TMI Blog2023 (3) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... . 383, 384 & 385/Srt/2022 - - - Dated:- 28-2-2023 - Shri Pawan Singh, Judicial Member For the Assessee : None For the Respondent : Shri Ashok B. Koli, CIT-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These three appeals by the single assessee are directed against the separate orders of the learned National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)], all dated 13/10/2022 for the Assessment years (AY) 2017-18 to 2019-20 respectively. In all the appeals, the assessee has raised common grounds of appeal, facts in all the appeal are almost similar, except figure of disallowance of exemption under Section 11 and 12 of the Income Tax Act, 1961 (in short, the Act), therefore, all the appeals were clubbed, heard together and are decided by this consolidate order to avoid the conflicting decision. For appreciation of fact, the appeal in ITA No. 383/Srt/2022 for A.Y. 2017-18 is treated as lead case, wherein, the assessee has raised following grounds of appeal: 1. The order passed by the learned Commissioner of Income-Tax (Appeals) (NFAC) (hereinafter referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective and would apply for present appeal also. 8. The appellant trust craves liberty to add, alter, amend, modify, substitute or delete any grounds of appeal on or before the final hearing if necessity arises. 2. Brief facts of the case are that the assessee is a public charitable trust registered under Public Trust Act, Mumbai. The assessee is engaged in imparting education. The assessee is also having registration under Section 12A and recognition certificate under Section 80G of the Act. For the A.Y. 2017-18, the assessee filed its return of income on 17/10/2017 declaring income of Rs. 2,41,990/- . In the computation of income, the assessee claimed exemption under Section 11/12 of the Act of Rs. 24,69,286/-. The return of income was processed by Central Processing Centre (CPC), Bangalore and disallowed the expenditure incurred by assessee trust aggregating to Rs. 24,69,286/- for want of non-furnishing the audit report in Form-10 alongwith return of income or before filing of return of income. 3. Aggrieved by the disallowances, the assessee filed appeal before the ld. CIT(A)-3, Vadodara. The appeal of the assessee was migrated to National Faceless Appeal Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observation. Further aggrieved, the assessee has filed the present appeal before this Tribunal. 4. None appeared on behalf of assessee despite the knowledge of hearing of present appeals. The present appeal was initially listed on 13/01/2023, wherein the assessee filed application for adjournment dated 27/01/2023 on the ground that the submission is under compilation. On the basis of contents of such application, the appeal was adjourned to 28/02/2023. Today, none appeared on behalf of assessee nor any application for adjournment was filed, therefore, keeping in view the fact that a very short question is involved in the present appeal, I decided to hear the submission of learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the Revenue and to decide the appeal on the basis of material available on record. 5. The ld. CIT-DR for the revenue supported the orders of lower authorities and would submit that the assessee has not filed report under From 10B either before filing of return of income or before due date for filing of return under Section 139(1) of the Act. Thus, the assessee was not eligible for exemption under Section 11 and 12 of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction of our client, TRUST FOR REACHING THE UNREACHED we would like to state that : The object of the Trust ic charitable in nature since incorporation of the trust in the year 1987. The Trust is running various educational and health centers for providing help to the needy and poor persons. Moreover the trust is also carrying out the welfare activities to ensure better livelihood for the poor disable and weaker section of the society. We would like to state that the assessee has filed return of income for the relevant assessment year declaring NIL total income and claiming refund of Rs. 1,92,845/- vide acknowledgement no. 370510010270914 dated 27-9-2014. We would like to state that as per the provisions of the section 11(2) of the I.T. Act 1961 - Accumulation and Setting a part of the trust income for specific purpose, the assessee has set apart the income of the trust in the the forms or modes specified in section 11(5) Where 85% of the income of charitable trust as referred above is not applied to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to charitable or religious purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing reasons in the impugned order : ORDER U/S.119(2)(b) OF THE INCOME-TAX ACT, 1961 The applicant, Trust for Reaching the Unreached, Vadodara has filed an application dated 11-2-2019, for condonation of delay in filing the form No. 10 of the I.T. Act, 1961 for the A.Y. 2014-15. In its application it is stated that the trust is established since 1987 and is running various educational and health centres for providing help to the needy and poor persons. Moreover the trust is also carrying out the welfare activities to ensure better livelihood for the poor, disabled and weaker section of the society. It has further submitted that the return for A.Y. 2014-15 was filed on 27-9-2014 vide acknowledgement no. 370510010270914 claiming refund of Rs. 1,92,845/-. During the A.Y. 2014-15, it had accumulated an amount of Rs. 17,50,000/- and has also utilized it in the subsequent year itself. As the Trust was massively involved in the activities of charitable, religious and educational purpose within the city as well as in the outskirts of the city, it genuinely skipped to file Form 10 as per the provisions of the Act. After coming to know the facts the assessee filed Form 10 on 11-2-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional and health centres for providing help to the needy and poor persons since its inception i.e. from 1987, means trust is very old and well aware about the legal provisions of I.T. Act. This was not the new provision which came to be implemented first time in the year under consideration. 5. The assessee's contention that the income tax work was handed over to a Tax Consultant who was not having exposure in the area of work and he had not filed the Form 10, is found unsubstantiated. No such details and evidences have been placed on record to support said contention. Further it cannot be the reasonable cause to accept the condonation petition for such a huge period of almost 5 years. Moreover, the assessee has not submitted any details and evidences showing that the provisions of section 11(5) r.w.s. 11(2) are fully complied with more particularly the investment of accumulated funds was in specified modes only. Thus compliance of the provisions of section 11(5) are not proved by the assessee. Even no details of the utilization of accumulated funds for the specified objects have been placed on record by the assessee. In this regard CBDT has issued a circular no. 273 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use hardship. But a question as to whether the default in payment of the amount was due to circumstances beyond the control of the assessee, also bears consideration. 12. In the case of R. Seshammal (supra), the Madras High Court was pleased to observe as under (page 187 of 237 ITR): This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to comply with all the requirements of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and there after seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the hyper technical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund. 13. In the case of Sitaldas Motwani (supra), this court has held that the expression genuine hardship used in section 119(2)(b) of the said Act should be construed liberally, particularly in matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doption of an unduly restrictive approach. The Central Board of Direct Taxes appears to have proceeded on the basis that the delay was deliberate, when from the explanation offered by the petitioner, it is clear that the delay was neither deliberate nor on account of culpable negligence or any mala fides. Therefore, the impugned order dated May 16, 2006, made by the Central Board of Direct Taxes refusing to condone the delay in filing the return of income for the assessment year 1997-98 is liable to be set aside.' In Jay Vijay Express Carriers v. CIT [2013] 34 taxmann.com 61/215 Taxman 562 (Guj.), in relevant paragraph 16 of the said judgment, this Court held as under : 16. In our opinion, in the present case, there would be genuine hardship, if the time limit is not extended as otherwise, the entire claim of Rs. 17,84,323/- would be destroyed. The petitioner would neither get deduction in the assessment year 2005-06 nor in the year 2008- 09 as per then prevailing Section 40(a)(ia) of the Act. In our opinion, the petitioner was neither lethargic nor lacking in bona fides in making the claim beyond the period of limitation, which should have a relevance to the desirabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia for recompensating the Revenue from loss suffered by non-deposit of tax by the assessee within the time specified therefor. The said principle should also be applied for the purpose of determining as to whether any hardship had been caused or not. A genuine hardship would, inter alia, mean a genuine difficulty. That per se would not lead to a conclusion that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied. The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. For the said purpose, another well-known principle, namely, a person cannot take advantage of his own wrong, may also have to be borne in mind. The said principle, it is conceded, has not been applied by the Courts below in this case, but we may take note of a few precedents operating in the field to highlight the aforementioned proposition of law. (See Priyanka Overseas (P.) Ltd. Anr. v. Union of India Ors. 1991 Suppl. (1) SCC 102, para 39, Union of India Ors. v. Maj. Gen. (Retd.) Madan Lal Yadav (1996) 4 SCC 127 at 142, paras 28 and 29, Ashok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not always take only a pro revenue approach in such matters. Their approach in such cases should be equitious, balancing and judicious which should reflect the application of mind to the facts of the case and before denying the genuine claim of the assessee on the grounds of mere delay in making such claim, something more than the user of innocuous terms as employed in the present case, should be forthcoming. Technically, strictly and literally speaking, the Board might be justified in denying the exemption from capital gains tax by rejecting such condonation application, but an assessee, who substantially satisfies the condition for availing such exemption should not be denied the same, merely on the bar of limitation, especially, when the legislature has conferred wide discretionary powers to condone such delay on the highest executive authority of the Central Board of Direct Taxes under the Act. 13. The general and wide powers given to the Board in this regard, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case .. , not only gives wide powers to the Board, but confers upon it a obligation to consider facts relevant for condonation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has difficulty to understand what more plea or proof any assessee could have brought on record, to substantiate the inadvertence of its advisor. The net result of the impugned order is in effect that the petitioner's claim of inadvertent mistake is sought to be characterised as not bonafide. The court is of the opinion that an assessee has to take leave of its senses if it deliberately wishes to forego a substantial amount as the assessee is ascribed to have in the circumstances of this case. Bonafide is to be understood in the context of the circumstance of any case. Beyond a plea of the sort the petitioner raises (concededly belatedly), there can not necessarily be independent proof or material to establish that the auditor in fact acted without diligence. The petitioner did not urge any other grounds such as illness of someone etc., which could reasonably have been substantiated by independent material. In the circumstances of the case, the petitioner, in our opinion, was able to show bonafide reasons why the refund claim could not be made in time. 9. The statute or period of limitation prescribed in provisions of law meant to attach finality, and in that sense are sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set-aside and the delay condonation applications stand allowed. 37. It is declared that the writ-applicants are entitled to seek exemption under section 12 of the Act. The authorities below are directed to give effect to such exemption to the assessees and pass necessary consequential orders in this regard. However, as fairly submitted by Mr. Vora, the grant of benefit of exemption under section 12 of the Act shall be subject to section 143(2) and section 142(1) respectively of the Act 1961. 7. Considering the aforesaid factual and legal discussion, I find that the assessee has substantially satisfied all the conditions for availing the benefit of exemption under Section 11/12 of the Act and except for filing audit report in Form 10B, which was filed belatedly, thus respectfully following the decision of Hon'ble Jurisdictional High Court, the grounds of appeal raised by assessee are restored back to the file of Assessing officer to verify the contents of Form 10 for all the assessment years and grant necessary exemptions by passing the order in accordance with law. 8. In the result, this appeal of the assessee is allowed for statistical purposes. 9. Now we take ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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