The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently in an appeal filed before it, held that eligible deductions cannot be disallowed, merely on ground of technicalities.
The aforesaid observation was made by the Delhi ITAT when an appeal was filed before it by the assessee, as against the order dated 08.03.2019, of the Commissioner of Income Tax (Appeals) (CIT (A), New Delhi, for assessment year 2016-17.
The grounds of the assessee’s appeal being that on the facts and circumstances of the case, the CIT(A) has erred both on facts and in law in confirming the action of CPC, in not allowing assessee the benefit of accumulation u/s 11(2) of the Income Tax Act amounting to Rs. 34,73,760/, and further that, in the facts and circumstances of the case, the CIT(A) has erred both on facts and in law in confirming the action of CPC in upholding that the benefit of accumulation is not available to the assesses ,as it has not exercised its option before the due date of filing of return u/s 139(1) of the Act, the brief facts of the case were that, the assessee was a charitable trust, who filed its return of income.
It so happened that since the income of the assessee trust had not been fully utilized during the Assessment Year, a sum of Rs. 34,73,758/- was accumulated or set apart for carrying out the purpose of the trust in the succeeding Assessment Years, and Form No. 10 was filed on 14/10/2016. And thereafter, the return was processed by the CPC and the intimation u/s 143(1) of the Act dated 27/04/2007 was issued, application of Rs. 34,73,758/- was denied and demand of Rs. 10,42,290/- raised.
Consequently, the assessee filed an application u/s 154 of the Income Tax Act, before the CPC, to delete the said demand. However, the CPC, while rejecting the application filed u/s 154, held the assessee to be ineligible for this claim.
As against the order of the CPC, being aggrieved, the assessee filed an appeal before the CIT(A) and the CIT(A) has dismissed the appeal filed by the assessee vide order dated 08/03/2019. And it is being agitated by the same, that the assessee has preferred the instant appeal before the Delhi ITAT.
Hearing the opposing contentions of either sides as submitted by Ms. Rano Jain, & Ms. Mansi Jain, the Advocates on behalf of the asseessee and by Shri Narpat Singh, the Sr. D. R, on behalf of the Revenue, as well as perusing the materials available on record, the Delhi ITAT observed:
“We have heard the parties and perused the material available on record and gave our thoughtful consideration. It is not in dispute that the assessee had filed Form No. 10 and who is eligible for the deduction. It is the case of the assessee is that the assessee should have filed u/s 11(2) of the Act but due to punching mistake the assessee had claimed the deduction u/s 11(1) of the Act. it is not the case of the Revenue that the assessee is not eligible for the benefit for the deduction u/s 11 Sub Clause 2 of the Act. The only reason for rejecting the application filed by the assessee is that there is no error apparent from the record of the order passed by the CPC.”
“In our considered opinion, the Revenue Authorities have to tax the right person in right manner and shall not disallow the eligible deductions on mere technicalities. The Revenue Authorities ought to have followed the ratio laid down by the Hon’ble Delhi High Court in the case of Pawan Kumar Agarwal (Supra) and should have been allowed the benefit of accumulation u/s 11 Sub Section 2 of the Act amounting to Rs. 34,73,760/- to the assessee.”, the ITAT Panel comprising of B.R.R Kumar, the Accountant Member, and Yogesh Kumar U.S., the Judicial Member, added.
Thus, allowing the assessee’s appeal, the Delhi ITAT held:
“In view of the above discussion, we allow the assessee’s Grounds of appeal and direct the authorities to allow the benefit of accumulation u/s 11 sub-Clause 2 of the Act amounting to Rs.34,73,760/- to the assessee. Ordered accordingly. In the result, the appeal of the assessee is allowed.”
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