Case Law Details
Maa Bhagwati Shiksha Samiti Vs Commissioner of Income Tax And Two Others (Allahabad High Court)
Conclusion: Form-10 under rule 17(2) for claiming exemption had been supplied to AO after the prescribed period but before completion of assessment, it ought to be considered by AO for granting benefit of exemption under Section 11(2) of the Income Tax Act, 1961 in original assessment proceedings. Accordingly, the entire process of reassessment that had been initiated by Department was without any legal basis whatsoever.
Held: Assessee-society was carrying out charitable work by imparting education through its institutions run by it. Books of account and other records of assessee were subjected to audit under section 12-A(b). For assessment year 2013-14, assessee had disclosed nil income after claiming exemption under Section 11 (Income From Property Held For Charitable Or Religious Purposes) of the Act. Assessee issued a statement in Form-10 as per Rule 17 of Income Tax Rules, 1961 before the Department as overall utilization during the year fell short by 17.02% (Rs.1,58,56,689/-) from prescribed limit of 85%. The return filed by assessee-society was selected for scrutiny and notice under section 143(2) was issued. Thereafter, notices under section 142(1) of the Act were also issued. After taking note of Form-10 filed by assessee and accepting the NIL income disclosed by assessee assessment order under Section 143(3) was passed in the year 2016. On 31st March 2021, after the lapse for 4 years, a notice under Section 148 was issued to assessee. It was alleged that income had escaped assessment as Form-10 for accumulation of income was filed belatedly and not within the due date of filing Return of Income u/s 139(1). During the pendency of the writ petition, order under Section 147 read with Section 144(B) of the Act was passed assessing the income of assessee as Rs. 1,58,86,689/- and imposing a demand of Rs. 1,03,00,246/-. It was held that Form-10 under Rule 17 of the Rules was required to be filed before AO before he completed the assessment. In a case, where Form-10 was filed late but was filed before AO completed the assessment, benefit of Section 11(2) should be available to assessee. From a reading of impugned notice, the order dated March 3, 2022 and assessment order dated March 19, 2022, it appeared that AO had paid no heed to the ratio laid down in the judgment of the Supreme Court and various High Courts including the Coordinate Bench of this Court. Accordingly, the entire process of reassessment that had been initiated by Department held no water and was without any legal basis whatsoever. Therefore, the notice issued under Section 148, order passed rejecting the objection of assessee and the reassessment order passed by AO was not valid.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel for the petitioner and learned Standing Counsel for the Income Tax Department.
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