2023 (11) TMI 634 - AT - Income Tax

Eligibility to exemption u/s 11/12 - Belated filing of return - Denial of exemption where return of income is not furnished within time - assessee argued passing the order in undue hurry and in gross violation of the principles of natural justice inasmuch as no opportunity of personal hearing was provided to the Appellant - HELD THAT - It is true that while denying exemption u/s 11/12 no intimation was given to the assessee which amounts to violation of principles of natural justice. It is true that the return was not filed u/s 139(1) of the Act, but it is equally true that the return was filed u/s 139(4) of the Act. Section 12A contains the conditions for applicability of sections 11 and 12 of the Act and at clause (ba), it is provided that the person in receipt of the income has furnished return of income for the previous year in accordance with the provisions of sub-section 4A of section 139 of the Act within the time allowed under sub- section (1) or sub-section (4) of that section . This has been inserted by the Finance Act, 2017 w.e.f. 01.04.2018 and reference to sub-section (1) or sub-section (4) is inserted by the Finance Act 2023 w.e.f 01.04.2023. Thus we are of the considered view that the assessee is very much eligible for exemption u/s 11/12 of the Act. We, therefore, direct the Assessing Officer to allow the claim of the assessee as claimed by it. Decided in favour of assessee.

Summary

Issues Involved:
The issues involved in the judgment are denial of exemption under Section 11/12 of the Income Tax Act, 1961 due to belated filing of return, violation of principles of natural justice by the authorities, and interpretation of Section 12A regarding the conditions for applicability of sections 11 and 12 of the Act.

Denial of Exemption under Section 11/12:
The appellant's grievance was that the Assessing Officer (AO) passed an intimation under Section 143(1) of the Act for the Assessment Year 2020-21, computing the income at Rs. 10,16,26,224 instead of Nil income declared by the appellant. The appellant contended that the denial of complete exemption under Section 11/12 by the AO was unjustified, as the return of income was filed under Section 139(4) of the Act. The appellant argued that the issue of denying exemption for a belated return was debatable and beyond the jurisdiction of the AO under Section 143(3) of the Act. The appellant further claimed that there were valid reasons beyond their control for the delayed filing of the return.

Violation of Principles of Natural Justice:
The appellant raised concerns regarding the lack of a personal hearing provided by the CIT (Appeals) and the undue haste in passing the order without considering all aspects of the case. It was emphasized that no intimation was given to the assessee while denying exemption under Section 11/12, which amounted to a violation of principles of natural justice. The appellant's counsel highlighted that the reasons for denying the exemption were not specified, and even online requests made by the assessee were left unanswered.

Interpretation of Section 12A:
The Tribunal examined Section 12A of the Act, specifically clause (ba), which stipulates conditions for claiming exemption under sections 11 and 12. The Finance Act amendments were analyzed, clarifying that exemption under Section 11, 12 would only be available if the return of income was furnished within the time allowed under Section 139(1) or Section 139(4) of the Act. The Tribunal concluded that since the appellant filed the return under Section 139(4) and met the conditions specified in the amendment, they were eligible for the claimed exemption under Section 11/12. Consequently, the appeal was allowed, directing the Assessing Officer to grant the exemption as claimed by the appellant.

This judgment addressed the issues of denial of exemption under Section 11/12, violation of principles of natural justice, and interpretation of Section 12A in determining the eligibility of the appellant for the claimed exemption. The Tribunal ruled in favor of the appellant, emphasizing compliance with the statutory provisions and the need for authorities to adhere to principles of natural justice in tax assessments.