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2021 (7) TMI 769 - AT - Income TaxRectification u/s 154 - Exemption u/s 11(2) denied - assessee has filed Form no.10 manually - exemption u/s.11(2) was rejected by the CPC while processing return u/s.143(1) of the Act on the reason that assessee has not electronically filed Form 10 along with return of income - HELD THAT - As per provisions of Rule 17 r.w. Rule 12(2) of the Income-tax Rules, 1962, Form 10 was required to be furnished electronically. Since the assessee has not filed Form 10 electronically, the claim of assessee for exemption u/s.11(2) was denied. The assessee has even failed to file Form 10 manually within the stipulated time. As been filed with the jurisdictional AO along with copy of Board Resolution while submitting the request for rectification u/s.154 on 11.1.2018, though it was dated 25.8.2015. The assessee trust has not filed Form 10 with the jurisdictional AO at the time of filing return of income. According to the assessee, it has not filed Form 10 with the jurisdictional AO as the ACIT, Raichur has informed the assessee that the same is not required to be filed before his office, but has to be filed online in the Income Tax portal. Whereas, in the Income Tax portal the facility to file Form 10 online was not available. Thus it was not filed along with return of income and filed for the first time while submitting the rectification letter u/s. 154 on 11.1.2018. It is an admitted fact that the assessee has filed Form 10 manually before the AO within the due date of filing of return of income for the AY 2015- 16. However, these two assesses failed to file Form 10 electronically, then the AO denied exemption u/s. 11 on the reason that Form 10 was not electronically filed. In such circumstances, the Tribunal held that since the assessee has filed Form 10 manually before the due date of filing of return of income u/s. 139(1) and the filing of Form 10 electronically was on account of amendment of Rule 17 w.e.f. 1.4.2016. In the present case, the assessee has not filed Form 10 manually before the due date of filing return of income u/s. 139(1) of the Act. Being so, the decisions relied on by the ld. AR supra are of no assistance to the assessee. On this count, in our opinion, it is mandatory on the part of assessee to file Form 10 manually though not electronically before the due date of filing of return of income with the jurisdictional AO. Since the assessee has even failed to file Form 10 manually, the assessee cannot seek to rectify the order of intimation passed u/s. 143(1) in the petition filed u/s. 154 on 11.1.2018. Accordingly, the first ground of assessee is dismissed. Intimation order u/s. 143(1) though there was no appeal against the order u/s. 143(1) - In the present case, the assessee has not filed Form 10 manually within the stipulated time i.e., before the due date for filing return of income and therefore the assessee cannot avail the benefit of CBDT Circular to cover its own mistake. The appeal of the assessee is not against the order of AO passed u/s. 143(1), on the other hand it is against the proceedings u/s.154 of the Act. Being so, these two orders stand on a different footing. In other words, what could not be done by the assessee directly, cannot be achieved indirectly. The assessee in this case has filed appeal against the order u/s. 154 to challenge the intimation order u/s. 143(1), though there was no appeal against the order u/s. 143(1) passed by the CPC. Being so, we are not in agreement with the ld. AR for the assessee so as to exempt the assessee in filing Form 10 manually before the jurisdictional AO. Accordingly, this ground of the assessee is rejected. As rightly held by the CIT(Appeals), this issue is not emanating from the order passed u/s.154 of the Act. The assessee cannot use proceedings u/s. 154 to file appeal against the order passed u/s. 143(1) of the Act. Accordingly, we have no hesitation in rejecting this ground of assessee.
Issues Involved:
1. Maintainability of rectification application under Section 154. 2. Consideration of CBDT Circulars for condonation of delay in filing Form 10. 3. Set-off of accumulated deficit against current year’s income. Issue-wise Detailed Analysis: 1. Maintainability of Rectification Application under Section 154: The appellant trust challenged the decision of CIT(A) in holding that a rectification application under Section 154 was not maintainable against the order under Section 143(1) issued by CPC Bengaluru. The appellant argued that the adjustment made by CPC was based on the non-filing of Form 10 electronically, which was not mandated for AY 2015-16. The return of income and Tax Audit Report in Form 10B, both filed before the due date, indicated the set-apart amount. The appellant contended that the adjustment was erroneous and fell within the purview of a mistake apparent from the record, eligible for rectification under Section 154. The tribunal noted that the scope of Section 143(1) is restricted to prima facie mistakes and that the CPC could not have made the adjustment without considering the manual filing of Form 10. However, the tribunal ultimately upheld the rejection of the rectification application, stating that the appellant failed to file Form 10 manually before the due date, and thus, the adjustment by CPC was not rectifiable under Section 154. 2. Consideration of CBDT Circulars for Condonation of Delay in Filing Form 10: The appellant argued that CIT(A) ignored CBDT Circular No. 7/2018 and Circular No. 10/2019, which allowed for condonation of delays in filing Form 10 for assessment years preceding AY 2018-19. The appellant submitted that these circulars were brought to CIT(A)'s attention, but CIT(A) did not consider them. The tribunal observed that the circulars allowed the Commissioner to condone delays in filing Form 10 electronically but did not exempt the appellant from filing Form 10 manually within the stipulated time. Since the appellant did not file Form 10 manually before the due date, the tribunal held that the appellant could not benefit from the CBDT Circulars in the context of a rectification application under Section 154. 3. Set-off of Accumulated Deficit against Current Year’s Income: The appellant raised an additional ground before CIT(A), arguing that the trust had accumulated excess expenditure over receipts, amounting to over ?55.29 crores, which should have been considered while processing the return. The appellant contended that the CPC could have allowed the set-off against the accumulated deficit. The tribunal noted that this issue was not raised in the rectification application before the AO and was not emanating from the order under Section 154. The tribunal held that the appellant could not use Section 154 proceedings to challenge the order under Section 143(1) and rejected this ground. Conclusion: The tribunal dismissed the appeal, upholding the rejection of the rectification application under Section 154, stating that the appellant failed to file Form 10 manually before the due date and could not benefit from CBDT Circulars in this context. The tribunal also rejected the additional ground for set-off of accumulated deficit, as it was not part of the rectification application.
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