2023 (12) TMI 1132 - HC - Income Tax

Exemption u/s 11 denied - sum offered for tax and Form No. 10 was filed during the reassessment proceedings as conditions provided in Section 11(2) of the Act, for accumulation of income, had not been fulfilled - as stated that due to an inadvertent error, the respondent/assessee had failed to show this in its original ROI - CIT(A) also held that the AO had not returned a finding that the conditions provided in Section 11(2) of the Act, for accumulation of income, had not been fulfilled - whether a revised Form No. 10 could have been filed by the respondent/assessee during the reassessment proceedings? - HELD THAT - To claim the benefit of the provisions of sub-Section (2) of Section 11, the respondent/assessee had to file a statement in the prescribed form, i.e., Form No. 10. The Tribunal has noted that there is no adverse finding by the AO concerning the fulfillment of conditions subject to which the accumulation of income was allowed under Section 11(2). Insofar as the issue concerning the timing of the filing of Form No. 10 is concerned, i.e., in the course of reassessment proceedings, this stands covered by a decision of a coordinate Bench of this court rendered in Association of Corporation Apex Societies of Handlooms case 2013 (1) TMI 317 - DELHI HIGH COURT Clearly, the respondent/assessee is not precluded from filing a revised Form No. 10 during reassessment proceedings. The record also shows that the appellant/revenue had carried the judgment rendered in Association of Corporation Apex Societies of Handlooms in appeal to the Supreme Court. The appeal preferred by the appellant/revenue, i.e., Civil Appeal 2020 (1) TMI 1664 - SUPREME COURT was dismissed as withdrawn, on account of low tax effect. Given this position, according to us, no substantial question of law arises for our consideration.

Summary

Issues Involved:
1. Condonation of delay in re-filing the appeal.
2. Legality of reopening the assessment under Section 148 of the Income-tax Act, 1961.
3. Validity of filing revised Form No. 10 during reassessment proceedings.

Condonation of Delay:

The appellant/revenue sought condonation of a 63-day delay in re-filing the appeal. The court, considering the period involved, condoned the delay and disposed of the application accordingly.

Reopening of Assessment:

The appeal concerns the Assessment Year (AY) 2008-09, where the respondent/assessee, a charitable society, had its return of income (ROI) processed under Section 143(1) of the Income-tax Act, 1961. The Assessing Officer (AO) noticed that the respondent/assessee had claimed an advance payment of Rs. 5,85,00,000/- for purchasing an immovable property as 'application of income' in AY 2007-08. This amount was returned in AY 2008-09 but was not included in the ROI for the said year, leading to the reopening of the case under Section 148 of the Act.

Filing Revised Form No. 10:

During reassessment proceedings, the respondent/assessee filed a revised ROI and Form No. 10, which were initially rejected by the AO. The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the appeal, noting that the amount was offered for tax and that the conditions of Section 11(2) for income accumulation were met. The Income Tax Appellate Tribunal (ITAT) upheld this decision, dismissing the appeal filed by the appellant/revenue.

The court examined Section 11 of the Act and the mandatory requirement for filing Form No. 10 to claim benefits under sub-section (2). It was noted that the Tribunal found no adverse findings by the AO regarding the fulfillment of conditions for income accumulation under Section 11(2). The court referred to a coordinate Bench decision in Association of Corporation & Apex Societies of Handlooms, which allowed filing Form No. 10 during reassessment proceedings initiated by the revenue under Section 147.

The court concluded that the respondent/assessee was not precluded from filing a revised Form No. 10 during reassessment proceedings. Given that the appellant/revenue's appeal to the Supreme Court on a similar matter was dismissed due to low tax effect, and the respondent/assessee's Special Leave Petition was admitted, no substantial question of law arose for consideration. The appeal was accordingly closed.