2024 (11) TMI 678 - AT - Income Tax

Disallowance on the set apart fund u/s 11(2) and 11(5) - delay in filing of income tax return made by the AO - HELD THAT - The assessee filed its audit report in Form No10B, Form No. 10 (For set apart of Rs. 15.00 lacs) and original income tax return within due date i.e. 31-10-2019 wherein it claimed exemption u/s 11(2) and 11(5) of the Act. Assessee submitted the copy of screen shot of Uploading Form No. 10 on 31-10-2019 and copy of screen shot of Uploading Form No. 10B on 29-10-2019 (PB 2 3). Assessee for ready reference also filed copy of Original ITR, Form No. 10 B and 10. AR mentioned in his written submission at page 10, para 1.3 14 that however, the income tax return was filed without digital signature and due to oversight and unavoidable circumstances the manual copy of ITR verification could not be sent at CPC, Bangalore within 120 days of submission of ITR. 14 Hence, subsequently assessee again filed revised return immediately after COVID restrictions were lifted, declaring the same income as shown in original return and verified the same through digital signature. The copy of revised return filed on 05-06-2020 is available - Bench noted that the CPC without going into the facts that Original Income Tax Return, Form 10 and Form 10B were submitted before filing of due date and merely filing of the revised ITR after the due date disallowed the set apart fund u/s 11(2) and 11(5) of the Act and thus raised demand of Rs. 2,91,070/-. Bench is of the view that CPC grossly erred in not considering the genuine hardship with the assessee and without considering the submissions dated 02-07- 2020 made by the assessee in response to notice issued under section 143(1) and without going into the fact has denied the benefit to the assessee u/s 11(2) - Bench has also gone through the CBDT Circular No. 3/2020 dated 13.7.2020 and after going through the said circular issued by CBDT, it is found that in the said circular relaxations has been given to those assesses whose ITR could not be verified for the assessment years 2015-16 to 2019-2020. Since the Assessment year of the assessee is covered under the said circular, therefore benefit of the said circular ought to have been given to the assessee. Hence, with the findings of the ld CIT(A). Thus the appeal of the assessee is allowed.

Summary

Issues:
1. Disallowance of set apart fund under section 11(2) and 11(5) of the Act due to delay in filing income tax return.
2. Validity of original return filed on 31-10-2019.
3. Benefit of late filing of Acknowledgement under relaxation scheme.

Detailed Analysis:

Issue 1: The primary issue in the appeal was the disallowance of the set apart fund under section 11(2) and 11(5) of the Act due to a delay in filing the income tax return. The appellant argued that the original return and relevant forms were filed within the due date, but the Central Processing Centre (CPC) disallowed the claim based on the revised return filed after the due date. The appellant contended that the delay was due to genuine hardship and oversight. The Tribunal noted that the appellant had submitted the necessary documents before the due date and that the CPC erred in not considering the genuine hardship faced by the assessee. Additionally, the Tribunal referred to a CBDT circular providing relief to assesses unable to verify their ITR, which covered the appellant's assessment year. Consequently, the Tribunal allowed the appeal, disagreeing with the lower authorities' decision to disallow the claim.

Issue 2: The appellant also challenged the validity of the original return filed on 31-10-2019, arguing that it should be considered a valid return. The appellant's counsel submitted evidence showing the timely submission of forms and returns, albeit without digital signatures. The Tribunal considered this argument and noted that the original return, along with the necessary forms, was filed within the due date. The Tribunal found that the subsequent filing of a revised return, after the due date, did not render the original return invalid. Therefore, the Tribunal concluded that the original return should be considered valid.

Issue 3: The appellant sought the benefit of late filing of Acknowledgement under a relaxation scheme due to unavoidable circumstances. The appellant's counsel provided explanations for the delay, including health issues in the family. The Tribunal, after considering the submissions and evidence presented, condoned the delay in filing the appeal. The Tribunal referred to a decision of the Hon'ble Apex Court to support the decision to condone the delay. Ultimately, the Tribunal allowed the appeal, granting the benefit of the relaxation scheme for the delay in verifying the return.

In conclusion, the Tribunal allowed the appeal, overturning the disallowance of the set apart fund and recognizing the validity of the original return filed within the due date. The Tribunal emphasized the genuine hardship faced by the assessee and the relevance of the CBDT circular providing relief to assesses in similar situations.