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TMI Blog2022 (1) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 139(5) are part of section 139 only and in this section 139 and sub-section (5) provides the mechanism to file a belated return, therefore, for A.Y 2018-19, even if the assessee files the return before the last date of filing of belated return the same should be treated as due compliance to section 12A(1)(ba) of the Act. For the year under appeal, the belated return could have been filed before 31.03.2019, and since the assessee has filed the return on 15.11.2018, therefore, considering the directions of CBDT Circular dated 23.04.2019, which are binding on the Revenue authorities, we are of the view that the assessee has fulfilled the conditions provided under sub-clause (ba) of section 12A(1) of the Act and has filed the return of income within the time allowed. Filing the belated audit report on form 10B - As in the given facts and circumstances and respectfully following the judgment of Sarvodaya Charitable Trust [ 2021 (1) TMI 214 - GUJARAT HIGH COURT] we are of the considered view that since the case of assessee is for A.Y 2018-19 and CBDT came up with a circular dated 23.04.2019 specially for A.Y 2018-19 providing that return of income to be filed within the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant trust keeps reserve it s right to add further ground(s) on or before the hearing of the appeal. 3. Brief facts of the case as emanated from the record are that the assessee is a charitable trust established with the main object of imparting education to student of rural areas without any profit motive. The trust was granted registration u/s 12AA(b)(i) dated 12.09.2018 and also granted approval u/s 10(23C)(vi) of the Act for A.Y 2019-20 onwards. Return of income e-filed on 15.11.2018 claiming deduction u/s 11 of the Act towards application of income for charitable purposes. The case processed by Central Processing Centre ( CPC ) vide intimation u/s 143(1) of the Act dated 26.09.2019. The deduction of Rs.13587109/- claimed by the assessee denied. The same is on account of two reasons; firstly the assessee failed to file the return before due date of filing return of income and secondly audit report on Form 10B not filed before the due date prescribed under the Act. Further, while processing the return, the gross receipts during the year were treated as income. 4. Aggrieved, assessee preferred the appeal before the ld. CIT(A) raising various grounds challenging th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Year 2017-2018 10 The copy of the Assessment (Intimation u/s.143(1) for the assessment year 2018-2019 Corresponding Previous Year 2017-2018; i.e., year under Appeal 11 The copy of the CBDT Circular dated 23.04.2019 12 The copy of the I.T.R-7 of the Trust for the previous year 2017-2018 (Corresponding Assessment year 2018- 2019). 13 The copy of The Financial Audit Report for The Previous year 2017-2018 (Corresponding Assessment year 2018- 2019) i.e., year under Appeal. 14 Copy of Appeal Order u/s. 250 of the I T Act,61 of CIT(Appeals), of our other client on identical grounds 15 The copy of the general power of Attorney. 6. Further, the ld. counsel for the assessee referring to the CBDT Circular dated 23.04.2019 stated that the assessee, which is a trust registered u/s 12AA of the Act in order to avail the benefit of exemption u/s 11 of the Act is required to file the return of income within the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed that due to some personal exigencies, he could file the return only on 15.11.2018 and that by oversight the audit report also was e-filed only later on 30.03.2019. 5.1 It is noted that the said undated letter is not in the form of any affidavit and there is no proof of the identity of the person concerned. It is further seen the Income Tax Return was e-fled on 15.11.2018 using the credentials and DSC of Shri Sudip Ganguly, Chairperson of the appellant Trust and not by any other person/professional. It is pertinent to note that the verification part of Income Tax Return itself is dated 01.11.2018 which is clearly beyond the extended due date of 31.10.2018. Hence, this contention of delay being attributable to a third party is totally irrelevant to the issue. On this ground of failure to furnish the return of income on or before the prescribed due date u/s.139(4A) alone, the appellant's claim of deduction u/s.11 and 12 fails. 5.2 Further, the Audit Report in Form 1OB cannot be filed by a person other than the Chartered Accountant, not even by the appellant, since the Audit Report is to be electronically filed by the CA concerned under his digital signature. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim for deduction u/s.11 and 12 could have been considered by CPC while processing the return u/s.143(1). Nevertheless, the appellant's failure to furnish the return of income by itself has resulted in the disentitlement of such deduction in appellant's case. 6.1. It is further seen that during the pendency of this current appeal against the intimation u/s.143(1), CBDT has issued a revised Circular No.2/2020 vide ref. in F.No.197/55/2018-1TA-I dated 3rd January, 2020 in supersession of its earlier instruction and provided for condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10B for Assessment Year 2018-19 and subsequent years. As per this circular, where there is delay of up to 365 days in filing Form No. 10B for Assessment Year 2018-19 or for any subsequent Assessment Years, the Commissioners of Income-tax are authorized to admit such belated applications of condonation of delay u/s 119(2) of the Act and decide on merits, after satisfying themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. 