The Income Tax Officer (Exemptions) Ward-1 , Mangalore V. M/s Catholic Diocese of Karwar , Karwar

ITA 599/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2877 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 02-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V K GURUNATHAN
• Keywords: Charitable institution; Reasonable cause; Wrong claim
• Section: 92E; 115JB; 139

Judgement Text

ITA.599/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.599/BANG/2018 (ASSESSMENT YEAR : 2014-15) INCOME TAX OFFICER (E), WARD 1, MANGALURU .. APPELLANT V. M/S. CATHOLIC DIOCESE OF KARWAR, D NO.416, PUNEETH SADAN, SHIRWAD, KARWAR 581 306 .. RESPONDENT PAN : AAATC1869K ASSESSEE BY : SHRI. V. K. GURUNATHAN, ADVOCATE REVENUE BY : SHRI. S. T. SESHADRI, JCIT HEARD ON : 23.08.2018 PRONOUNCED ON : 29.08.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS FILED IS FILED BY THE REVENU E AGAINST THE ORDER OF THE CIT (A), MANGALURU, DT.13.12.2017, FOR THE ASSESSMENT YEAR 2014-15, ON THE FOLLOWING GROUNDS : ITA.599/BANG/2018 PAGE - 2 ITA.599/BANG/2018 PAGE - 3 02. WITH RESPECT TO GROUND NO.2, IT WAS SUBMITTED THAT THE FINDING RECORDED BY THE AO IN PARAS 9 TO 11 IS AGAINST THE PROVISION OF LAW. IT WAS THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAS FILED THE REQUISITE FORM NO.10 DURING THE ASSESSMENT PROCEEDI NGS AND THEREFORE THERE IS A SUBSTANTIAL COMPLIANCE UNDER T HE PROVISIONS OF SECTION 11(2) OF THE ACT. FOR THE PURPOSES OF CLAR ITY, WE MAY REPRODUCE PARAS 9 TO 11 OF THE ASSESSMENT ORDER WHI CH IS TO THE FOLLOWING EFFECT : 9. MOREOVER, THE FORM NO.10 FILED BY THE ASSESSEE T RUST AT THE TIME OF ASSESSMENT PROCEEDINGS DOES NOT SPECIFY THE AMOUNT OF ITA.599/BANG/2018 PAGE - 4 ACCUMULATION AND HENCE THE AMOUNT OF ACCUMULATION I S TO BE TREATED AS NIL. FORM 10 FILED AT THE TIME OF ASSES SMENT IS REPRODUCED HERE UNDER FOR READY REFERENCE : 10. THE CLAIM OF ACCUMULATION OF RS.27,50,184/- U/S .11(2) IS HEREBY DENIED FOR THE FOLLOWING REASONS : A. FORM 10 HAS NOT BEEN FILED BEFORE THE ASSESSING OFFICER ON OR BEFORE THE DUE DATE I.E. 30.09.2014 B. FORM 10 HAS NOT BEEN ELECTRONICALLY FILED, AS RE QUIRED BY LAW UPTO THE COMPLETION OF ASSESSMENT C. APPLICATION FOR CONDONING THE DELAY IN FILING FO RM 10 HAS NOT BEEN MADE BEFORE THE HONBLE COMMISSIONER OF INCOME TAX AS PER BOARDS CIRCULAR CITED ABOVE. 