KERALA CATHOLIC ASSOCIATION ,MUMBAI V. INCOME TAX OFFICER EXEM WARD 1(4), MUMBAI

ITA 945/MUM/2025

AI Insights

The case involves the Kerala Catholic Association appealing against the order of the Commissioner of Income-tax (Appeals), which had confirmed an addition of Rs. 1,36,45,240 to the assessee's income for the Assessment Year 2017-18. This addition was initially made by the Assessing Officer due to a violation of provisions under section 11(2)(c) read with section 13(9) of the Income-tax Act, 1961, concerning the non-filing of Form 10 within the stipulated time for claiming exemption on accumulated income. The Tribunal, referencing several precedents, held that the assessee's late filing of Form 10 should not result in the denial of exemption, especially as the form was filed before the conclusion of the assessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312793 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Other Referred Cases: Sarvodaya Charitable Trust Vs. Income Tax Officer (Exemption), Al Jamia Mohammediyah Education Society Vs. Commissioner of Income tax (Exemptions), Rajasthan Medical Relief Society Vs. Income-tax Officer, Shree Vardhman Stanakvasi Jain Shravak Trust Vs. Income Tax Officer, Commissioner of Income-tax (Exemptions), UP Vs. Reham Foundation LKO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT PAL SINGH
• Assessee Lawyers: TANZIL R. PADVEKAR
• Keywords: Charitable institution; Benefit of exemption
• Section: 143(3); 11; 12; 10B

