2023 (7) TMI 278 - AT - Income Tax

Tribunal upholds CIT(A)'s decision in Revenue's appeal on deduction disallowance issue

ITO (Exemption), Ward-1 (2), Kolkata Versus Debendra and Rohini Memorial Trust

The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal. The case revolved around the deletion of additions made by the Assessing ... Deduction u/s 11 - not filing the return of income within time as prescribed u/s 139(1) as required u/s 12A(1)(ba) r.w.s 139(4A) - return of income filed by the assessee is a belated return - CIT-A deleted the addition - HELD THAT:- The issue is squarely covered by the decision of Bangarh Educational Welfare Trust [2022 (1) TMI 1321 - ITAT KOLKATA] taking note of the CBDT Circular No.F.No.173/193/2019-ITA-I dated 23.04.2019 held 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 the Act and has filed the return of income within the time allowed - Decided in favour of assessee. Issues Involved:The appeal by Revenue against order of National Faceless Appeal Centre under Income Tax Act.Issue 1:Whether CIT(A) erred in holding that assessee was entitled for exemption despite failure to file return of income as per provisions of section 12A(1)(ba) of Income Tax Act 1961.Details:The revenue challenged CIT(A)'s decision regarding exemption entitlement despite failure to file return of income timely under section 12A(1)(ba) of the Act.Issue 2:Whether CIT(A) erred in not appreciating that provision of section 12A(1)(ba) mandates filing return of income within time allowed under section 139(4A) for exemption eligibility.Details:The revenue contested CIT(A)'s interpretation of section 12A(1)(ba) regarding the requirement to file return of income within specified time under section 139(4A) for exemption eligibility.Judgment Summary:The sole issue in the appeal concerned the CIT(A)'s deletion of additions made by Assessing Officer/CPC for disallowance of deduction under section 11 of the Act due to failure to file return of income timely as per section 12A(1)(ba) read with section 139(4A) of the Act. The assessee's counsel cited a Tribunal decision in a similar case, emphasizing compliance with CBDT Circular No.F.No.173/193/2019-ITA-I. The Tribunal found that the assessee, a charitable trust, filed the return of income and audit report within the extended due date, fulfilling conditions under section 12A(1)(ba) of the Act. The Circular clarified the time allowed for filing returns post insertion of clause (ba) in section 12A(1), emphasizing compliance with section 139 provisions. As no contrary decision was presented, the Tribunal dismissed the revenue's appeal, aligning with the precedent set in the mentioned case.Conclusion:The Tribunal upheld the CIT(A)'s decision, emphasizing compliance with section 12A(1)(ba) and section 139 provisions for exemption eligibility, as clarified by the CBDT Circular. The appeal by Revenue was dismissed in favor of the assessee.Note:Separate judgments were not delivered by the judges in this case.