ITO Vs Camellia Educare Trust (ITAT Kolkata)
ITAT Kolkata held that in respect of any adjustment proposed to be made u/s 143(1)(a), a prior intimation is required to be served on the assesse. Failure to issue such prior intimation to the assessee before making an adjustment by way of disallowing the claim of exemption u/s. 11 of the Act is unjustified.
Facts- The assessee is a Trust registered u/s. 12AA of the Act. Assessee filed its return of income in Form ITR 7 u/s. 139(4A) of the Act on 31.03.2021 reporting total income at Rs. Nil. Assessee also filed Form 10B on 30.03.2021. The extended due date for filing return of income in respect of year under consideration was 15.02.2021. In the return filed by the assessee, it reported total receipts of Rs.5,67,16,797/-. Against these receipts, assessee claimed application of income u/s. 11 of the Act of Rs.6,83,64,500/-
Since return of the assessee was a belated return in terms of provisions contained in Sec. 139(4A), Centralised Processing Centre of Income Tax, Bengaluru (CPC) while processing the return, made an adjustment by not allowing the claim of the assessee u/s. 11 towards application of income.
CIT(A) allowed the claim of the assessee by observing that the delay in filing the return of income and Form 10B was due to the outbreak of Pandemic of Covid-19 coupled with a fire which broke at the premises of the assessee wherein most of the original office records, files, documents and computer hard disk were burnt.
Being aggrieved, revenue has preferred the present appeal.
Conclusion- In the present case has filed a belated return u/s. 139(4) of the Act which the department has not held it to be a defective return u/s. 139(9) and has processed it by accepting the revenue and capital expenditure though denying the exemption claimed u/s. 11 and computed the total income equal to the total receipts of the assessee for the year. Once a return has been processed as a valid return, there are restrictions within section 143(1)(a) which lists down six specific adjustments which can be made in the processing of return.
In respect of any adjustment which is proposed to be made, a prior intimation is required to be served on the assessee, either in writing or electronically, as contained in 1st proviso to section 143(1)(a) of the Act. Ld. Counsel has evidently demonstrated before us, the failure on the part of CPC to issue such prior intimation to the assessee before making an adjustment by way of disallowing the claim of exemption u/s. 11 of the Act.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
Appeal filed by the revenue and Cross Objection filed by the assessee are against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/250/2022- 23/1044890142(1) dated 24.08.2022 against the order of Centralised Proceeding Centre (CPC), Bengaluru u/s. 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 30.11.2021 for AY 202021.
2. Essentially, grounds taken by the Revenue are in respect of allowing the exemption claimed by the assessee u/s. 11 of the Act when assessee has filed its return of income and Form 10B without compliance of Section 139(4A) i.e. after the due date of filing the return. In the Cross Objection, assessee has taken the ground in respect of intimation issued u/s. 143(1) by not following the mandate as required by the 1st proviso to the said section according to which no adjustment shall be made unless an intimation is given to the assessee for the adjustment proposed to be made.
3. Brief facts of the case are that assessee is a Trust registered u/s. 12AA of the Act. Assessee is running an educational institution in the name of Camellia School of Engineering & Technology at Nadibhag, Post Badu Road, Madhyamgram, Kolkata-700129. Assessee filed its return of income in Form ITR 7 u/s. 139(4A) of the Act on 31.03.2021 reporting total income at Rs. Nil. Assessee also filed Form 10B on 30.03.2021. The extended due date for filing return of income in respect of year under consideration was 15.02.2021. In the return filed by the assessee, it reported total receipts of Rs.5,67,16,797/-. Against these receipts, assessee claimed application of income u/s. 11 of the Act of Rs.6,83,64,500/- comprising of the following components:
