TaxTMI 
TaxTMI 
2026 (9) TMI 973
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....st appellate authority. General ground 23 The Ld. CIT(A) ought to have considered that no addition can be made under 'the income from other sources' as no addition was made towards the time deposits for which the case was reopened u/s 147 of the act Technical ground 24 The Ld. CIT(A) failed to consider that the assessee, being the institution/ society, which had received loan of Rs. 2.5 crores from central Government grant-free of interest in the year 2008 and the deposit of Rs. 2,08,70,967/- is out of the said central government grant made in that year, which amount was eligible for exemption u/s 10(23C)(iiiab) of the act and hence there was no escapement of income during the year AY 2016-17 and therefore invoking of provisions u/s 148A/148 are invalid and are bad-in-law. Technical ground 25 The Ld. CIT(A) failed to consider that the issue of notice u/s 148 by the AO is invalid and without jurisdiction for this AY, if the enquiries as laid down u/s 148A(a) of the act were conducted before issuing show cause notice u/s 148A(b) of the act by the ITO, ward-1, Guntur, no escapement of income was identified for this AY and hence the provisions of sec.....
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.... to exemption only on furnishing return of income was brought onto statute by introducing the 20th proviso to section 10(23C) of the act by the finance act 2022 w.e.f. 01.04.2023 which is prospectively and was not in the statute for the assessment year 2016-17 and therefore the action of AO in treating Rs. 23,53,086 as "income from other sources" is bad in law and not sustainable. Technical ground 32 The Appellant may add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of appeal. General ground. 4. The Learned Authorized Representative ("Ld. AR") submitted that additional grounds so filed are admissible in view of judgment rendered by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). The Learned Departmental Representative ("Ld. DR") also did not raise any objection for admission of the additional grounds. The prayer for admission of additional grounds noted above which are not in memorandum of appeal are being admitted for adjudication in terms of Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 owing to the fact ....
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....nder section 139(4C)(e) of the Act, mere non-filing of return cannot result in denial of exemption available under section 10(23C) of the Act. The Ld. AR invited our attention to the Twentieth Proviso to section 10(23C) of the Act inserted by the Finance Act, 2022 with effect from 01.04.2023 and submitted that the Legislature has specifically prescribed filing of return of income as a condition for claiming exemption only in respect of entities covered under section 10(23C)(iv), (v), (vi) and (via) of the Act. It was contended that the denial of exemption for non-filing of return has been brought into the statute only with effect from Assessment Year 2023-24 and even then, the assessee's case is not covered by the said proviso. Accordingly, it was submitted that there was no statutory requirement during the year under consideration mandating filing of return of income as a pre-condition for claiming exemption under section 10(23C)(iiiab) of the Act. In support of the aforesaid contention, reliance was placed on the decision of the Indore Bench of the Tribunal in the case of Harda Nagar Bal Vikas Samiti Harda Vs. ITO reported in 174 taxmann.com 680. It was therefore submitted that t....
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.... clause (b), who is not required to furnish a return under this sub-section and residing in such area as may be specified by the Board in this behalf by notification in the Official Gazette, and who during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or at any time during the previous year fulfils any one of the following conditions, namely (4C) Every- (a) research association referred to in clause (21) of section 10; (b) news agency referred to in clause (22B) of section 10; (c) association or institution referred to in clause (23A) of section 10; (ca) person referred to in clause (23AAA) of section 10; (d) institution referred to in clause (23B) of section 10; (e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (iiiab) or sub-clause (iiiad) or sub- clause (vi) or any hospital or other medical institution referred to in sub-clause (iiiac) or sub-clause (iliae) or sub-clause (via) of clause (23C) of section 10; (ea) M....
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.... so. It is therefore clear that the assessee has accepted its mistake of not filing the return of income for claiming the exemption. Therefore, in view of the facts discussed above, I do not find any excuse to take a divergent view from the findings of the AO and therefore confirm the addition made by the AO on account of income from other sources amounting to Rs.23,53,086/- to the total income of the assessee for the year under consideration. Accordingly, Ground Nos. 2, 4, 5, 6, 7, 10 and 11 raised by the assessee are hereby dismissed. 10. At the outset, we find a discrepancy in the findings recorded by the Ld. CIT(A). In para no. 5.3 of the impugned order, the Ld. CIT(A) has recorded that the assessee is covered under section 10(23C)(iiiab) of the Act. However, while rendering his findings in para no. 5.4, the Ld. CIT(A) has observed that the assessee is covered under section 10(23C)(iiia) of the Act. Further, in Ground No.16 of the appeal, the assessee has referred to section 10(23C)(iiia) of the Act, whereas during the course of hearing, the Ld. AR submitted that the assessee, being an educational institution substantially financed by the Central Government, is covered under....
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....rda Nagar Bal Vikas Samiti Harda Vs. ITO (supra), which is to the following effect: "13. We have considered rival contentions of both sides and perused the orders of lower authorities as well as the material held on record to which our attention has been drawn. The core dispute in present case relates to the allowability of exemption u/s 10(23C)(vi). Admittedly, the assessee is having requisite approval granted by CIT(E) vide order dated 10.08.2018 for AY 2017-18 under consideration. The only reason for denial of exemption advanced by lower authorities is that the assessee has not filed return of income in terms of section 139(4C). It is a fact that the assessee has not filed any return of income to Income-tax Department for AY 2017-18 under consideration. But the Ld. AR for assessee has given a detailed justification as to why the assessee did not and could not file return. Ld. AR has submitted that the assessee's application filed to CIT(A) for grant of approval for exemption u/s 10(23C)(vi) was filed on 18.08.2017 before 30.09.2017 which was the due date for filing of return u/s 139(1) and such application was pending at the level of CIT(E) on 30.09.2017 rendering i....