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 945/MUM/2025 (निर्धारण वर्ा / Assessment Year :2017-18) Kerala Catholic Association KCA Bhavan, St. Francis of Asis International School, P.L. Lokhande Marg, Chembur, Mumbai, Maharashtra-400043 v/s. बिधम ITO Exemption, Ward 1(4), Mumbai Room No. 612, 6th Floor, Cumballa Hill MTNL Te Building, Pedder Road, Dr. Gopalrao Deshmukh Marg, Mumbai, Maharashtra- 400026 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAATK3121E Appellant/अपीलधर्थी .. Respondent/प्रनिवधदी निर्ााररती की ओर से /Assessee by: Shri Tanzil R. Padvekar रधजस्व की ओर से /Revenue by: Shri Ajit Pal Singh सुिवधई की िधरीख / Date of Hearing 17.04.2025 घोर्णध की िधरीख/Date of Pronouncement 29.04.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 24.06.2024 passed P a g e | 2 ITA No. 945/Mum/2025 A.Y. 2017-18 Kerala Catholic Association u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2017-18. 2. The assessee has raised the following grounds of appeal: “1. On the facts and in law, the CIT(A) erred in confirming the impugned assessment Order dated 11/12/2017 passed by Ld. AO. making impugned addition of Rs. 1,36,45,240/-. 2. On the facts and in law, the Ld. Assessing Officer [in short Ld. AO] erred in wrongly adding back the figure of Income of Rs. 1,36,45,240/- on account of denial of exemption under Section 11(1) of the Act as it is unwarranted, unjustified and bad in law. 3. On the facts and in law, the Ld. AO has erred in wrongly mentioning the facts in the body of the order which are not applicable to the Assessee, You are requested to kindly delete the entire additions and oblige. 4. On the facts and in law, the Appellant prays that the addition/disallowance of Rs. 1,36,45,240/- as states in the order may be deleted. 5. On the facts and in law, the provision regarding furnishing of Form 10 with the return must to be treated as a procedural proviso and therefore substantial compliance must suffice. The benefit of exemption should not be denied merely on account of furnishing of Form 10 at the time of assessment proceedings. 6. On the facts and in law, all the relevant details relating to accumulation as per section 11(2) of the Act, were made available before the Assessing officer, in Form 10B filed before filing of return of income and therefore, mere filing of Form 10 at the time of filing of assessment proceedings should be treated as sufficient compliance. 7. On the facts and in law, the Ld. CIT(A) erred in dismissing appeal filed by the Appellant for non-prosecution and on the Assumption that the Appellant did not receive any physical notices even when the Appellant had opted for option for sending notices and communication through physical manner. 8. On the facts and in law, the Ld. CIT(A) erred by failing to send the notices on the email id provided under the caption for sending notices in Form No.35 thereby making it impossible for the appellant respond to such notice. 9. The appellant craves leave to add to alter, modify, revise, or delete any ground (s) in the interest of justice.” 3. At the outset, it is noticed that the appeal is delayed by 165 days. The assessee has filed an application for condonation of delay, wherein it has been submitted that the assessee was unaware of the proceedings as well as the order of the Ld. CIT(A) as all the notices were sent online, even though the assessee P a g e | 3 ITA No. 945/Mum/2025 A.Y. 2017-18 Kerala Catholic Association had opted for ‘no notice or communication via email’ while filing the appeal. Since the staff of the trust was not familiar with the compliances on the Income Tax Portal, and no physical notice was received, the assessee remained unaware of the appellate proceedings before Ld. CIT(A). Subsequently, the Chartered Accountant, upon checking the ITBA portal, informed the assessee about the order of Ld. CIT(A), and hence, the appeal was filed belatedly by the assessee. In view of the submissions made by the assessee, we hereby condone the delay in filing the appeal of 165 days. 4. Brief facts of the case are that the assessee had filed its return declaring income of Rs. 2,55,240/-. The case was selected for scrutiny and assessment was completed u/s 143(3) at an income of Rs. 1,36,45,240/- after making an addition of Rs. 1,34,00,000/- on account of violation of provisions of section 11(2)(c) r.w.s. 13(9) of the Act. 5. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before CIT(A). The assessee did not make any compliance before Ld. CIT(A) for the reasons stated in Para 3 hereinbefore, and therefore, Ld. CIT(A) examined the assessee’s grounds and dismissed the appeal after holding that the assessee had not filed Form 10 on or before the due date of filing of return, which is a mandatory requirement for claiming the benefit of accumulation of income. 6. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before the Tribunal. Ld. AR has submitted that the disallowance has been made only P a g e | 4 ITA No. 945/Mum/2025 A.Y. 2017-18 Kerala Catholic Association for the reason that the requisite form giving details of accumulation was not filed within time. As per the amended provision applicable w.e.f. AY 2017-18, this form was required to be submitted on or before filing of the return. However, the same was filed only after receipt of notice u/s 143(2) of the Act. On this issue, Ld. AR has relied on the various decisions of the Hon’ble Apex Court, Hon’ble High Courts and coordinate benches, wherein under similar circumstances, the issue has been decided in favour of the assessee. Specifically, the assessee has relied on the following decisions: 1. “Sarvodaya Charitable Trust Vs. Income Tax Officer (Exemption) [2021] 125 taxmann.com 75 (Gujrat) 2. Al Jamia Mohammediyah Education Society Vs. Commissioner of Income tax (Exemptions) - [2024] 162 taxmann.com 114 (Bombay) 3. Rajasthan Medical Relief Society Vs. Income-tax Officer - [2024] 162 taxmann.com 568 (Jaipur-Trib) 4. Shree Vardhman Stanakvasi Jain Shravak Trust Vs. Income Tax Officer - [2025] 173 taxmann.com 165 (Ahmedabad-Trib.) 5. Commissioner of Income-tax (Exemptions), UP Vs. Reham Foundation LKO - [2019] 111 taxmann.com 379 (Allahbad)” 7. On the other hand, Ld. DR has strongly relied on the orders of lower authorities, and has argued that after the amendment in the Act, it is now mandatory for the assessee to file the requisite audit report before filing of return. Accordingly, he submitted that the decision of the Ld. AO deserves to be upheld. 8. We have heard the rival submissions and considered the relevant facts in the light of judicial pronouncements cited before us. It is seen that the issue is squarely covered in the writ petition in the case of AI Jamia Mohammediyah P a g e | 5 ITA No. 945/Mum/2025 A.Y. 2017-18 Kerala Catholic Association Education Society v/s CIT (Exemptions) (supra) wherein it has been held that when the delay in filing of Form 10 was not intentional or deliberate, the same should be condoned. 9. Similarly, in the writ petition in the case of Survodaya Charitable Trust v/s ITO (supra), the Hon’ble High Court has held that where the assessee substantially satisfied condition of availing the benefit of exemption, it could not be denied the exemption merely on bar of limitation to submit Form No. 10, especially when a legislature had conferred vide discretionary powers to condone the such delay to the authorities concerned. 10. In the case of Shri Vardhman Stanak Vasi Jain Sharvarak Trust v/s ITO (supra), the coordinate bench in identical circumstances, relying on the decision of the coordinate bench in the case of Swami Narayan Charitable Trust v/s ITO in ITA No. 1106/Ahd/2024 has held that the exemption u/s 11 and 12 of the Act cannot be denied only on account of late filing of Form 10, especially when the same was available before conclusion of the proceedings. 11. In the present case also, the assessee has filed the requisite audit report in Form 10 during the course of assessment proceedings, and therefore, we are of the view that the benefit of the same cannot be denied to the assessee as has been held in the various decisions cited above. Accordingly, we direct the Ld. AO to take into account the requisite audit certificate filed during the course of P a g e | 6 ITA No. 945/Mum/2025 A.Y. 2017-18 Kerala Catholic Association assessment proceedings and allow the benefit of accumulation of income as per the provisions of section 11 of the Act. 12. In view of the above, appeal of the assessee is allowed. Order pronounced in the open court on 29.04.2025. Sd/- Sd/- KAVITHA RAJAGOPAL RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 29.04.2025 अननक ेत स ुंह र जपूत/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "