TaxTMI 
TaxTMI 
2021 (7) TMI 769
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....e.f. from AY 2016-17. The Jurisdictional AO has rejected the rectification application that Form 10 was not filed electronically. There was no utility to file form 10 electronically for AY 2015-16 at online portal of income tax. Thus, dismiss of appeal by CIT (A) is bad in law. 2. On the basis of facts and the circumstances of the case and in law, the CIT (A) has not considered the CBDT circular no 7/2018 dated 20th December 2018 to grant condonation of delay for filing form 10 prior to assessment year 2016-17. Moreover, the appellant trust has filed form 10B electronically wherein it was mentioned about set apart amount was duly deposited as per section 11(5) of the act, the proof of deposit was submitted before CIT (A) and Jurisdictional AO. Thus, dismiss of appeal without considering the fact of the case is not correct. 3. On the basis of facts and the circumstances of the case and in law, the CIT (A) has not adjudicated the additional ground for set off of accumulated deficit or t application for previous years before making the addition of Rs. 6,99,58,902/-. The total carry forward accumulated deficit or application of earlier years funds amounts to Rs. 49,03,75,799/-. 4....
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....was filed (UID 201712250466458), with a request to the CPC Bengaluru, to delete the outstanding demand raised, since investment of Rs. 6,99,58,902/- has been made as the provisions of section 11(5). In reply to the grievance filed, the CPC informed that "rectification rights have been transferred to the jurisdictional assessing officer". 8. On 11.01.2018, the appellant trust filed a rectification application u/s 154, before the jurisdictional AO, namely, the DCIT Central Circle, Bellary, along with the following enclosures:- a) Copy of Tax Audit Report in Form 10B which was earlier e-filed on 28.08.2015 b) Copy of ITR acknowledgement for assessment year 2015-16, dated 30.08.2015. c) Copy of resolution passed by the Board of Trustees of the appellant trust, dated 23.08.2015, directing that an amount of Rs. 6,99,58,902/- be set aside from the income of assessment year 2015-16 for the purpose of expansion and renovation of the trust buildings, and that such amount should be deposited in a scheduled bank as per the provisions of section 11(5), and to be utilised before 31.03.2020. d) Copy of Form 10 which had been filed manually before the jurisdictional assessing officer on 2....
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.... 143(3) has been passed and the assessee has separately filed Form 10 along with Board Resolution, it is a fit case where the assessing officer should be directed to take note of Form 10 and take decision on merits". Reliance was also placed on the decision of the Mumbai High Court in the case of Nagpur Hotel Owners Association v CIT (Appeal) case No 1662 of 2019, wherein it was held that "if Form 10 is filed electronically before completion of assessment proceedings, then the exemption u/s 11(2) cannot be denied merely because the form was filed after the due date of filing of return of income u/s 139(1)". 13. The appellant also drew attention of the CIT(Appeals) to CBDT Circular No 10 of 2019 [F.No 197/ 55/ 2018-ITA-I] dated 22.5.2019, wherein Commissioners of Income Tax have been directed to condone delay in filing Form 10 for charitable and religious trusts for years prior to assessment year 2018-19. 14. The appellant also raised an additional ground before the CIT(Appeals) stating that the appellant trust had been incurring expenditure on the aims and objects of the trust in excess of 100% of receipts. Thus, the appellant trust had accumulated excess expenditure in its books....
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....for condonation of delay and that such delay had been condoned. Anyhow, these aspects could have been looked into if the appeal was against order u/s 143(1), but for rectification purposes the assessing officer could not have taken into account these aspects being brought to his knowledge". 16. The additional ground taken in appeal was also dismissed for the stated reason that this ground is not arising out of the rectification application filed by the appellant before the assessing officer. No such claim was made in the said rectification application. 17. Against this order of the CIT(Appeals), the assessee trust is in appeal before us. 18. In the first ground of appeal, the appellant challenges the decision of the CIT (Appeal) in holding that a rectification application u/s 154 was not maintainable, against the order u/s 143(1), issued by the CPC Bengaluru. The ld. AR submitted that the AO had rejected the application u/s 154 on the grounds that Form 10 had not been filed electronically and hence the CPC Bengaluru was correct in adding back the amount set apart under the provisions of sections 11(2) and 11(5) of the Act. The CIT(Appeals) was of the view that the decision of ....
