9911796707
TMI Blog2024 (8) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... ndments, all that Section 11 (2) (a) required was for the assessee to apprise the AO, by a notice in writing, of the purposes for which the income was sought to be accumulated and the mode of its investment or deposit in accordance with Section 11(5). The requirement of Form 10 being furnished electronically was undisputedly introduced for the first time by way of the 2016 Amendment Rules. There thus clearly appears to exist plausible cause for the petitioner having been unable to effect an online filing. More fundamentally, we note that the action for reassessment is not founded on income liable to tax having escaped assessment. The respondents also do not question the acceptance of the accumulations in terms of Section 11 (2) in the assessment order dated 01 December 2018. The entire action for reassessment is founded solely on Form 10 having been submitted after 17 October 2016 and which was the due date in terms of Section 139 (1). In our considered opinion, an action for reassessment would have to be based on the formation of an opinion that income chargeable to tax has escaped assessment. That primordial condition would clearly not be satisfied on the mere allegation of a del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilisation subsequently. 3. As those provisions stand today and post the amendments which came to be introduced in the Act and the Income Tax Rules, 1962 [Rules] , Form 10 is liable to be submitted electronically by virtue of Rule 17 (3) thereof. 4. From the facts which have remained uncontroverted it would transpire that the petitioner had duly submitted both Forms 10 and 10B before the Assessing Officer [AO] prior to the completion of assessment proceedings albeit after the last date for the furnishing of a return in terms of Section 139 (1). The accumulations under Section 11 (2) were also duly accepted in the order of assessment which ultimately came to be framed on 01 December 2018. 5. The reassessment action, however, is premised on Form 10 having not been submitted within the time prescribed under Section 139 (1) and the petitioner having failed to obtain condonation of delay on account of a belated filing of Form 10. 6. The petitioners would contend that since the requisite forms had been duly submitted before the AO, the proposed reassessment action is rendered wholly arbitrary as the digital submission of Form 10 was merely a procedural requirement. It is their contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct on 01.12.2018 at income of Rs. 7,12,75,688/- as against nil returned income. Audit scrutiny revealed that during the year under consideration, the assessee has accumulated income of Rs.2,00,00,000/- u/s 11 (2) of the I.T. Act, 1961 for Improvement, Development, and acquisition of infrastructure of the Chamber purpose as mentioned in Form 10 filed on 05.10.2018. However, the assessee has claimed a sum of Rs. 1,96,60,814/- accumulated u/s 11 (2) in the income tax Return. The due date for filing Form 10 as per section 139 (1) of the I T Act was 17.10.2016. Hence, the assessee has filed Form 10 beyond the due date prescribed u/s 139 (1) of the Act. As per the submission given by the assessee it is noticed that the assessee has not obtained condonation of delay in filing Form 10 from them competent authority. Thus the assessee has failed to comply with the provisions of section 13 (9) (i) of the IT Act as the assessee has filed Form 10 belatedly after the time period prescribed u/s 139 (1) of the I T Act. In view of the above, the assessee should be denied the benefit of provisions of section 11 (2) of the I T Act and the accumulation of income u/s 11 (2) claimed by the assessee trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year; or b) the return of income for the previous year is not furnished by such person on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the said previous year. xxxx xxxx xxxx Conclusion 8. Considering the above facts and on the basis of material available on record, there is information/document in this case that reveals that there is income to the tune of Rs Rs. 1,96,60,814/- for AY 2016-17, chargeable to tax, which has escaped assessment. Hence, the case of THE ASSOCIATED CHAMBERS OF COMMERCE AND INDUSTRY OF INDIA PAN-AAATTT4704C for the AY 2016-17, is a fit case for issuance of notice u/s 148 of the Act for A.Y. 2016-17. This order is being issued after obtaining prior approval of the specified authority i.e. Pr. Chief Commissioner of Income Tax (Exemption), New Delhi. 12. It is pertinent to note that under Section 11 (2) if an entity engaged in charitable or religious purposes be desirous of seeking a waiver of taxation on 85 per cent of the income referred to in clauses (a) and (b) of Section 11 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.] 13. It becomes necessary to note that prior to the said provision coming to be recast by virtue of the amendments introduced by Finance Act, 2015 [2015 Act], clause (a) of Section 11 (2) read as under:- (a) such person specifies, by notice in writing given to the Assessing Officer in the prescribed manner, the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years; 14. The requirement of Form 10 being digitally filed appears to have been introduced for the first time by virtue of Rule 17 as it came to exist on the statute book pursuant to the Income-tax (1st Amendment) Rules, 2016 [2016 Amendment Rules] and which came into effect from 01 April 2016. Rule 17 (3) as introduced then has remained unchanged thereafter. 