11. FORM 10 FILED AT THE TIME OF ASSESSMENT (NOT ELECTRONICALLY) DOES NOT SPECIFY THE AMOUNT OF ACCU MULATION, ITA.599/BANG/2018 PAGE - 5 HENCE CLAIM OF ACCUMULATION U/S.11(2) AMOUNTING TO RS.27,50,184/- IS DISALLOWED. THE ASSESSEE TRUST HAS THUS MADE A WRONG CLAIM THU S RESULTING IN FURNISHING OF INACCURATE PARTICULARS O F INCOME FOR WHICH PENALTY PROCEEDINGS U/S.271(1)(C) IS INITIATE D. 03. ON THE OTHER HAND THE LD. DR HAS SUBMITTED THAT FINDING RECORDED BY THE CIT (A) IN PARA 4.4 TO 4.4.8 IS AGA INST THE INCOME TAX ACT AND RULES. OUR ATTENTION WAS DRAWN TO RULE 12, WHEREIN THE AMENDMENT WAS INCORPORATED W.E.F. 01.04.2012, TO TH E FOLLOWING EFFECT : [(2) THE RETURN OF INCOME REQUIRED TO BE FURNISHED IN FORM SAHAJ (ITR-1) OR FORM NO. ITR-2 OR FORM NO. ITR-3 OR 75 [ FORM SUGAM (ITR-4) ] OR FORM NO. ITR-5 OR FORM NO. ITR-6 47 [OR FORM NO. ITR-7] SHALL NOT BE ACCOMPANIED BY A STATEMENT SHOWING THE COMPUTATION OF THE TAX PAYABLE ON THE BASIS OF THE RETURN, OR PROOF OF THE TAX, IF AN Y, CLAIMED TO HAVE BEEN DEDUCTED OR COLLECTED AT SOURCE OR THE ADVANCE TAX OR TAX ON SELF-ASSESSMENT, IF ANY, CLAIMED TO HAVE BEEN PAID OR ANY DOCUMENT O R COPY OF ANY ACCOUNT OR FORM OR REPORT OF AUDIT REQUIRED TO BE ATTACHED WIT H THE RETURN OF INCOME UNDER ANY OF THE PROVISIONS OF THE ACT:] 48 [ PROVIDED THAT WHERE AN ASSESSEE IS REQUIRED TO FURNISH A REP ORT OF AUDIT SPECIFIED UNDER SUB-CLAUSE ( IV ), ( V ), ( VI ) OR ( VIA ) OF CLAUSE ( 23C ) OF SECTION 10, SECTION 10A 49 [, SECTION 10AA], CLAUSE ( B ) OF SUB-SECTION (1) OF SECTION 12A, SECTION 44AB 49 [, SECTION 44DA, SECTION 50B], SECTION 80-IA, SECTI ON 80-IB, SECTION 80-IC, SECTION 80-ID, SECTION 80JJAA , SECTION 80LA, SECTION 92E, 50 [SECTION 115JB, 50A [ SECTION 115JC ] OR SECTION 115VW] 51 [OR TO GIVE A NOTICE UNDER CLAUSE ( A ) OF SUB-SECTION (2) OF SECTION 11] OF THE ACT, HE SHALL FURNISH THE SAME ELECTRONICALLY.] 04. IN REBUTTAL IT WAS THE CONTENTION OF THE ASSESS EE THAT THOUGH IT IS UNDISPUTED THAT THERE IS A PROVISION UNDER RULE AS MENTIONED HEREIN ABOVE, BUT NONE-THE-LESS, THE ASSESSEE HAS M ADE SUFFICIENT COMPLIANCE BY REFERRING THE AMOUNT OF THE ACCUMULAT ED FUND UNDER PART-B-TI, COLUMN VI-9VI OF THE IT RETURN, FILED FO R AY 2014-15. ITA.599/BANG/2018 PAGE - 6 FOR THIS PURPOSE, OUR ATTENTION WAS DRAWN TO PAGE 8 OF CIT (E) ORDER, AS UNDER : 05. IT WAS THE FURTHER CONTENTION OF THE ASSESSEE B EFORE US THAT SECTION 11(2)(C) WAS BROUGHT INTO THE STATUTE BOOK BY THE AMENDMENT W.E.F. 01.04.2015, TO THE FOLLOWING EFFEC T : ( C ) THE STATEMENT REFERRED TO IN CLAUSE ( A ) 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 YE AR: PROVIDED THAT IN COMPUTING THE PERIOD OF FIVE YEARS REFERRED TO IN CLAUSE ( A ), THE PERIOD DURING WHICH THE INCOME COULD NOT BE APP LIED FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULATED OR SET APART, DUE TO AN ORDER OR INJUNCTION OF ANY COURT, SHALL BE EXCLUDED. ITA.599/BANG/2018 PAGE - 7 HOWEVER DURING THE ASSESSMENT YEAR 2014-15, SECTION 11(2) PROVIDES AS UNDER : [(2) 40 [WHERE 41 [EIGHTY-FIVE] PER CENT OF THE INCOME REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OF SUB-SECTION (1) READ WITH