2024 (9) TMI 1272 - AT - Income Tax

Denial of exemption u/s. 11 - return of income filed by the assessee is beyond the time limit prescribed u/s. 139(1) - effect of return filled belated u/s 139(4) - assessee argued that the return was filed within the time allowed under Section 139(4) - HELD THAT - Trust registered u/s. 12AA of the Act, in order to avail the benefit of exemption u/s. 11 of the Act shall inter-alia files its return of income within the time allowed u/s. 139(1) of the Act. The CBDT has categorically directed the AO and this clarification was issued to the Pr.DGIT(Systems), New Delhi that the orders issued u/s. 143(1A) in the case where already disallowance were carried out, those may be rectified. Hence, the CBDT itself accepted the position that even returns filed u/s. 139 is to be accepted. It means that it has enlarged its scope of section 139 of the Act, which includes provisions of section 139(4) also. Provision of section 139(4) w.e.f. 01.04.2017 lays down that any person who has not furnished return of income within the time allowed u/s. 139(1) of the Act, may furnish the return for any previous year at any time before the end of the relevant financial year or before the completion of assessment whichever is earlier. As in term of section 139(4) of the Act, a return filed at a belated stage but upon complying with the requirement of such provision, has to be treated as return of income. In the present case, the CBDT has already clarified vide F.No.173/193/2019-ITA-I dated 23.04.2019, which that the assessee is entitled for exemption u/s. 11 of the Act, if such return of income is filed within the time allowed u/s. 139 of the Act. It means that it covers all the provisions of section 139 of the Act and it is not limited to section 139(1) - Appeal filed by the assessee is allowed.

Summary

Issues Involved:

1. Disallowance of exemption claim under Section 11 of the Income Tax Act due to late filing of the return of income beyond the time limit prescribed under Section 139(1).

Issue-wise Detailed Analysis:

1. Disallowance of exemption claim under Section 11 of the Income Tax Act due to late filing of the return of income beyond the time limit prescribed under Section 139(1):

The central issue in this appeal was the disallowance of the exemption claim under Section 11 of the Income Tax Act by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)], due to the return of income being filed beyond the time limit prescribed under Section 139(1). The assessee filed the e-return of income on 09.02.2019 for the assessment year 2018-19, which was beyond the due date under Section 139(1). The AO disallowed the exemption claim under Section 11, reasoning that the return was not filed within the stipulated time, and added back the income of Rs. 79,92,658 to the total income. The AO also considered this a fit case for imposition of penalty under Section 270A for under-reporting of income.

The assessee argued that the return was filed within the time allowed under Section 139(4) and submitted all necessary details for the exemption claim under Section 11. The CIT(A) upheld the AO's decision, relying on the Finance Act, 2017, which amended Section 12A to include the condition that the return must be filed within the time allowed under Section 139.

The Tribunal examined the provisions and noted that the Finance Act, 2017, indeed amended Section 12A to mandate the filing of returns within the time allowed under Section 139. However, the Tribunal also considered Circular No. 2/2018 issued by the CBDT, which provided clarity on the amendments, stating that the return of income must be filed within the time allowed under Section 139, without limiting it to Section 139(1).

Further, the Tribunal referred to a subsequent clarification issued by the CBDT (F.No.173/193/2019-ITA-I dated 23.04.2019), which stated that the return filed under Section 139(4) should also be considered for exemption under Section 11. The Tribunal concluded that the return filed by the assessee on 09.02.2019 was within the time allowed under Section 139(4) and should be treated as a valid return for claiming exemption under Section 11.

Based on the above clarifications and the provisions of Section 139(4), the Tribunal allowed the appeal of the assessee and directed the AO to grant the exemption under Section 11.

Conclusion:

The Tribunal allowed the appeal, ruling that the return filed within the time allowed under Section 139(4) should be considered valid for claiming exemption under Section 11, and directed the AO to allow the exemption. The judgment emphasized the importance of considering the broader provisions of Section 139 and the clarifications issued by the CBDT.