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2024 (8) TMI 736 - AT - Income TaxScope of making adjustments u/s 143(1) - Denial of exemption u/s 11 on non-electronic filing of Form 10B - assessee filed the audit report in Form 10B electronically though omitted to file along with the return of income - assessee upon realising the mistake filed Form 10B before it preferred application u/s. 154 - HELD THAT - The scope of section 143(1) is restricted to adjustment of prima facie mistakes and omissions, which are apparent from what is available on record. In such case record would be constituted by the return of income as well as other data such as brought forward losses etc. The assessing officer carrying out processing of a return of income u/s 143(1) cannot initiate investigation into the facts of the case, nor presume the existence of facts and circumstances which are not brought by the records of the case. Adjustment made by the CPC Bengaluru, was on account of non-filing of Form 10 electronically. The record available before the CPC Bengaluru, was the return of income for assessment year under consideration and the tax audit report in Form 10B both of which had been filed by the assessee subsequently. As noted in preceding paras that in present case Form 10B was furnished electronically and the assessee had preferred application u/s. 154. The issue that thus needs to be addressed is that when electronically filed Form 10 was available on record, could the AO ignore such record to arrive at a finding that deduction claimed by the assessee u/s. 11 is not admissible and that the impugned adjustment could be made. As narrated in the discussion above, the assessee had filed Form 10 electronically before the application u/s.154 was filed, which could have been considered by the Ld.AO u/s. 154 for necessary remedial action as per law. As admitted fact that the CPC, Bengaluru made adjustment for non-filing of Form 10 along with original return of income. Subsequently, when the same was filed electronically, it could have considered the same u/s. 154 and was eligible for rectification We note that Hon ble Tribunal at Mumbai has addressed similar issues in case of Pane Hindu Devalaya Mandal 2020 (3) TMI 1353 - ITAT MUMBAI Tribunal held that assessee s claim of exemption under section 11(2) of the Act cannot be rejected only for the reason that Form no.10 was not filed electronically. The issue was restored to the AO with a direction to verify Form no.10 filed by the assessee manually, as stated by assessee therein to consider the claim of exemption u/s 11(2) of the Act. Also decided in Shree Dadar Jain Paushadhshala Trust 2019 (9) TMI 145 - ITAT MUMBAI with a view to expedite the disposal of applications filed by trusts for condoning the delay and in exercise of the powers conferred u/s. 119(2)(b) of the Act, the Central Board of Direct Taxes authorized the Commissioners of Income-tax, to admit belated applications in Form No. 9A and Form No.10 in respect of AY 2016-17 where such Form No. 9A and Form No.10 are filed after the expiry of the time allowed under the relevant provisions of the Act. Thus, we are of the opinion that the issue needs to be remanded to the AO for necessary verification / consideration of Form 10B and to consider the claim of the assessee u/s.11(2) in accordance with law. Appeal filed by the assessee stands partly allowed for statistical purposes.
Issues Involved:
1. Disallowance of exemption claimed under Section 11 due to non-electronic filing of Form 10B. 2. Rectification order under Section 154 adding Rs. 42,85,977 to the returned income. 3. Delay in filing Form 10B and its impact on exemption claims. 4. Applicability of CBDT Circular dated 22/05/2019. 5. Consideration of gross receipts and expenditure for tax liability. Detailed Analysis: 1. Disallowance of Exemption Claimed Under Section 11 Due to Non-Electronic Filing of Form 10B: The appellant argued that the authorities erred in disallowing the exemption claimed under Section 11 for Rs. 42,85,977 on the grounds that Form 10B was not filed electronically. The appellant had obtained the audit report but failed to file it electronically with the return of income. The authorities did not consider that the appellant had filed Form 10B before the rectification order under Section 154 was passed. The Tribunal noted that the scope of Section 143(1) is restricted to adjustments of prima facie mistakes and omissions apparent from the record. The Tribunal referenced judicial precedents, including the decision in Khatau Junker v Pathania, which held that deductions cannot be disallowed merely because a specific document was not annexed to the return unless explicitly required by the Act. The Tribunal concluded that the electronically filed Form 10B should have been considered, and the deduction under Section 11 should not have been denied. 2. Rectification Order Under Section 154 Adding Rs. 42,85,977 to the Returned Income: The appellant contended that the AO erred in passing a rectification order under Section 154 by adding Rs. 42,85,977 to the returned income without considering the facts and circumstances. The Tribunal observed that the adjustment made by CPC, Bengaluru, was due to the non-filing of Form 10B electronically. The Tribunal noted that the Form 10B was filed electronically before the rectification application under Section 154, and thus, the AO should have considered this for necessary remedial action. The Tribunal cited the case of Pane Hindu Devalaya Mandal Vs DCIT, where it was held that the exemption under Section 11(2) cannot be rejected solely because Form 10 was not filed electronically. The Tribunal remanded the issue to the AO for verification and consideration of Form 10B. 3. Delay in Filing Form 10B and Its Impact on Exemption Claims: The appellant argued that the authorities erred in not condoning the delay in filing Form 10B and dismissing the appeal without adjudicating the merits. The Tribunal referenced the CBDT Circular dated 22/05/2019, which allowed for the condonation of delay in filing Form 10B. The Tribunal also cited the case of Shree Dadar Jain Paushadhshala Trust Vs. ITO, where the Tribunal allowed the exemption claim despite the delayed filing of Form 10B. The Tribunal concluded that the delay should have been condoned, and the exemption under Section 11 should have been considered. 4. Applicability of CBDT Circular Dated 22/05/2019: The appellant argued that the authorities failed to apply the CBDT Circular dated 22/05/2019, which relates to the delay in filing Form 10B. The Tribunal noted that the Circular authorizes the Commissioners of Income-tax to admit belated applications in Form No. 9A and Form No.10 for AY 2016-17. The Tribunal held that the authorities should have applied this Circular and considered the delayed filing of Form 10B. 5. Consideration of Gross Receipts and Expenditure for Tax Liability: The appellant contended that the AO erred in considering the gross receipts, including corpus donations, and arriving at the tax liability without considering the expenditure on charitable activities. The appellant collected Rs. 22,31,019 as contributions not forming part of the corpus and spent Rs. 25,05,809 towards charitable activities. The Tribunal did not specifically address this issue in detail but remanded the case to the AO for verification and consideration of Form 10B, which indirectly impacts the consideration of gross receipts and expenditure. Conclusion: The Tribunal concluded that the issue needs to be remanded to the AO for necessary verification and consideration of Form 10B. The AO is directed to consider the claim of the assessee under Section 11(2) in accordance with the law, ensuring proper opportunity for the assessee to be heard. The appeal filed by the assessee is partly allowed for statistical purposes.
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