2022 (7) TMI 738 - AT - Income Tax

Exemptions u/s 11 and 12 - denial of exemption as Form 10B not filled online/electronically - HELD THAT - CIT(A) has held that Form No. 10B was filed manually on 03/03/2020 during the appellate proceedings but no evidence of the Form 10B when was uploaded electronically by the assessee which is mandatory as per Section 12A(1)(b) of the Act read with Rule 17B of the Income Tax Rules. CIT(A) has observed that the assessee is free to file the said Form 10B online and/or approach the CIT(Exemption), Ahmedabad after filing Form 10B electronically and to condone the delay in accordance with the delegated powers vested u/s. 119(2)(b) - Such a power u/s. 119(2)(b) is not vested with ld. CIT(A). Therefore, the ld. CIT(A) dismiss the appeal filed by the assessee. Now before the Tribunal, the assessee has not produced only details of filing Form 10B electronically with condone delay petition. In absence of the same, We do not find any infirmity in the order passed by the ld. CIT(A) and therefore we have no hesitation in confirming the order passed by the ld. CIT(A). - Decided against assessee.

Summary

Issues:
Delay in filing appeals before the Tribunal due to COVID-19 pandemic situation, Exemption under sections 11 and 12 of the Income Tax Act, 1961, Requirement of filing Form No. 10B electronically, Power of CIT(Exemption) to condone delay, Taxation at Maximum Marginal Rate (MMR) for a trust registered under Bombay Public Charitable Trust Act, 1951.

Analysis:

Issue 1: Delay in filing appeals due to COVID-19 pandemic
The appeals were filed 438 days late before the Tribunal, but the delay was condoned due to the COVID-19 pandemic situation. The Hon'ble Supreme Court had extended the time limit for filing appeals from 15.3.2020 onwards. Hence, the delay was considered justified, and the appeals were accepted for adjudication on merit.

Issue 2: Exemption under sections 11 and 12 of the Income Tax Act
The assessee, a public charitable trust, claimed exemption under sections 11 and 12 of the Act for the Asst. Years 2016-17 and 2017-18. The trust's registration under section 12AA was granted after filing the return of income. The trust argued that it was eligible for exemption under the first proviso to section 12A(2) of the Act. However, the ld.CIT(A) dismissed the appeal, emphasizing the mandatory requirement of filing Form 10B electronically for granting benefits under sections 11 and 12. The trust's failure to comply with this requirement led to the denial of deductions claimed.

Issue 3: Requirement of filing Form No. 10B electronically
The dispute revolved around the necessity of electronically filing Form 10B for claiming deductions under sections 11 and 12. The trust had filed Form 10B manually during the appellate proceedings, but the electronic filing was not evidenced. The failure to electronically submit Form 10B led to the denial of benefits by the ld.CIT(A), who suggested filing it online and approaching the CIT(Exemption) for condonation of delay under section 119(2)(b) of the Act.

Issue 4: Taxation at Maximum Marginal Rate (MMR)
The trust raised an additional ground challenging the direction to tax its income at the Maximum Marginal Rate (MMR) instead of the normal rate, given its registration under the Bombay Public Charitable Trust Act, 1951. However, the ld. CIT(A) dismissed this ground, and the Tribunal found it irrelevant to the case's circumstances, leading to its rejection.

Conclusion:
The Tribunal upheld the ld.CIT(A)'s decision, emphasizing the trust's failure to provide evidence of electronically filing Form 10B as mandated by law. The trust's general grounds of appeal were considered unsubstantiated, leading to the rejection of the appeals. The additional ground related to taxation at MMR was also dismissed. Consequently, the appeals filed by the Assessee were ultimately dismissed by the Tribunal on 15th July, 2022, in Ahmedabad.