TMI Blog2009 (5) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... e first time only in response to notice under section 148 of the IT Act issued by the Assessing Officer and not filed any return under section 139 of the IT Act ? 3.Whether in the facts and in the circumstances of the case, learned CIT(A) was justified in relying on the decision .of Hon ble Supreme Court in the case of CIT v. Nagpur Hotel Owners Association [2001] 165 CTR (SC) 1 : [2001] 247 ITR 201 (SC) even in spite of the fact that rule 17 has been amended with effect from 1st April, 1990 and Form No. 10 is to be filed on or before the time available under section 139 of the IT Act ? 4.Whether in the facts and in the circumstances of the case, learned CIT(A) was justified in directing the Assessing Officer to assess the income at nil instead of Rs. 60,53,980, Rs. 33,43,8001 and Rs. 1,63,14,740 respectively assessed by the Assessing Officer?" 2. We have heard the learned representatives of both the parties at length and gone through the material available on record and perused the findings of the authorities below. 3. The facts of the case are that the above appeals emanate from order j under section 143(3)/147 of the IT Act, all three dated 31-12-2007. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 indicates that the assessee was having knowledge of position of law in this regard. So far as this aspects concerned, the learned CIT(A) agreed with the finding of the Assessing Officer. The submission of the assessee about frequent change of chairman and administrator was not accepted by the learned CIT(A) because ignorance of law by the senior office bearers could not be accepted as an excuse. 5. The assessee relied upon decision of Hon ble Supreme Court in the case of CIT v. Nagpur Hotel Owners Association [2001] 247 ITR 201 (SC) and the submissions of the assessee have been summarized in the impugned order as under : "( i )The deduction under section 11(2) permits to the charitable trust to accumulate the income for further five years if 85 per cent of the gross receipt is not applied during the year for the object of the trust. Such income will not be included in the total income of the trust. ( ii )The assessee trust accordingly has submitted the notice in prescribed form together with resolution for accumulation and proof of investment along with the return to the Assessing Officer. ( iii )The time-limit for filing of the application has not been prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules, even then, in our opinion, it is reasonable to presume that the intimation required under section 11 has to be furnished before the assessing authority completed the concerned assessment because such requirement is mandatory and without the particulars of this income, the assessing authority cannot entertain the claim of the assessee under section 11 of the Act. Therefore, compliance with the requirement of the Act will have to be any time before the assessment proceeding. Further, any claim for giving the benefit of section 11 on the basis of information supplied, subsequent to the completion of assessment would mean that the assessment order will have to be reopened. In our opinion, the Act does not contemplate such reopening of the assessment. On the basis of reading the aforesaid pronouncement, it gives a clear impression that the assessee cannot be deprived of the benefit if the intim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) are reproduced as under : "3. On careful consideration of all the facts and circumstances of the case, I found substance in the argument of the appellant. The Assessing Officer in his assessment order reproduced a fraction of observation made by Hon ble Supreme Court in case of CIT v. Nagpur Hotel Owners Association [2001] 165 CTR (SC) 1 : [2001] 247 ITR 201 (SC) which is interpreted against the appellant, but in the same para, it has been explicitly stated that, As a matter of fact this benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer as well as the accumulation of funds for the activities of the assessee has also not been disputed. Form No. 10 filed along with return of income was also not disputed but claim of assessee was rejected being there was a delay in filing the required form. The delay was explained which was not considered favourably by the authorities below. However, all informations were available at the time of assessment before Assessing Officer, therefore, requirements of section 11(2) have been duly complied with. He has relied upon decision of Supreme Court in the case of Nagpur Hotel Owners Association ( supra ), decision of Gujarat High Court in the case of CIT v. Mayur Foundation [2005] 274 ITR 562, order of Tribunal, Ahmedabad Bench in the case of Stock Exchange, Ahmedabad v. Asstt. CIT (2000) 68 TTJ (Ahd.) 610. He has reiterated the submissions made before authorities below. 9. We have considered rival submissions and material available on record. It s not in dispute that assessee was granted registration under section 12AA of the IT Act, therefore, assessee would be entitled for the benefit under sections 11 and 12 of the IT Act. Section 11(2) of the IT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income under section 148 of the IT Act and also filed Form No. 10 for accumulation of funds in the prescribed manner along with the return of income. Therefore, as per section 148(1), the return of income filed along with Form No. 10 shall be treated as return so filed under section 139(1) of the IT Act. The genuineness of the purpose: of the trust and accumulation of funds for the purpose of assessee; as disclosed in the Form No. 10 are not disputed by the Assessing Officer. 9.2 Hon ble Supreme Court in the case of Nagpur Hotel Owners Association ( supra ) observed that the assessing, authority held that assessee has not applied for accumulation of its income for charitable purposes as required under section 11(2) within the time specified in rule 17 of the IT Rules. Hence, total income was assessed. The Tribunal however held that the objects of the assessee were charitable, hence, the relief sought by the assessee could not have been refused on that ground. It was further held that the time-limit fixed under rule 17 cannot be insisted upon by the assessing authority because said rules could not have fixed a time-limit for filing an application under section 11(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilarly, Tribunal, Ahmedabad Bench in the case of Stock Exchange, Ahmedabad ( supra ) considered the similar issue for the assessment years 1989-90 to 1995-96 held that Form No. 10 can be filed before completion of the assessment. Hon ble Andhra Pradesh High Court in the case of CIT v. Mumtaz Yarud Dowla Waqf [1998] 101 Taxman 258 held that the period prescribed under rule 17 is directive and not mandatory, even if the notice is not issued within the period prescribed under rule 17, the assessee would be entitled to the benefit of section 11 provided the notice is issued-before assessment is made. 9.4 On consideration of above discussions, it is clear that the assessee filed Form No. 10 along with return of income filed under section 148 of the IT Act prior to completion of assessment giving the details of the funds/amount to be accumulated. The details submitted in the Form No. 10 are not disputed. The claim of the assessee is rejected merely on the reasons that Form No. 10 was not filed on time. The issue is, therefore, squarely covered by several decisions referred to above in favour of the assessee. 9.5 We may also note here that Hon ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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