15. For the sake of completeness, we reproduce Rule 17 in its entirety he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the concerned assessing authorities, while entertaining delayed digital submissions of Form 10, to satisfy themselves with respect to the individual assessees having been prevented by reasonable cause from filing the same within the stipulated time. That Circular reads as follows:- CIRCULAR NO. 7/2018 [F.NO.197/55/2018-ITA-I] SECTION 119 OF THE INCOME-TAX ACT, 1961 - CONDONATION OF DELAY UNDER SECTION 119(2)(b) OF THE INCOME-TAX ACT, 1961 IN FILING OF FORM NO. 10 AND FORM NO. 9A FOR AY 2016-17 CIRCULAR NO. 7/2018 [F.NO.197/55/2018-ITA-I], DATED 20-12-2018 Under the provisions of section 11 of the Income-Tax Act, 1961 (hereafter Act ) the primary condition for grant of exemption to trust or institution in respect of income derived from property held under such trust is that the income derived from property held under trust should be applied for the charitable purposes in India. Where such income cannot be applied during the previous year, it has to be accumulated and applied for such purposes in accordance with various conditions provided in the section. 2. The Finance Act, 2015 amended section 11 and section 13 of the Act with effect from 1-4-2016 (A.Y. 2016-17). Consequently, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any one or more of the forms or modes specified in sub-section (5) of section 11 of the Act. 18. According to Mr. Jain, learned counsel for the petitioner, since the factum of the petitioner having submitted Form 10 electronically on 05 October 2018 and thus prior to the completion of the original assessment was undisputed, the respondents were clearly unjustified in seeking to reopen a completed assessment based on a mere technicality of the said form having not been digitally uploaded within the stipulated time period prescribed by Section 11 (2) read along with Section 139 (1) of the Act. 19. According to learned counsel, the Circular is itself evidence of the functionality issues which were faced by various assessees in digitally submitting Form 10 for AY 2016-17 and which ultimately led to the CBDT providing that a belated submission of those forms may be duly accepted, subject to sufficient cause being shown. It was the submission of learned counsel that the accumulations in accordance with the mandate of Section 11 (2) had also been duly accepted in the ultimate order of assessment which came to be framed on 01 December 2018 and viewed in that light the respondents would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It is the aforesaid rival contentions which fall for determination. 23. In our considered opinion, the stand as struck by the respondents, relying on Paragraph 16 of the counter affidavit, is firstly belied by the issuance of the CBDT Circular itself. The Circular itself acknowledged and took note of the grievances which were raised with respect to the non-functionality of the facility for digital submission of forms leading to a delayed e-filing of Form 10. The CBDT also appears to have taken a sympathetic view bearing in mind the fact that the requirement of digital filing had come to be introduced and become applicable for the first time in AY 2016-17. It was in that backdrop that the CBDT had hoped that assessing authorities would approach the issue bearing in mind reasonable cause being established by individual assessees in case of a delayed digital submission of Form 10. 24. We additionally note that the respondents allude to 3687 digital submissions of Form 10 in the month of October 2016. We have not been provided any further details with respect to how that number would be representative or proof of a broad or universal functionality of the filing portal when compared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying intent of Section 11 (2) and the submission of Form 10 in connection therewith which were aspects succinctly explained by the Supreme Court in Commissioner of Income-tax vs. Nagpur Hotel Owners Assn. (2001) 2 SCC 128. The Bench of three learned judges in Nagpur Hotel Owners Assn. rendered the following pertinent observations:- 6. It is abundantly clear from the wordings of sub-section (2) of Section 11 that it is mandatory for the person claiming the benefit of Section 11 to intimate to the assessing authority the particulars required, under Rule 17 in Form 10 of the Act. If during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from Section 11 and is subject to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time before the framing of the assessment, the requirement of section 80-IA (7) would be met. 31. While we are conscious that the judgments in Nagpur Hotel Owners Assn. as well as Contimeters Electricals P. Ltd . were rendered prior to the promulgation of the 2015 Act and the 2016 Amendment Rules, the said decisions clearly underline the importance of due disclosure as opposed to adherence to the mere procedural requirements of the digital filing of a form. 32. We further note that a Division Bench of the Gujarat High Court has in its decision rendered after the insertion of the 2015 Act and the 2016 Amendment Rules in Association of Indian Panelboard Manufacturer vs. Deputy Commissioner of Income-tax 2023:GUJHC:27028-DB clearly held that the electronic submission of Form 10B is essentially a matter of procedure as opposed to being a mandatory condition which may be recognized to form part of substantive law. We deem it apposite to extract the following passages from that decision:- 5.4 Recollecting the relevant dates, the income was filed on 31.8.2018. On 15.3.2019 Form 10B was filed electronically. On 7.12.2019 intimation under Section 143(1) of the Act was given to the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