THE EXPLANATION TO THAT SUB-SECTION IS NOT APPLIED, OR IS NOT DEEMED TO HAVE BEEN APPLIED, TO CHARITABLE O R 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 INC OME SO ACCUMULATED OR SET APART SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PR EVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME, PROVIDED THE FOLLOWING CONDITIONS AR E COMPLIED WITH, NAMELY:] ( A ) SUCH PERSON SPECIFIES, BY NOTICE IN WRITING GIVEN TO THE 42 [ASSESSING] OFFICER IN THE PRESCRIBED 43 MANNER 44 , THE PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET APART AND THE PERIOD FOR WHICH T HE INCOME IS TO BE ACCUMULATED OR SET APART, WHICH SHALL IN NO CASE EX CEED TEN YEARS; 45 [( B ) THE MONEY SO ACCUMULATED 46 OR SET APART IS INVESTED OR DEPOSITED IN THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5)]:] 47 [ PROVIDED THAT IN COMPUTING THE PERIOD OF TEN YEARS REFERRED TO IN CLAUSE ( A ), THE PERIOD DURING WHICH THE INCOME COULD NOT BE APPLIED FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULATED OR SET APART, DUE TO AN ORDER OR INJ UNCTION OF ANY COURT, SHALL BE EXCLUDED:] 48 [ PROVIDED FURTHER THAT IN RESPECT OF ANY INCOME ACCUMULATED OR SET A PART ON OR AFTER THE 1ST DAY OF APRIL, 2001, THE PROVISIONS OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS TEN YEARS AT BOTH THE PLACES WHE RE THEY OCCUR, THE WORDS FIVE YEARS HAD BEEN SUBSTITUTED.] 06. ON THE BASIS OF THE ABOVE, IT WAS SUBMITTED THA T THERE WAS NO MANDATORY PROVISION OF FILING THE FORM UNDER THE AC T AND THIS PROVISION ONLY BECAME PART OF THE ABOVE RULES AND THEREFORE ON THE BASIS OF THE RULES, THE DISALLOWANCE CANNOT BE MADE . 07. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. BEFORE WE DECIDE THE ISSUE ON MERIT, IT IS NECESSA RY TO REPRODUCE THE RULES AND FORM PREVALENT DURING THE A. Y 2014-1 5, AS UNDER : ITA.599/BANG/2018 PAGE - 8 UNDER RULE 17, THIS FORM WAS REQUIRED TO BE FILLED BEFORE THE AO BEFORE EXPIRY OF THE TIME ALLOWED FOR FILING THE RE TURN OF INCOME, UNDER SUB SECTION (1) OF SECTION 139. 08. RELEVANT PORTION OF RULE 17 PROVIDES AS UNDER : 17. NOTICE FOR ACCUMULATION OF INCOME BY CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION OR ASSOCIATION REFER RED TO IN CLAUSES (21) AND (23) OF SECTION 10 THE NOTICE TO BE GIVEN TO THE ASSESSING OFFICER OR THE PRESCRIBED AUTHORITY UNDER SUB-SECTION (2) OF SECTION 11 OR UNDER THE SAID PRO VISION AS APPLICABLE UNDER CLAUSE (21) OR CLAUSE (23) OF SECTION 10 SHALL BE I N FORM NO.10 AND SHALL BE DELIVERED BEFORE THE EXPIRY OF THE TIME ALLOWED UND ER SUB-SECTION (1) OF SECTION 139, FOR FURNISHING THE RETURN OF INCOME. ITA.599/BANG/2018 PAGE - 9 09. THE LAW HAS BROUGHT IN THE AMENDMENT IN RULE 12 (2) THE PROVISO TO THE FOLLOWING EFFECT : PROVIDED THAT