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2023 (8) TMI 1336 - AT - Income TaxValidity of order passed un/s 143(1) - Whether CPC erred in not following the mandate as required by first proviso to section 143(1) which says that no such adjustment shall be made unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode? - HELD THAT - As the adjustment has been made by the ld. Assessing Officer, CPC to the income of the assessee without even giving any intimation in terms of proviso to section 143(1)(a) of the Act and, therefore, the said order is quashed as invalid and nullity in the eyes of law. In the result, the additional ground is allowed. Exemption u/s 11 comprising capital expenditure and revenue expenditure - claim denied as income tax return and Form 10B were filed late - HELD THAT - Admittedly the return of income was filed in Form 7 and Form 10B on 31.03.2021 and 30.03.2021 while the extended due date for filing the return of income in relevant assessment year was 15.02.2021. We note that the COVID 19 pandemic was spread all over the country and the entire country rather the entire globe were completely brought to standstill. And so was the condition so far as the assessee trust is concerned. So considering all these practical difficulties for making compliances, Hon ble Apex Court has extended the period of limitation with respect to judicial or quasi-judicial proceedings. As relying on Apex Court vide its order IN RE COGNIZANCE FOR EXTENSION OF LIMITATION 2022 (1) TMI 385 - SC ORDER there is no delay in filing the return of income as well as Form 10B and, therefore, the order of the CIT(A) upholding the order of ld. Assessing Officer, wherein the exemption claimed u/s 11 by the assessee-Trust has been rejected resulting into disallowance of capital expenditure, revenue expenditure and exemption of 15% of total receipts u/s 11(1)(a) which is incorrect and against the ratio laid down by the Hon ble Supreme Court. Accordingly direct the AO allow the exemption claimed u/s 11 of the Act. The ground No. 1 to 5 are allowed.
Issues Involved:
1. Disallowance of capital and revenue expenses due to late filing of return and Form 10B. 2. Disallowance of statutory exemption under Section 11(1)(a) due to late filing of return and Form 10B. 3. Computation of income derived from trust property on commercial principles. 4. Delay in filing return and Form 10B due to fire and COVID-19 pandemic. 5. Jurisdiction of the Assessing Officer to make adjustments without intimation. Summary: Issue 1: Disallowance of Capital and Revenue Expenses The Tribunal addressed the disallowance of capital expense of Rs. 64,52,436/- and revenue expense of Rs. 5,52,52,167/- on the grounds that the return of income and Form 10B were not filed on time. The Tribunal noted that the assessee filed the return on 31.03.2021 and Form 10B on 30.03.2021, while the extended due date was 15.02.2021. The Tribunal ruled that due to the COVID-19 pandemic, the Supreme Court had extended the limitation period, and thus, the return and Form 10B were filed within the permissible time. Consequently, the disallowance was deemed incorrect. Issue 2: Disallowance of Statutory Exemption under Section 11(1)(a) The Tribunal examined the disallowance of the statutory exemption of Rs. 93,31,921/- under Section 11(1)(a) due to late filing. The Tribunal reiterated that the return and Form 10B were filed within the extended period as per the Supreme Court's order, and therefore, the exemption should not have been disallowed. Issue 3: Computation of Income Derived from Trust Property The Tribunal considered the assessee's argument that income derived from trust property should be computed on commercial principles, referencing Circular No. 5-P(LXX-6) of 1968. The Tribunal agreed with the assessee, noting that the computation should follow commercial principles, and thus, the disallowance was unjustified. Issue 4: Delay Due to Fire and COVID-19 Pandemic The Tribunal acknowledged the assessee's explanation that the delay in filing was due to a fire in the office and the COVID-19 pandemic, which caused severe disruptions. The Tribunal found these reasons valid and aligned with the Supreme Court's extension of the limitation period. Issue 5: Jurisdiction of the Assessing Officer The Tribunal addressed the additional ground regarding the jurisdiction of the Assessing Officer to make adjustments without intimation. The Tribunal found that the Assessing Officer, CPC, failed to follow the mandate of the first proviso to Section 143(1)(a), which requires intimation to the assessee before making adjustments. Consequently, the Tribunal quashed the order passed under Section 143(1) as invalid and nullity in the eyes of the law. Conclusion: The Tribunal allowed the appeal of the assessee, setting aside the order of the CIT(A) and directing the Assessing Officer to allow the exemption claimed under Section 11 of the Act. The Tribunal's decision was pronounced in open court on May 23rd, 2023.
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