2022 (7) TMI 172 - AT - Income Tax

Exemption u/s 11 Denied - Default filling Form No. 10 electronically - HELD THAT - It is not in controversy that an amendment in section 11 and 13 of the Act was made vide Finance Act, 2015 applicable from 01.04.2016 (A.Y. 2016-17 onwards), whereby filing of Form No. 10 electronically to the Assessing Officer within the due date specified u/s. 139(1) of the Act, has been made as a condition for accumulation of income u/s. 11 and 13 of the Act. The CBDT while considering the representations received by the Board/Field Authorities qua delay in filing of Form No. 9A and Form No. 10 for A.Y. 2016-17, issued a Circular No. 7/2018 dated 20.12.2018 and empowered the Commissioners of Income Tax to admit belated applications in Form No. 9A and Form No. 10 qua A.Y. 2016-17 where the same are filed after the expiry of time allowed under the relevant provisions of the Act. It was further instructed to the Commissioners of Income Tax, to satisfy themselves that the Assessee was prevented by reasonable cause from filing an application in Form No. 9A and Form No. 10 within the stipulated time. I n the case of CIT vs. Nagpur Hotel Owners Association ( 2000 (12) TMI 99 - SUPREME COURT allowed the filing of Form No. 10 upto the stage of completion of assessment u/s. 143(3) of the Act and the Hon ble Allahabad High Court in the case of CIT vs. Panama Chemical Works ( 1999 (6) TMI 3 - MADHYA PRADESH HIGH COURT also held that filing of the audit report during the assessment proceedings by the Assessee amounts to substantial compliance with the statutory requirement. No doubt, lack of knowledge of law is not an excuse, however,considering the peculiar facts that the provision for filing of the Form No. 10 was inserted newly and made applicable from A.Y. 2016-17 onwards, which in the instant case is under consideration and therefore the Assessee committed error which prima facie seems to be bonafide and unintentional. Even otherwise the Assessee rectified its mistake by filing form No. 10 electronically along with revised return of income u/s. 139(4) of the Act, which goes to show that the Assessee has used its due Diligence and made available the form No. 10 to the Assessing Officer during the assessment proceedings itself and therefore the Assessee can not be penalized. On the aforesaid analyzations, we are of the view that the Assessing Officer should have taken into consideration the form No. 10 filed on dated 24.03.2018. Consequently, the assessment order along with impugned order is set aside and the case is remanded to the file of the Assessing officer for decision afresh by taking into consideration the FORM 10 filed along with the revised return of income, suffice to say while affording proper and reasonable opportunity of being heard to the Assessee. Assessee appeal stands allowed for statistical purposes.

Summary

Issues Involved:
- Filing of Form No. 10 electronically within the due date specified u/s. 139(1) of the Act for accumulation of income u/s. 11 and 13.
- Condonation of delay in filing Form No. 10.
- Interpretation of legal provisions regarding accumulation of income and submission of Form No. 10.
- Applicability of Circulars issued by CBDT for belated applications of Form No. 10.
- Consideration of case laws and judicial precedents regarding filing of Form No. 10.

Analysis:
1. Filing of Form No. 10: The case involved a dispute regarding the mandatory requirement of filing Form No. 10 electronically within the prescribed time frame for accumulation of income under sections 11 and 13 of the Act. The Assessee failed to file the form within the due date specified u/s. 139(1) of the Act, leading to the Assessing Officer treating the shortfall as deemed application. The Assessee contended that the form was filed with the revised return u/s. 139(4) of the Act, citing ignorance about the new provisions introduced from A.Y. 2016-17 onwards.

2. Condonation of Delay: The Assessee sought condonation of delay in filing Form No. 10, relying on Circulars issued by the CBDT authorizing the Commissioners of Income Tax to admit belated applications for A.Y. 2016-17. The Assessee argued that the delay was due to genuine hardships and lack of awareness about the new electronic filing requirements, which were introduced for the first time.

3. Interpretation of Legal Provisions: The Tribunal considered the legal provisions amended by the Finance Act, 2015, and the requirement of filing Form No. 10 electronically as a condition for accumulation of income under sections 11 and 13. The Tribunal also analyzed the provisions of section 139(9) of the Act and the implications of not filing Form No. 10 within the stipulated time frame.

4. Applicability of Circulars: The Tribunal examined the Circulars issued by the CBDT, specifically Circular No. 7/2018, which empowered the Commissioners of Income Tax to entertain belated applications for Form No. 10. The Tribunal assessed whether the Assessee met the criteria of reasonable cause for the delay in filing the form and whether the accumulated amount was invested as per the requirements of the Act.

5. Case Laws and Precedents: The Tribunal considered various judicial precedents, such as the decisions of the Hon'ble Apex Court and High Courts, regarding the filing of Form No. 10 at different stages of assessment proceedings. The Tribunal analyzed the principles of substantial compliance with statutory requirements and the relevance of furnishing necessary documents during the assessment process.

Conclusion:
The Tribunal allowed the appeal filed by the Assessee for statistical purposes, setting aside the assessment order and the impugned order. The case was remanded to the Assessing Officer for a fresh decision, considering the filing of Form No. 10 along with the revised return of income. The Tribunal emphasized affording the Assessee a proper and reasonable opportunity to be heard, taking into account the circumstances and the due diligence shown by the Assessee in rectifying the filing error.