2022 (10) TMI 1158 - AT - Income Tax

Exemption u/s 11 denied - return has been filed beyond due date as mandated in section 139 (1) - HELD THAT - The undisputed facts are that the assessee filed its return of income on 23.02.2021. It is also not in dispute that the due date for this assessment year has been extended till 15.02.021. This means that there was a delay of 7 days but considering the pandemic period and the decision of the Hon ble Supreme Court by which the Hon ble Supreme Court has extended the period of limitation across board, thus delay of 7 days deserves to be condoned. In any case the return was filed before 31.03.2021 which is the last date for filing a belated return of income. Language of the Circular F. No.173/193/2019 ITA is very clear and unambiguous in so far as the return of income filed u/s. 139 of the Act is concerned. Section 139 has several sub sections (1), (2), (3), (4), (4a), (5) - it is of the considered view that if the return is filed within the specified time limit of sub section of 139 would be eligible for the benefit given by the above mentioned CBDT circular and should avail the benefit of exemption u/s. 11 of the Act. CIT(A) erred in misinterpreting the aforementioned circular and, therefore, to that extent the order of the CIT(A) is erroneous and deserves to be set aside the grievance of the assessee is allowed. Delay has not been condoned inspite of CBDT circular No.06/2020 dated 19.02.2020 - As per CBDT circular No.06/2020 dated 19.02.2020, we direct the CIT(A) exemption to consider the return of the assessee and allow the benefit as per the provisions of the law.Appeal of the assessee is allowed in part for statistical purpose.

Summary

Issues involved:
1. Disallowance of exemption u/s 11 of the Act.
2. Delay in filing return of income.

Analysis:
1. Disallowance of exemption u/s 11 of the Act:
The appellant, a charitable institution, filed a return of income claiming exemption u/s 11 of the Act. However, the benefit of section 11 was not allowed during processing u/s 143(1) of the Act. The CIT(A) dismissed the appellant's claim, stating that the return was filed beyond the due date as per section 139(1) of the Act. The appellant relied on a CBDT instruction clarifying the time allowed for filing the return of income, but the CIT(A) rejected this argument. The appellant's counsel reiterated this argument before the ITAT, emphasizing the CBDT circular. The ITAT observed that the return was filed within the extended due date and before the last date for filing a belated return, considering the pandemic period and Supreme Court's decision on extending limitation periods. The ITAT held that the CIT(A) misinterpreted the CBDT circular, allowing the appellant's grievance and setting aside the CIT(A)'s order.

2. Delay in filing return of income:
The appellant also raised a grievance regarding the delay in filing the return of income, citing a CBDT circular from 2020. The ITAT directed the CIT(A) to consider the appellant's return and allow the benefit as per the law. Consequently, the ITAT allowed the appeal in part for statistical purposes, emphasizing compliance with the CBDT circular. The judgment was pronounced on 13.10.2022, favoring the appellant on both issues raised in the appeal.