AI Drafter 
TaxTMI 
TaxTMI 
2024 (8) TMI 370
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....before the due date prescribed under Section 139 of the Act. Forms 10 and 10B owe their genesis to Sections 11 (2) and 12-AA of the Act. The filing of Form 10 is mandated in terms of the requirement placed by Section 11 (2) and where an entity engaged in charitable or religious purposes has not applied 85 per cent of the income referred to in clauses (a) and (b) of Section 11 (1) towards those purposes and has chosen to accumulate the same for 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 premis....
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....ord. 10. The Show Cause Notice [SCN] under Section 148A (b) of the Act, thereafter, came to be issued on 10 March 2023. Since the reasons on the basis of which that SCN came to be issued would be of some relevance, we extract the same hereinbelow:- "The return of Income was e-filed on 01.10.2016 declaring NIL income. The case was selected for scrutiny under CASS. Assessment in this case was completed under section 143 (3) read with section 144B of the Income tax Act 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 not....
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.... a new facility the late filing was not intentional is not acceptable. The mandate of the provision of section 13 (9) of the Act inserted by Finance Act, 2015 w.e.f A.Y.2016-17 clearly attracted in this case which is reproduced as under:- "(9) Nothing contained in sub-section (2) of section 11 shall operate so as to exclude any income from the total income of the previous year of a person in receipt thereof, if- a) the statement referred to in clause (a) of the said sub-section in respect of such income is not furnished on or before 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 esca....
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....uting the period of five years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded.] [Explanation.-Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA [or section 12AB] or to any fund or institution or trust or any university or other educational institution or any hospital or other 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 writ....
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.... verification of the person furnishing the said Forms; and (iii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to Forms so furnished.]" 16. Of equal significance is the Circular issued by the CBDT, and which acknowledged the receipt of various representations made to the Board in light of the new e-filing obligations which had come into effect from 01 April 2016. The representations had consequently requested the CBDT to condone delays in the e-filing of Form 10 (among other forms), in exercise of the powers conferred upon the Board by Section 119(2)(b) of the Act. 17. Taking note of the above representations, the aforenoted Circular came to be promulgated and obliged 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-T....
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....for condoning the delay and in exercise of the powers conferred under section 119 (2) (b) of the Act, the Central Board of Direct Taxes hereby authorizes 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 6. The Commissioners will, while entertaining such belated applications in Form No. 9A and Form No.10, satisfy themselves that the assessee was prevented by reasonable cause from filing of applications in Form No. 9A and Form No.10 within the stipulated time. Further, in respect of Form No. 10 the Commissioners shall also satisfy themselves that the amount accumulated or set apart has been invested or deposited in 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 unjusti....
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....se, there was a flawless filing of this form for the A. Y. 2016 -17. The total filing count of Form 10 between 01-10-2016 to 31-10-2016 for A.Y. 2016-17 is 3687. Because of the above facts, it is quite evident that the taxpayer's arguments regarding the non-availability of functionality in the Income-tax portal to e-file Form10 before the due date for AY 2016-17 were found to be devoid of any merit and are baseless. " " 22. While evaluating the above disclosure, we find that the respondents seek to assert that at the relevant time the online portal supported a "flawless filing" of Form 10. They further aver that the total filing count of Form 10 between 01 October 2016 to 31 October 2016 was 3687. It is in the aforesaid backdrop that the respondents argue that the allegation of non-availability of the functionality to upload the forms on the portal is baseless. 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....
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....re thus clearly appears to exist plausible cause for the petitioner having been unable to effect an online filing. 27. 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). 28. 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 delayed digital filing of Form 10. 29. Quite apart from the above, we also bear in mind the underlying 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' As....
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....on in the negative and against the assessee. In view of our answer to the first question, we agree with Mr Varma that it is not necessary to answer the second question on the facts of this case. 7. In view of the above findings of ours, the second question referred will not arise for consideration. Accordingly these appeals are allowed." 30. Of equal significance is the judgment rendered by a Division Bench of our Court in Commissioner of Income-tax vs. Contimeters Electricals P. Ltd. 2008 SCC OnLine Del 1458 and where the Court had observed:- "8. In view of this long line of decisions of various High Courts in considering the provisions of section 80J (6A) which are similar to the provisions of section 80-IA (7), we feel that the Tribunal has arrived at the correct conclusion that the requirement of filing the audit report along with the return is not mandatory but directory and that if the audit report is filed at 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 p....