WHERE AN ASSESSEE IS REQUIRED TO FURN ISH A REPORT OF AUDIT SPECIFIED UNDER SUB-CLAUSE (IV), (V), (VI) OR (VIA) OF CLAUSE (23C) OF SECTION 10, SECTION 10A, CLAUSE (B) OF SUB -SECTION (1) OF SECTION 12A, SECTION 44AB, SECTION 80-IA, SECTION 8 0-IB, SECTION 80-IC, SECTION 80-ID, SECTION 80JJAA, SECTION 80LA, SECTION 92E SECTION 115JB OR TO GIVE A NOTICE UNDER CLAUSE (A) OF SUB-SECTION (2) OF SECTION 11 OF THE ACT, HE SHALL FURNISH THE SAME ELECTRONICALLY.] 10. IN VIEW OF THE AMENDMENT BROUGHT IN RULE12 (2) OF RULES AND UNDER CLAUSE (C) TO SECTION 11( 2) , LAW HAS MANDA TORY TO FILE FORM 10 ELECTRONICALLY. HOWEVER PRIOR THERETO UNDER RUL E 17, NOTICE WAS REQUIRED TO BE GIVEN AND DELIVERED BEFORE THE EXPIR Y OF THE TIME ALLOWED UNDER SUB-SECTION (1) OF SECTION 139 FOR FU RNISHING THE RETURN OF INCOME AND THERE WAS NO REQUIREMENT OF FI LLING THE FORM ELECTRONICALLY. IN THE LIGHT OF THE ABOVE AND THE CONJOINT READING OF RULE 17, RULE 12( 2 ) AND FORM 10, IT IS ABUNDANTLY CLEAR THAT IF THE ASSESSEE WISHES TO TAKE THE BENEFIT OF SECTION 11(2), IT IS ESSENTI AL FOR THE ASSESSEE TO FURNISH AND DELIVER THE NOTICE IN THE REQUISITE FOR M 10 TO THE AO BEFORE THE EXPIRY OF THE PERIOD PROVIDED U/S.139(1) OF THE ACT. HOWEVER BY VIRTUE OF AMENDMENT TO RULE 12(2), IT W AS ONLY PROVIDED THAT THE ASSESSEE IS REQUIRED TO SUBMIT EL ECTRONICALLY THE FORM 10 TO THE AO. 11. IN THE PRESENT CASE, THE FORM 10 HAS NOT BEEN FILED BEFORE THE AO ON OR BEFORE THE DUE DATE FOR FILING THE RETURN U/S.139(1) AS ON ITA.599/BANG/2018 PAGE - 10 30.09.2014, FURTHER THE ASSESSEE HAS NOT FILED THE FORM ELECTRONICALLY. LASTLY THE FORM SUBMITTED BY THE A SSESSEE WAS INCHOATE AS IT IS LACKING THE NECESSARY PARTICULARS IN RESPECT OF INCOME FOR WHICH THE BENEFIT WAS SOUGHT U/S.11(2) O F THE ACT. UNDER THE RELEVANT FORM 10 (SUPRA), IT WAS NECESSA RY FOR THE ASSESSEE TO GIVE THE SPECIFIC DETAILS OF THE AMOUNT FOR WHICH THE ASSESSEE WAS SEEKING THE BENEFIT U/S.11(2) OF THE A CT. HOWEVER THE NEEDFUL HAS NOT BEEN DONE AND THE CIT (A) BASED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE MATTER OF CIT V . NAGPUR HOTEL OWNERS ASSN [(2001) 247 ITR 201] AND MORE PARTICUL ARLY IN VIEW OF THE ENTRY MADE IN THE CONCERNED COLUMN OF THE IT RETURN, HAD ALLOWED THE BENEFIT U/S.11(2) OF THE ACT. 12 . IN OUR CONSIDERED OPINION, THERE IS NO CHALLENGE TO THE RULE BEFORE ANY COURT OF LAW, MORE PARTICULARLY RULE 17 AND FORM 10 AS EXISTING ON 01.04.2014. IN THE PRESENT CASE ASSESS EE HAS NOT BEEN ABLE TO ESTABLISH THE REASONABLE CAUSE FOR NOT FILL ING THE FORM 10 AND DELIVERING THE NOTICE AS PER RULE 17 BEFORE THE AO BEFORE THE DATE OF FILING OF THE RETURN OF INCOME. FURTHER THE NOT ICE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS WAS LACK ING