It is appropriate to consider sub-section 9 of section 139 of the Act provides as follows: Section 139(9) Where the [Assessing] Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the [Assessing] Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return : Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the [Assessing] Officer may condone the delay and treat the return as a valid return. 11. In our considered view, the AO as well as CIT(A) are not ready to follow 67 years old Circular and the provisions viz. sub-section (9) of section 139 of the Act, in letter and spirit. We also find that the ld.CIT(A), NAFC has simply extracted the written submissions filed by the assessee, wherein Circular No. 273 dated 3-6-1980 was also reproduced in which the Board has clearly authorized Commissioners to admit applications under section 11(2) of the Act read with rule 17 of the Income- tax Rules, 1962 from persons deriving income from property held under trust wholly for charitable or religious purposes for accumulation of such income to be applied for such purpose in India when the aforesaid application (herein Form No. 10) are filed beyond the time stipulated, subject to the conditions that - (a) that the genuineness of the trust is not in doubt; (b) delay is due to oversight mistake; (c) trustees or the settlers have not been benefited by such failure directly or indirectly; 12. Further, Hon'ble Supreme Court in the case of Nagpur Hotel Owners Association (supra) has held that it is abundantly clear from the wordings of sub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required under the Rule 17 in Form No. 10 of the Act. Even assuming that there is no valid limitation prescribed under the Act and the Rules, it is reasonable to presume that the intimation required under section 11 in form No. 10 has to be furnished before the assessing authority completes the concerned assessment. 13. We observe that the ld.CIT(A) failed to consider insertion of sub-clause (c) to section 11(2) by the Finance Act, 2015 which reads as under: "Section 11(2) as applicable for AY 2016-17: (2) Where eighty-five percent of the income referred to in clause (a) or clause (b) o f sub-section (1) read with the Explanation to that sub section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with namely:— (a) such person furnishes a statement in the prescribed form and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years; (b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5); (c) the statement referred to in clause (1) is furnished on or before the due date specified under sub-section(1) of section 139 for furnishing the return of income for the previous years." ITA no.409/AHD/2022 A.Y. 2015-63 5 14. Further, the ld.CIT(A) failed to take note of CBDT Circular No. 7 of 2018 dated 20-12-2018 to condone the delay in filing Form No. 10 and 9A for the Asst. Year 2016-17. Para-4 of the above circular reads as under: "4. Representations have been received by the Board/field authorities stating that Form and Form No. 10 could not be filed in the specific time for AY. 2016-17, which was the first year of e-filing of these forms. It has been requested that the delay in filing of Form No. 9A and Form No. 10 may be condoned under section 119(2) (b) of the Act." 15. Thus, going by the insertion of new sub-clause (c) of section 11(2) of the Act, the assessee is required to furnish Form No. 10 along with Return of Income from the Asst. Year 2016-17 onwards. As per the CBDT Circular No. 7 of 2018, representation from the assessee that Form No. 9A and 10 could not be filed in specific time for the Asst. Year 2016-17, which were the first year of efiling of these forms, and also to condone such delay by invoking section 11(2)(b) of the Act. All the above provisions & circulars make it clear that non-filing or delay in filing the Form No. 10, there was no time limit prescribed under the Act for the present Asst. Year 2015-16. Following the Supreme Court judgments, if the Form No. 10 is filed before the assessing authority before completion of regular assessment, the assessee is eligible for the deduction. We find that in this case only an intimation under section 143(1) has been made rejecting the claim of deduction to the assessee. There is no regular assessment made for the A.Y. 2015-16. The assessee's rectification petition filed under section 154 of the Act is also rejected without considering insertion of sub-clause (c) in section 11(2) of the Act as well as CBDT Circular No. 7 of 2018. Thus, the ld.CIT(A) has not applied his mind while disposing of the appeal filed by the assessee. 16. In our considered view, the need for disposal of objections by way of a speaking order by the Assessing Officer, who is performing a quasi-judicial function. The soul of a quasi-judicial decision making is in the reasoning for coming to the decision taken by the quasi-judicial officer. While on this aspect of the matter, we may usefully refer to the observations made by the Hon'ble Supreme Court, in the case of Union Public Service Commission v. Bibhu Prasad Sarangi [2021] 4 SCC 516. While these observations are in the context of the judicial officers, these observations will be equally applicable to the decisions by the quasi- judicial officers like us, as indeed the Assessing Officer CPC. In the inimitable words of Hon'ble Justice Chandrachud, Hon'ble Supreme Court has made the following observations: ".....Reasons constitute the soul of a judicial decision. Without them, one is left with a shell. The shell provides neither solace nor satisfaction to the litigant. We are constrained to make these observations since what we have encountered in this case is no longer an isolated aberration. This has become a recurring phenomenon. ........How judges communicate in their judgments is a defining characteristic of the judicial process. While it is important to keep an eye on the statistics on disposal, there is a higher value involved. The quality of justice brings legitimacy to the judiciary." 17. These observations of Their Lordships apply equally, and in fact with much greater vigour, to the quasi-judicial functionaries as well. Viewed thus, reasons in a quasi-judicial order constitute the soul of the quasi-judicial decision. A quasi-judicial order, without giving reasons for arriving at such a decision, is contrary to the way the functioning of the quasi-judicial authorities is envisaged. 18. Thus, in the present case the immediately after the intimation order was passed on 15-9-2016, the assessee realized the mistake of not upholding Form No. 10 along with Return of Income, however, uploaded the same on 2-11-2017 and filed rectification application on 6-10-2017 requesting to rectify the mistake in the intimation. But the DCIT(CPC) simply rejected the rectification by his order dated 31-10-2019 by holding that there is no prima facie error in the order sought to be rectified, and simply rejected the rectification application filed by the assessee. We further observe that the ld.CIT(A) even gone one step further by dismissing the appeal without considering Circulars issued by the CBDT, as well as Hon'ble Supreme Court's judgment and other High Courts' judgments placed by the assessee before the ld.CIT(A), NFAC. We further observe that in spite of Circular 14 of 1955, the Departmental Officers are taking advantage of the ignorance of the assessee, instead of assisting the taxpayers more particularly in the matter of claim of relief, issuance of refund, but the officers had not taken any initiative in guiding the taxpayers in accordance with law. This attitude will not give long term benefit to the department and discourage the confidence to the taxpayers. In simple words, when a litigant knocks the doors of the Temple of Justice, Justice to be rendered to his door steps itself and he should not be allowed to run from pillar to post for the Justice. ITA no.409/AHD/2022 A.Y. 2015-63 6 19. Thus, taking overall circumstances of the case, we quash the orders passed by the lower authorities, and delete the additions. Thus, the grounds of appeal raised by the assessee are hereby allowed. 8.1 Thus, respectfully following the finding of the coordinate bench of this tribunal in above mentioned case and especially considering the fact that no material brought by the learned DR that the above order of the tribunal was over ruled by higher judicial authority. I hereby set aside the finding of the learned CIT(A)-NFAC and direct to allow the deduction claimed under section 11(2) r.w.s 11(1) of the Act. Hence, the ground of appeal of the assessee is hereby allowed. 9. In the result, appeal of the assessee is hereby allowed. Order pronounced in the Court on 06/04/2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 06/04/2023 Manish