6.2 It is seen that the appellant has not furnished evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of Income as required u/s.12A(1)(6) and 12A(1)(ba) read with Rule 17B. 9 It is therefore, held that the denial of deduction u/s.11 vide intimation u/s.143(1) by DCIT, CPC, Bangalore is strictly in accordance with the provisions of section 12A(1)(b) / (ba) of the Act. Therefore, there is no reason or ground to interfere with the order of the DCIT, CPC, Bangalore in this regard. Appellant's Ground No.1 to 5 fails and the denial of deduction u/s.11 vide intimation u/s.143(1) issued by the DCIT, CPC, Bangalore is fully confirmed 10. On the issue of charging of interest u/s.234A 234B and 234C, since it is a statutory charge, and is a settled issue as held in the case of Commissioner of Income Tax V Anjum M.H Ghaswala (2001) 252 1TR1 (SC) followed by the decision in the case of Karanvir Singh CGossal v. CIT [20121 25 taxmann.com 213 (SC), no interference is warranted thereon. 11. Levy of late filing fee u/s.234F is also found tenable on facts and in law. In fact, in the return of income at Sr.No.11 (e) of Computation of tax liability on total income in Part B-TTI, the appellant itself has shown a sum of Rs.1,000/- as Fee for default in furnishing return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d;] (ba) the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of subsection (4A) of section-139, within the time allowed under that section. *** *** *** 9. Section 12A(1)(ba) of the Act provides that the provisions of section 11 and 12 shall apply in relation to income of any trust or institution if the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139 i.e. within the time allowed under that section. Now, since reference has been made to section 139(4A) of the Act and the same is reproduced below: S. 139(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Otherwise the exemption u/s-11 i.e. sr. no 4(i) and 4 viii in schedule Part BTI is not allowed. Based on this, exemption u/s 11 of the Act has been denied to otherwise eligible trust, thereby creating huge demand. 2. In the matter, the memorandum explaining the relevant provisions of the Finance Bill, 2017 reads as under: as per the existing provisions of said section, the entities registered under section 12AA are required to file return of income under subsection (4A) of section 139, if the total income without giving effect to 05 Standards Norms, Legal Series Vol. XII, Issue 1, April 2019 CBDT CLARIFICATION ON PENALTIES FOR DELAYED FILING OF RETURN IN ITR-7 the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. However, there is no clarity as to whether the said return of income is to be filed within time allowed u/ s 139 of the Act or otherwise. In order to provide clarity in this regard , it is proposed to further amend section 12A so as to provide for further condition that the person in receipt of the income chargeable to incometax shall furnish the return of income within the time allowed under section 139 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue, the said CBDT Circular has issued and while dealing with this issue, the returns filed within the time allowed u/s 139 of the Act have been directed to be accepted for the purpose of considering benefit of deduction u/s 11 of the Act. Now, since only section 139 of the Act has been mentioned and does not specify whether it is about u/s 139(1) of the Act or section 139(5) of the Act, the view beneficial to the assessee needs to be accepted and, since section 139(1) and section 139(5) are part of section 139 only and in this section 139 and sub-section (5) provides the mechanism to file a belated return, therefore, for A.Y 2018-19, even if the assessee files the return before the last date of filing of belated return the same should be treated as due compliance to section 12A(1)(ba) of the Act. For the year under appeal, the belated return could have been filed before 31.03.2019, and since the assessee has filed the return on 15.11.2018, therefore, considering the directions of CBDT Circular dated 23.04.2019, which are binding on the Revenue authorities, we are of the view that the assessee has fulfilled the conditions provided under sub-clause (ba) of section 12A(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer or before the appellate authority by assigning sufficient cause. 14. In the above judgment, Hon ble Court has held that filing of audit report is directory in nature and its substantial compliance would suffice. The ld. Departmental Representative failed to place before us any other binding precedents of Hon ble Jurisdictional High Court or the Hon ble Apex Court. Therefore, considering the ratio laid down in the Hon ble Gujarat High Court in the case of Sarvodaya Charitable Trust vs. ITO(Exemption) (supra), we find that though the audit report has been uploaded after the filing of return of income but the said report has been signed by the auditor on 28.10.2018 and the copy of this report is placed at 40- 41 of paper book and the date of audit report is prior to the filing of the return of income, therefore, it is presumed that conducting of audit for preparation of audit report is before e-filing of the return of income but as claimed by the assessee due to technical glitches, the report was uploaded after filing the return of income. 15. Though the Hon ble Court holds that the report should be considered even filed in the course of assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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