ESSENTIAL PARTICULARS AS THE INCOME FOR WHICH THE ASSESSEE HA S SOUGHT THE BENEFIT HAD NOT BEEN DISCLOSED. HOWEVER CONSIDERIN G THAT THE ASSESSEE BEING A CHARITABLE ORGANISATION AND HAD DI SCLOSED THE ACCUMULATED FUNDS IN PART VI OF COLUMN.9 OF THE IT RETURN, WE DEEM IT APPROPRIATE TO REMAND THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO THE ASSESSEE TO FILE THE CORRECT FORM 10 GIVING THE ENTIRE DETAILS AS REQUIRED IN FORM 10 TO THE AO. IT IS DI RECTED THAT THE AO ITA.599/BANG/2018 PAGE - 11 ON FURNISHING THE FORM 10 BY THE ASSESSEE, AO MAY D ECIDE THE MATTER AFRESH WITHOUT BEING INFLUENCED BY THE ORDER EARLIER PASSED BY THE AO. 13. THE NEXT GROUND IN THE REVENUES APPEAL IS ON A CCOUNT OF DELETION OF THE ADDITION MADE ON SPECIFIC FUND MADE BY THE CIT (A). IN THIS REGARD, THE LD. DR HAS SUBMITTED THAT THE D OCUMENTS FURNISHED BY THE ASSESSEE BEFORE THE CIT (A) WERE N OT AVAILABLE TO THE AO AND THEREFORE THE AO HAD NO OCCASION TO EXAM INE THE SPECIFIC PURPOSE FOR WHICH THE DONATIONS WERE RECEI VED BY THE ASSESSEE AND THEREFORE THE AO WAS RIGHT IN HIS FIND ING AND HAD RIGHTLY TREATED THE DONATION AS INCOME OF THE ASSES SEE. 14. PER CONTRA, THE LD. AR HAS SUBMITTED THAT THE C IT (A) HAD EXAMINED THE ENTIRE AFTER GOING THROUGH THE DOCUMEN TS FILED BY THE ASSESSEE. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE CIT (A) HAD MERELY FOLLOWED THE ORDER PASSED IN THE CASE OF THE ASSESSEE FOR AY 2012-13. HOWEVER THE CIT (A) HAS N OT EXAMINED ANY OF THE DOCUMENT MENTIONED IN THE PAPER BOOK BEF ORE US RUNNING PAGES 56 TO 81. IN THE LIGHT OF THE ABOVE, AS THE CIT (A) HAS NOT EXAMINED ANY OF THE DOCUMENTS FILED BY THE ASSESSEE AND HAD WRONGLY COME TO THE CONCLUSION RELYING UPON THE DEC ISION PASSED IN THE CASE OF THE ASSESSEE FOR AY 2012-13, HIS ORDER CANNOT BE SUSTAINED. THEREFORE, WE RESTORE THIS ISSUE OF FOR EIGN CONTRIBUTION AND SPECIFIC FUND DONATION ISSUES TO THE FILE OF THE AO TO EXAMINE ITA.599/BANG/2018 PAGE - 12 AFRESH AFTER GIVING OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. THE AO IS DIRECTED TO SCRUTINISE THE PURPOSE OF FOREIGN CONTRIBUTION RECEIVED BY THE ASSESSEE AND FURTHER TO EXAMINE WHE THER SUCH FOREIGN CONTRIBUTION WAS USED FOR THE PURPOSE FOR W HICH IT WAS RECEIVED BY THE ASSESSEE. NEEDLESS TO SAY THE SPECI FIC PURPOSE FOR WHICH CONTRIBUTION WAS RECEIVED BY THE ASSESSEE SHO ULD BE IN ACCORDANCE WITH THE AIMS AND OBJECT OF THE ASSESSEE AND SHOULD NOT IN ANY CASE VIOLATE ANY PROVISION OF LAW. 16. IN THE RESULT, BOTH THE GROUNDS RAISED IN APPEA L OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF AUGUST, 2018. SD/- SD/- (A. K. GARODIA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 29.08.2018 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE