9911796707
TMI Blog2024 (7) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... d for not filing the return of income in proper Form i.e., assessee has filed in Form ITR 7 instead of Form 5. Technically, there is no assessment proceeding pending before the any authority at the time of grant of registration as per the fact available on record. We are inclined to remit this issue back to the file of the Jurisdictional Assessing Officer for wrongly rejecting the rectification application filed by the assessee and in our considered view as per the facts available on record, at that point of time, assessee has wrongly filed ITR 7 instead of ITR 5, therefore,direct the Assessing Officer to consider the case of the assessee and reassess the income of the assessee as per ITR 5. Further, direct the assessee to file the financial statements and submit the data as per ITR-5 before the Jurisdictional Assessing Officer. We direct the Assessing Officer to re-do the assessment after giving proper opportunities of being heard to the assessee - Appeal filed by the assessee is allowed for statistical purposes. - Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri S.K. Gupta, CA For the Department : Shri Om Prakash, Sr. DR ORDER PER S.RIFAUR RAHMAN, AM: 1. This ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant authority. 5. At the time of hearing, the Ld. AR submitted are as under:- a) With regard to ground No.1, the appellant challenges the action of the Ld CIT(A)in not allowing the exemption u/s 11(1) of the Act on the ground that the trust in question was not registered u/s 12A/12AA of the Act but ignoring the applicability of the proviso to section 12A(2) of the Act. b) The appellant trust was admittedly not registered u/s 12A/12AA of the Act for AY 2014-15. But by virtue of the subsequent registration granted to the trust u/s 12AA of the Act dt 22.02.2016 (PB 17) and applicability of the proviso to section 12A(2) of the Act (then in force), the appellant was entitled to be treated as a registered trust so as to entitle it to benefit of the exemption u/s 11 of the Act. c) To appreciate the relevance of the above contention and the impact of above proviso, it will be appropriate to look into what the proviso provides. The above proviso reads as under: First proviso Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above legal proposition. v. Exemption by virtue of CBDT Circular dt: 23.04.2019: Without prejudice to above, the claim of exemption u/s 11 of the Act for application of income for charitable purposes is available to the appellant despite the return of income filed belatedly but before expiry of time limit laid down u/s 139 of the Act. In this context, reliance is placed in the circular F No.173/193/2019-ITA-1 dt: 23.04.2019 issued by CBDT, wherein it is provided that the appellant is eligible to claim of exemption u/s 11 of IT Act even if the ITR has been filed belatedly before the expiry of time limit laid down in sec 139 of the Act. It is relevant to note that sec 12A(1) (ba) provides that the assessee's filling return beyond the time limit prescribed under sec 139(4A) will not be eligible for exemption under 11 of the Act but the above circular has mitigated the hardship of assessee's by extending the time for availing exemption when the returns of income filed belatedly before expiry of time limit prescribed under 139. The time limit available under section 139 (as applicable in AY 2014- 15) was till 31.03.2016. The filling of return by the appellant trust before the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The above First Schedule of the Finance Act prescribes the rate of taxes at which different persons will be liable to pay taxes and clause (1) of that part prescribes AOP to be taxed as same as on the basis of individual. It can therefore be understood that if Trust or institutions are liable to be assessed as AOP then obviously section 1678 does not have applicability in case of charitable trust or institutions because of following two reasons; (a) The section 167B of Act, specifically excludes Companies and societies registered under societies registration Act, 1980 or any other similar legislation. (b) The different rates as prescribed in section 1678 are based upon knowledge and determination of share of individual members. But as far as charitable or religious organizations are concerned there is no scope of share of income or surplus among members concerned. ii. Hence it can be said now that charitable or religious trust or institutions (memorandum of A are subject to tax (if income is not exempt) at the rate applicable to individual assessee, However there are certain exceptions in this regard also as contained in section 13(1) of Income Tax Act, 1961 in which case inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has been accepted and no demand of tax has been raised where there had been similar receipts and similar expenditure booked. The CPC was intimated about the wrong selection of form for filling ITR. The CPC was not entitled to capitalize on the mistake of the assessee leading to undue enrichment. It is a trite law that the revenue should act fairly and judiciously and should collect tax what is due as per law. To support the above proposition of law, reliance is placed in the decision on the decision of Sanchit Software and Solutions (P.) Ltd. Vs CIT 349 ITR 0404 (Bom) wherein it was held that department must not take advantage of ignorance of an assessee as to his rights. Further, the circular issued by CBDT which is binding on department authorities also supports the above proposition of law. The relevant extract of circular 11/04/1955 issued by CBDT is reproduced here under: 3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income and the mistake was apparent that assessee should have filed the return of income only under ITR Form 5. It is brought to our notice that the assessee was granted registration subsequently on 22/02/2016. As per the first proviso to section 12A(2) of the Act when assessment proceedings pending before the Assessing Officer as on the date of such grant of registration and the objects and activities of such trust remain the same for such preceding assessment year, the provision of section 11 12 are applicable in such cases. 9. In the present case, the issue raised by Counsel are, whether the assessment proceedings are pending in this case when the 12A registration was granted on 22/02/2016. The case of the assessee was not selected for scrutiny for the current assessment year, however, only proceedings u/s 143(1) were initiated and wrong claim of the assessee was rejected and assessee made a rectification application before the CPC, however, the same was rejected. The assessee had filed an appeal before the Ld. CIT(A) as filed by the assessee on 25/02/2020 against the order passed u/s 154 of the Act dated 12/02/2020 by the CPC, Bengaluru. We observed that this issue was ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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