2022 (8) TMI 248 - AT - Income Tax

Rectification u/s 154 - return filled treated as inconsistent and defective u/s. 139(9) - assessee considered non - enclosing the details of investments/deposits u/s. 11 - objection of CIT(A) was that the assessee claimed excess accumulation and no details regarding investments/deposits were filed with the return of income, though the said discrepancies was brought to the notice of assessee by the AO (CPC), but no compliances made by the assessee in order to rectify the said mistake - contention of ld. AR is that the assessee ready to file all the investments/deposits, because of treating return of income as invalid, the proceedings u/s. 11 will go against the assessee - HELD THAT - We find the rectification application u/s. 154 wherein, it is noted that the assessee enclosed the details of investments/deposits for ready reference of AO and requested the AO to accept the same. AO did not consider the same and held the return of income as invalid. We find on similar issue the Co-ordinate Bench of this Tribunal in the case of Deere Company 2021 (11) TMI 503 - ITAT PUNE held that, no technicality can be allowed to operate as a speed breaker in the course of dispensation of justice. If a particular relief is legitimately due to an assessee, the authorities cannot circumscribe it by creating such circumstances leading to its denial. We find the order of CIT(A) in confirming the order of AO in treating the return of income as invalid, made the assessee remediless and there is no option to claim exemption u/s. 11 - we find force in the arguments of the ld. AR that the assessee shall get an opportunity to file details of investments/deposits before the AO. Therefore, we deem it proper to remand the issue to the file of AO with a direction to treat the return of income filed by the assessee on 17-06-2015 as valid return and complete the assessment thereon. The assessee is liberty to file evidence, if any, in support of its claim. Thus, the grounds raised by the assessee are allowed for statistical purpose.

Summary

Issues:
Appeal against rejection of application filed under section 154 of the Income Tax Act by the Commissioner of Income Tax (Appeals) for assessment year 2014-15.

Analysis:
The appellant, a registered public charitable trust, appealed against the rejection of its application under section 154 of the Income Tax Act by the Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The appellant's main objective is the education and welfare of destitute women, girls, and children from economically weaker backgrounds. The appellant filed its return of income online, declaring total income as nil and claiming various exemptions and accumulations. However, the ACIT (CPC), Bangalore deemed the return as invalid due to inconsistencies and defects, specifically related to not providing details of investments/deposits as required under section 11(5) of the Act. The appellant subsequently filed an application under section 154 to rectify the issue, but the AO rejected the application, leading to the appeal before the CIT(A) and eventually to the ITAT Pune.

The appellant argued that it attempted to rectify the online filing issues but was unsuccessful due to technical difficulties. The appellant contended that the AO did not provide a chance to rectify the defects and that the return should not be deemed invalid solely for not enclosing investment details. The appellant emphasized its compliance with previous years' provisions and requested an opportunity to rectify the mistake. The ITAT Pune noted that the appellant had submitted the necessary investment details with the rectification application, which the AO did not consider, leading to the invalidation of the return. Citing precedent, the ITAT Pune held that technicalities should not impede legitimate relief due to an assessee and that denial of exemption under section 11 due to procedural issues would render the appellant remediless. Consequently, the ITAT Pune remanded the issue to the AO, directing the acceptance of the appellant's return as valid and allowing the completion of the assessment thereon, with the appellant having the liberty to provide additional evidence if necessary.

In conclusion, the ITAT Pune allowed the appellant's appeal for statistical purposes, granting the appellant the opportunity to present the details of investments/deposits before the AO and complete the assessment based on the valid return filed by the appellant.