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.... i.e., it is engaged in imparting education and running various educational institutions. Thus, the registration u/s 12A is fait accompli and consequently the Harda Nagar Bal Vikas Samiti Harda computation of income has to be in accordance with sections 11 to 13 of the Act. The assessee society had not filed its return of income, and it was only in response to notice issued by the Assessing Officer under section 148, the assessee has filed its return of income alongwith the audited Balance Sheet and Profit & Loss Account. Now, whether the income of the assessee society is to be computed in accordance with the provisions of section 11 of the Act, as it has not filed the return as required under section 139(4A) of the Act, but has filed return in response to notice under section 148. 20. Section 139 falls under Chapter XIV-'Procedure for assessment' which provides procedures and conditions for filing of return of income. Section 139(1) mandates every person having income exceeding the maximum amount not chargeable to tax to file return of income. Similarly, section 139(1) (4A) mandates that every person in receipt of income derived from property held under trust, i.e....
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....tention of the Ld. DR that this amendment is clarificatory in nature. As rightly pointed out by the Ld. Counsel that this amendment has been made by the Finance Act, 2017 effective from A.Y. 2018-19, meaning thereby that this clause has not been made applicable even for the A.Y. 2017-18, the return of which were still to be filed. Thus, the Legislature has thought fit to make this amendment applicable from next assessment years onwards and not even to the current A.Y. 2017-18." [Emphsis supplied] (ii) ITAT, Hydrabad in Anjuman E Khadimul Muslimeen Refah-E Aam Vs. DCIT (2024) 167 taxmann.com 74 (Hyderabad - Trib.): "1. We have heard the rival contentions, perused the material available on record and gone through the order of the Ld. First Appellate Authority. The revenue authorities did not allowed the exemption claimed u/s 11 of the Act of Rs. 82,83,576/- contending that the assessee had not filed the ROI and form 10B within the due date specified under the Act and finally raised a demand of Rs. 34,47,810/-. As far as the delay in filing of form no.10B is concerned the Ld. CIT(E) has condoned the delay of filing of form 10B vide his order dated 06.08.2024. Ther....
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.... for non-filing/late filing of the income tax return. Therefore, the action of the lower authorities in denying the exemption to the assessee on this ground is not sustainable. 5. The second issue as to whether the filing of the return in wrong form i.e. Form u/s 139(4D) instead of Form u/s. 139(4C) becomes irrelevant. In view of the above stated legal position the action of the lower authorities in denying exemption to the assessee cannot be held to be justified. The impugned order of the Ld. CIT(A) is set aside and the Ld. AO is directed to grant exemption to the assessee as claimed u/s. 10(23C)(iiiab) of the Act. 6. In the result, the appeal of the assessee stands allowed." 15. From the judicial decisions discussed above, we can safely conclude that the amendment in section 10(23C) by way of insertion of 20th proviso prescribing dis-entitlement of exemption u/s 10(23C)(vi) for non-filing of return, is applicable from AY 2023-24 and the same was not applicable to AY 2017-18 under consideration. Therefore, in present case, the lower-authorities are wrong in denying exemption to assessee on the premise of non-filing of return. Needless to mention....
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....plicable only from Assessment Year 2023-24 and is not applicable to the year under consideration. 13. We further observe that consequences for non-filing of return of income have been separately provided by the Legislature under different provisions of the Act. Therefore, in the absence of any specific statutory provision applicable to the year under consideration linking entitlement of exemption under section 10(23C) of the Act with filing of return of income, exemption under section 10(23C) of the Act cannot be denied merely on account of non-filing of return. In the present case, the exemption has been denied solely for the reason that the assessee did not file its return of income. Neither the Ld. AO nor the Ld. CIT(A) has recorded any finding that the assessee failed to satisfy the substantive conditions prescribed under section 10(23C)(iiia) or section 10(23C)(iiiab) of the Act, as the case may be. Hence, the action of the Ld. AO in denying exemption merely on account of non-filing of return of income cannot be sustained. Therefore, we set aside the orders of the lower authorities on this issue and direct the Ld. AO to grant exemption under section 10(23C) of the Act to th....
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....bay HC) by the revenue wherein confirmed the decisions of High Courts that the notices u/s 148 has to be issued by the FAO by quashing notices issued by the JAO, as per provisions of Sec. 151A of the Act. Technical ground 7. The Ld. CIT(A) failed to follow the decisions of the Jurisdictional Tribunal i.e. ITAT, Hyderabad in various cases in holding that the notices issued u/s 148 of the act by the JAO's are invalid, without jurisdiction and bad-in-law. Technical ground 8. The Ld. CIT(A) erred in considering the assessment order was in order, but actually there was no escapement of income during the year under consideration and hence the provisions of section 149(1)(a) & 149(1)(b) are not applicable in the case of the assessee for assuming Jurisdiction to issue notice u/s 148 of the Act. Technical ground 9. The Ld. CIT(A) has not verified nor gave finding that the approval taken from the specified authority u/s 151 of the Act is not in accordance with the said provisions. Technical ground 10. The CIT(A) passed the order in a mechanical manner, which is non-speaking and invalid without independent reasoning and merely reproduced Ao's order which is bad-in-law. Technical....