2023 (2) TMI 1019 - AT - Income Tax

Reopening of assessment u/s 147 - claim u/s 11(2) which was only made during proceedings initiated u/s 148 - whether the Form-10 could be furnished by the assessee for the purposes of Section 11 of the said Act during the re- assessment proceedings? - As per CIT-A income was offered and Form No. 10 was filed during the re-assessment proceedings and there is no finding of the Assessing Officer that the conditions subject to which accumulation is allowed under section 11(2) were not fulfilled - HELD THAT - We find that CIT(A) while deciding the issue has relied on the decision rendered by Hon ble Apex Court in the case of Nagpur Hotels Associations 2000 (12) TMI 99 - SUPREME COURT and other decisions. Before us, Revenue has not pointed out as to how the ratio of the aforesaid decision is not applicable to the facts of the present case. We further find that CIT(A) while deciding the issue has given a finding that there is no findings of the AO about that the conditions subject to which the accumulation was allowed u/s 11(2) of the Act was not fulfilled by the assessee. Considering the totality of the facts, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.

Summary

Issues Involved:
1. Whether the CIT(A) erred in directing to allow the claim under section 11(2) of the Income Tax Act, which was made during proceedings initiated under section 148 of the Act.
2. Whether the CIT(A) erred in ignoring the fact that the assessee failed to file Form No. 10 and the requisite resolution by the trustees within the prescribed time.
3. Whether the CIT(A) erred in ignoring that the resolution to accumulate was passed by the trustees only after the assessment was reopened under section 148 of the Act.

Issue-Wise Detailed Analysis:

1. Allowance of Claim under Section 11(2) During Proceedings Initiated under Section 148:

The Revenue argued that the assessee had claimed Rs. 5,85,00,000 as an application of income for the advance given for the purchase of property in A.Y. 2007-08. However, in A.Y. 2008-09, when the amount was received back, it was not included as income in the original return. The Revenue contended that the assessee included this amount as income only when the case was reopened under section 148 and claimed it as accumulation under section 11(2). The CIT(A) directed to allow the claim under section 11(2) by treating the reassessment return as a return under section 139. The Tribunal upheld the CIT(A)'s decision, citing that the reassessment proceedings are considered part of the assessment process, and the assessee could claim the benefit of section 11(2) during these proceedings.

2. Filing of Form No. 10 and Requisite Resolution:

The Revenue contended that the assessee failed to file Form No. 10 and the requisite resolution by the trustees specifying the purposes for accumulation within the prescribed time. The Tribunal noted that the CIT(A) found that the assessee had offered the income of Rs. 5,85,00,000 and filed Form No. 10 during the reassessment proceedings. The CIT(A) relied on the decision of the Hon'ble Delhi High Court in the case of Association of Corporation and Apex Societies Handlooms vs. ADIT and the Hon'ble Supreme Court in CIT vs. Nagpur Hotels Associations, which allowed the filing of Form No. 10 during reassessment proceedings. The Tribunal upheld that the CIT(A) correctly applied these precedents, allowing the claim under section 11(2).

3. Resolution to Accumulate Passed After Reopening of Assessment:

The Revenue argued that the resolution to accumulate funds was passed by the trustees only after the assessment was reopened under section 148, which was beyond the statutory period of five years allowed under section 11(2). The Tribunal found that the CIT(A) had observed no findings by the AO indicating that the conditions for accumulation under section 11(2) were not fulfilled by the assessee. The Tribunal agreed with the CIT(A) that the reassessment proceedings allowed the assessee to comply with the requirements of section 11(2) and thus upheld the CIT(A)'s decision to allow the accumulation.

Conclusion:

The Tribunal upheld the CIT(A)'s decision on all grounds, finding no reason to interfere. The appeal of the Revenue was dismissed, and the order pronounced in the open court on 23.02.2023.