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.... The scope of making adjustments under section 143(1), is somewhat similar to the power to rectify a mistake apparent from the record under section 154 (Khatau Junker v Pathania [1992] 196 ITR 55, Bom). The Hon'ble Bombay High Court has held as under:- "17. In fact, the wording of this provisions itself makes this very clear. Under clause (ii) of the proviso to section 143(1)(a), any loss carried forward, deduction, allowance or relief has to be allowed on the basis of the information available in such return or accounts or documents accompanying it. Similarly, under clause (iii) of the proviso, to disallow any deduction, allowance or relief claimed, such deduction, allowance or relief must be such as is, on the basis of the information available in the return, accounts or documents, prima facie inadmissible. The Income-tax Officer therefore, has no power to go beyond or behind the return, accounts or documents, either in allowing or in disallowing any such deduction, allowance or relief. 18. Under clause (iii) to the proviso, unless the return or the accompanying documents or accounts shows that the deduction claimed is prima facie inadmissible, such deduction cannot be disall....
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....nd it was only with effect from 1.04.2016 that this facility was made available for tax filers. The CIT (Appeals) has admitted the same in para 4.2 of his impugned order. It is submitted that the CIT (Appeals) has failed to address the issue at hand. The record available before the CPC Bengaluru, was the return of income for assessment year 2015-16 and the tax audit report in Form 10B both of which had been filed by the appellant trust prior to the due date. As mentioned earlier, para 9(vi) of the Return of Income shows that an amount of Rs. 6,99,58,902/- is set apart for application towards specified purposes as per provisions of section 11(2) of the Act. In Schedule-I details of amounts accumulated or set apart of the return of income, details of investments made in the scheduled bank, as per provisions of section 11(5) were mentioned. Further, the Tax Audit Report in Form 10B, notes that an amount of Rs. 6,99,58,902/- has been set apart as per provisions of section 11(2) and such amount has been invested with a scheduled bank as required u/s. 11(5). Whether, the appellant trust has filed Form 10 manually before the jurisdictional assessing officer, was neither known to the CPC....
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....supersession of earlier Circular/Instruction issued in this regard, with a view to expedite the disposal of applications filed by trusts for condoning the delay and in exercise of the powers conferred u/s. 119(2)(b) of the Act, the Central Board of Direct Taxes authorized the Commissioners of Income-tax, to admit belated applications in Form No. 9A and Form No.10 in respect of AY 2016-17 where such Form No. 9A and Form No.10 are filed after the expiry of the time allowed under the relevant provisions of the Act. Considering the view in totality of the entire factual matrix and circumstances of the case, the Tribunal held that the assessee is entitled for deduction u/s 11(2) of the Act to the tune of Rs. 6.50 crores towards accumulation of income. 26. In light of the above, it is submitted that the action of the CPC Bengaluru in making the adjustment u/s 143(1) on account of non-filing of Form 10 electronically was not based on the records available to it, and hence was erroneous, and fell within the purview of mistake apparent from record, as visualised in section 154. The CIT(Appeals) order is therefore unsustainable on this ground alone. 27. On the other hand, the ld. DR submit....
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....led with the jurisdictional AO along with copy of Board Resolution while submitting the request for rectification u/s. 154 on 11.1.2018, though it was dated 25.8.2015. The assessee trust has not filed Form 10 with the jurisdictional AO at the time of filing return of income. According to the assessee, it has not filed Form 10 with the jurisdictional AO as the ACIT, Raichur has informed the assessee that the same is not required to be filed before his office, but has to be filed online in the Income Tax portal. Whereas, in the Income Tax portal the facility to file Form 10 online was not available. Thus it was not filed along with return of income and filed for the first time while submitting the rectification letter u/s. 154 on 11.1.2018. For the purpose, the assessee relied on the order of Tribunal in the case of Shree Dadar Jain Paushadhshala Trust in ITA No.2061/Mum/2019 dated 19.8.2018 and Parle Hindu Devalaya Mandal in ITA No.766/Mum2019 dated 4.3.2020. 29. We have carefully gone through the above judgments. In these two cases, it is an admitted fact that the assessee has filed Form 10 manually before the AO within the due date of filing of return of income for the AY 2015- 1....
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....ny authority and that the same was condoned. However, these aspects could have been looked into if the appeal was against order under Section 143(1) of the Act but for rectification purposes the AO could not have taken into account these aspects being brought to his knowledge. Since the relief sought would not fall within the scope of section 154, the action of the AO in rejecting the rectification application was to be upheld. 34. We have heard both the parties and perused the material on record. As per CBDT Circular No.7/2018, the Commissioner could condone the delay in filing Form 10 electronically with the department. While entertaining such application, the Commissioner is required to satisfy that the assessee was prevented by reasonable cause in filing Form 9A and Form 10 within the stipulated time. But this Circular does not preclude the assessee in filing Form 10 manually before the jurisdictional AO. The assessee is not exempted in filing Form 10 manually by this Circular. It only gives power to the Commissioner to permit the assessee to file Form 10 electronically belatedly. However, in the present case, the assessee has not filed Form 10 manually within the stipulated....