2023 (7) TMI 739 - AT - Income Tax

Exemption u/s. 11 - Assessee Trust failed to invest the accumulation u/s. 11(2) in specified modes as per section 11(5) within the stipulated time - Form No. 10 was not filed along with the original Return filed u/s. 139(1) - HELD THAT - The assessee has clarified that the accumulated amount is deposited in bank as per the provisions of section 11(5) within six months from the year ended in which the accumulation made. The assessee claimed the accumulated amount deposited. Thus the same are deposited within the period specified u/s. 11(2) of the Act. The Ld. CIT(Exemption) verified only balance sheet for the year ended 31.03.2019, while the above amount was reflected in the balance sheet of the year ended 31.03.2020. Therefore the findings arrived by the Ld. CIT(Exemption) is not correct in law. Further though the assessee filed Form No. 10 belatedly along with the Revised Return, however Form No. 10B which was filed along with the original return also certifies the amount of accumulation made by the assessee Trust. Without looking into the same, the assessee was denied the benefit of exemption u/s. 11 of the Act, which in our considered opinion is not correct in law. We hereby set aside the order passed by the Lower Authorities and direct the JAO to allow the claim of exemption u/s. 11 - Decided in favour of assessee.

Summary

Issues:
The judgment involves issues related to rectification under section 154 of the Income Tax Act, 1961, denial of benefit of section 11, filing of Form No. 10, and claim of deduction u/s 11(2) of the Act.

Rectification Application and Denial of Exemption:
The assessee filed a revised return along with Form No. 10 for the Assessment Year 2019-20, seeking the benefit of exemption u/s. 11(2) of the Act. However, the rectification petition was rejected on the grounds that Form No. 10 was not e-filed before the due date specified u/s. 139(1) of the Act, leading to the denial of exemption u/s. 11(2) by the lower authorities.

Appeal and Grounds Raised:
Aggrieved by the rejection, the assessee appealed before the National Faceless Appeal Centre, which dismissed the appeal stating that the filing of Form 10 after the due date specified u/s. 139(1) rendered the claim ineligible for exemption u/s. 11(2) of the Act. The appellant raised grounds challenging the upholding of the rejection of the rectification application and the denial of the deduction claimed u/s 11(2) of the Act.

Arguments and Legal Precedents:
The appellant contended that though Form 10 was filed belatedly, it was submitted along with the revised return, and technical issues on the e-filing portal caused the delay. The appellant cited relevant High Court and Supreme Court judgments to support the claim for exemption u/s. 11(2) of the Act.

Decision and Rationale:
Upon careful consideration, the Tribunal observed that the appellant had filed the original return with the required documents, and the subsequent filing of Form No. 10 along with the revised return should not have led to the denial of exemption u/s. 11. The Tribunal referred to legal precedents emphasizing the mandatory nature of filing Form 10 and the need for assessing authorities to have the necessary information before completing the assessment. Consequently, the Tribunal set aside the lower authorities' order and directed the allowance of the claim of exemption u/s. 11 of the Act, thereby allowing the grounds of appeal raised by the assessee.

Conclusion:
In conclusion, the Tribunal allowed the appeal filed by the assessee, overturning the previous decisions and directing the granting of the exemption u/s. 11 of the Act. The order was pronounced on 12-07-2023.