2022 (6) TMI 1153 - AT - Income Tax

Tribunal quashes tax additions, stresses fair justice, criticizes oversight.

The Tribunal allowed the appeal of the assessee, quashing the lower authorities' orders and directing the deletion of the additions made. The Tribunal ... Exemption u/s 11 - disallowing deduction u/s 11(2) for late filing of Form-10 for the Asstt.Year 2015- 16 - Form No.10 was not accompanied along with return of income, thereby 143(1) intimation was passed - assessee uploaded Form No.10 by online on 2.1.2017 and filed its rectification application on 6.10.2017 which was rejected - HELD THAT:- As going by the insertion of new sub-clause (c) of section 11(2) of the Act, the assessee is required to furnish Form No.10 along with Return of Income from the Asst.Year 2016-17 onwards. As per the CBDT Circular No.7 of 2018, representation from the assessee that Form No.9A and 10 could not be filed in specific time for the Asst.Year 2016-17, which were the first year of efiling of these forms, and also to condone such delay by invoking section 11(2)(b) of the Act. All the above provisions & circulars make it clear that non-filing or delay in filing the Form No.10, there was no time limit prescribed under the Act for the present Asst.Year 2015-16. Following the Supreme Court judgments, if the Form No.10 is filed before the assessing authority before completion of regular assessment, the assessee is eligible for the deduction. We find that in this case only an intimation under section 143(1) has been made rejecting the claim of deduction to the assessee. There is no regular assessment made for the A.Y. 2015-16. The assessee’s rectification petition filed under section 154 of the Act is also rejected without considering insertion of sub-clause (c) in section 11(2) of the Act as well as CBDT Circular No. 7 of 2018. Thus, the ld.CIT(A) has not applied his mind while disposing of the appeal filed by the assessee. The need for disposal of objections by way of a speaking order by the Assessing Officer, who is performing a quasi-judicial function. The soul of a quasi-judicial decision making is in the reasoning for coming to the decision taken by the quasi-judicial officer. While on this aspect of the matter, we may usefully refer to the observations made by the Hon'ble Supreme Court, in the case of Union Public Service Commission v. Bibhu Prasad Sarangi and Ors., [2021 (3) TMI 1349 - SUPREME COURT] - While these observations are in the context of the judicial officers, these observations will be equally applicable to the decisions by the quasi-judicial officers like us, as indeed the Assessing Officer CPC. As in the present case the immediately after the intimation order was passed on 15.9.2016, the assessee realized the mistake of not upholding Form No.10 along with Return of Income, however, uploaded the same on 02.11.2017 and filed rectification application on 6.10.2017 requesting to rectify the mistake in the intimation. But the DCIT(CPC) simply rejected the rectification by his order dated 31.10.2019 by holding that there is no prima facie error in the order sought to be rectified, and simply rejected the rectification application filed by the assessee. CIT(A) even gone one step further by dismissing the appeal without considering Circulars issued by the CBDT, as well as Hon’ble Supreme Court’s judgment and other High Courts’ judgments placed by the assessee before the ld.CIT(A), NFAC - as in spite of Circular 14 of 1955, the Departmental Officers are taking advantage of the ignorance of the assessee, instead of assisting the taxpayers more particularly in the matter of claim of relief, issuance of refund, but the officers had not taken any initiative in guiding the taxpayers in accordance with law. This attitude will not give long term benefit to the department and discourage the confidence to the taxpayers. In simple words, when a litigant knocks the doors of the Temple of Justice, Justice to be rendered to his door steps itself and he should not be allowed to run from pillar to post for the Justice Thus we quash the orders passed by the lower authorities, and delete the additions. Thus, the grounds of appeal raised by the assessee are hereby allowed. Issues Involved:1. Denial of deduction under section 11(2) of the Income Tax Act, 1961 for late filing of Form-10.2. Rejection of rectification petition under section 154 of the Income Tax Act by the DCIT (CPC).3. Dismissal of the appeal by the CIT(A), NFAC without proper consideration of the assessee's submissions and relevant circulars and judgments.Detailed Analysis:1. Denial of Deduction under Section 11(2) for Late Filing of Form-10:The assessee, a public charitable trust, filed its return of income for the Assessment Year (AY) 2015-16 on 1.10.2015, declaring NIL total income. The return was processed under section 143(1) on 15.9.2016, denying the deduction of Rs.20 lakhs under section 11(2) due to the late filing of Form-10, which was uploaded online on 2.1.2017. The assessee argued that the requirement to file Form-10 along with the return became mandatory only from AY 2016-17. The assessee cited Circular No.273 dated 3.6.1980, which allows Commissioners to admit applications for delayed filings under section 11(2), provided certain conditions are met, such as the genuineness of the trust and that the delay was due to oversight.2. Rejection of Rectification Petition under Section 154 by DCIT (CPC):The assessee filed a rectification petition under section 154 on 6.10.2017, requesting the deduction under section 11(2) be granted despite the late filing of Form-10. The DCIT (CPC) rejected the petition on 31.10.2019, stating there was no prima facie error in the original order. The DCIT (CPC) did not consider the CBDT Circular No.273 and the Supreme Court judgment in CIT Vs. Nagpur Hotel Owners Association, which emphasized the necessity of Form-10 being furnished before the completion of the assessment.3. Dismissal of the Appeal by CIT(A), NFAC:The assessee appealed to the CIT(A), NFAC, who dismissed the appeal in a cryptic manner without addressing the detailed submissions, including the relevant CBDT circulars and judgments. The CIT(A) upheld the rejection of the rectification petition, stating that the non-filing of Form-10 along with the return did not constitute a mistake apparent from the record and thus could not be rectified under section 154.Tribunal's Observations and Judgment:The Tribunal noted that both the DCIT (CPC) and the CIT(A) failed to consider the CBDT Circulars and the Supreme Court judgment which supported the assessee's claim. The Tribunal highlighted the importance of assisting taxpayers and not taking advantage of their ignorance, as emphasized in CBDT Circular No.14 of 1955. The Tribunal also pointed out that the requirement to file Form-10 along with the return was only applicable from AY 2016-17, and for AY 2015-16, there was no such mandatory requirement.The Tribunal criticized the CIT(A) for merely reproducing the assessee's submissions without providing a reasoned order. It emphasized that quasi-judicial decisions must include reasoning for the conclusions reached, as per the Supreme Court's observations in Union Public Service Commission v. Bibhu Prasad Sarangi and Ors.Conclusion:The Tribunal quashed the orders of the lower authorities and allowed the assessee's appeal, directing the deletion of the additions made. The Tribunal underscored the need for a fair and reasoned approach in handling taxpayers' claims and ensuring justice is delivered efficiently.Result:The appeal of the assessee was allowed for statistical purposes.