CPC cannot go beyond Income Tax Return: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that CPC cannot go beyond return of income.

The aforesaid observation was made by the Pune ITAT when an appeal was filed before it by Lions Nab Community Eyecare Centre, as against the order of the National Faceless Appeal Centre, Delhi (NFAC), dated 21.03.2022, for the assessment year 2012-13.

The facts of the case where that the appellant was a charitable trust incorporated under the provisions of the Trust Act, who claimed itself to be registered u/s 12A of the Income Tax Act, 1961.

The Return of Income for the assessment year 2012-13, being filed in Form No.5 by the assessee, declaring the total income of Rs.43,01,860/, an intimation was issued against the same u/s 143(1)(a) of the Income Tax Act on 26.03.2014, assessing the above income to tax, demanding a tax of Rs.16,96,480/.

Against the said intimation, a petition u/s 154 was filed stating that the income of the trust was exempt u/s 11, by virtue of registration u/s 12A of the Income Tax Act, and further that the return of income was filed in the wrong form i.e., Form No.5, as against the ITR Form No.7. However, the said petition was rejected by the Assessing Officer by holding that the appellant had failed to file the audit report in Form No.10B as required under Rule 17B of the Income Tax Rules, 1962.

Being aggrieved by the order passed u/s 154, an appeal was filed by the assessee before the NFAC who, vide impugned order, confirmed the action of the Assessing Officer. And it is being aggrieved by the same, that the appellant has preferred the instant appeal before the Pune ITAT.

With Shri Pramod Shingte, the AR for the assessee contenting that the filing of the audit report in Form No.10B was only directory and that the failure to file of audit report in Form No.10B does not disentitle the assessee to claim for exemption u/s 11 of the Income Tax Act, he therefore, prayed that the order passed u/s 154 be quashed. However, on the other hand, Shri M. G. Jasnani, the Sr. DR placed reliance on the orders of the lower authorities.

Hearing the opposing contentions of either sides and thereby perusing the materials available on record, the Pune ITAT commented:

“We heard the rival submissions and perused the material on record. We find that the appellant had filed the return of income in Form No.5. However, no documents were filed along with the return of income justifying the claim for exemption u/s 11 of the Act. It is only after receipt of intimation; the appellant took a plea that its income was exempt u/s 11 by virtue of registration u/s 12A of the Act. Even the audit report was admittedly not filed along with the petition u/s 154 or before the NFAC.”

“The CPC while processing the return of income u/s 143(1) can take into consideration only the return of income an accompanied document, when the appellant had filed the return of income in Form No.5, the natural inference to be drawn is that the assessee is a partnership firm. When the return was filed as if it is a firm, it follows that computation of tax liability should be made on the basis that it is a partnership firm. The CPC cannot go beyond the return of income”, the ITAT Panel consisting of S. S. Godara, the Judicial Member and Inturi Rama Rao, the Accountant Member added.

Thus, dismissing the assessee’s appeal the Pune ITAT held:

“In the circumstances, we are of the considered opinion that the Assessing Officer had rightly rejected the 154 petition as well as the NFAC justified in confirming the action of the Assessing Officer. Therefore, the appeal filed by the assessee stands dismissed.”

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