Punjab Municipal Infrastructure Development Company Vs DCIT (ITAT Chandigarh)
The appeal before the Income Tax Appellate Tribunal (ITAT), Chandigarh concerned Assessment Year 2016–17 and arose from an order of the Commissioner of Income Tax (Appeals), NFAC dated 25 February 2025 relating to an assessment framed under Section 143(3) of the Income Tax Act on 26 November 2018. During assessment proceedings, the Assessing Officer noted that the assessee had accumulated or set apart funds exceeding 15% of its income. However, the assessee had not electronically filed Form No.10, which is required under Section 11(2) read with Rule 17 to claim the benefit of accumulation of income. The assessee submitted that it had manually filed Form No.10 on 17 October 2016. Since the form was not e-filed as required under the applicable rules, the Assessing Officer denied the benefit of accumulation.
The Commissioner (Appeals) upheld the Assessing Officer’s view, observing that CBDT Circular No. 06/2020 dated 19 February 2020 allows taxpayers to seek condonation of such lapses from the competent authority under Section 119(2)(b) of the Act. As the assessee had not sought condonation, the disallowance was sustained.
Before the Tribunal, the assessee argued that the failure to e-file was procedural and that the form had been manually submitted before the assessment proceedings concluded. It was also submitted that the requirement of electronic filing had come into effect from 1 April 2016. The Tribunal held that the rules require electronic filing of the form for claiming accumulation benefits, and allowing the claim without following the prescribed procedure would render the provision redundant. However, noting that a condonation mechanism exists, the Tribunal set aside the impugned order and restored the matter to the Commissioner (Appeals) for fresh adjudication after the assessee seeks condonation from the appropriate authority. The appeal was allowed for statistical purposes.
