The Delhi High Court in a ruling in favour of Canara Bank Relief Welfare Society has held that Revised Form 10 can be filed during reassessment proceedings.
The appellant/revenue challenged the order dated 23.02.2023 passed by the Income Tax Appellate Tribunal [“Tribunal”]. The Canara Bank Relief and Welfare Society, respondent/assessee is a charitable society registered with the Registrar of Society while also holding a registration under Section 12A of the Income-tax Act, 1961 [“Act”].
As per the Memorandum of Association (MOA), the main aims and objects of the respondent/assessee include to make the best efforts to promote, protect, and advance the cause of women and girls; provide legal advice and aid to spouses involved in disputes; arrange talks; demonstrate low-cost nutritive diet; train economically weaker and destitute women under the aegis of various socio-economic schemes; and provide adult education.
The Return of Income (ROI) was processed under Section 143(1) of the Act. The Assessing Officer (AO) noticed that in the preceding AY, the respondent/assessee had claimed that it had paid, as advance, Rs. 5,85,00,000/- to purchase an immovable property. The money spent was claimed as “application of income” in AY 2007-08.
Furthermore, it stated that due to an inadvertent error, the respondent/assessee had failed to show this in its original ROI. The respondent/assessee also submitted that it had revised not only its ROI but also the audit report submitted in the prescribed form, i.e., Form No. 10. However, via the assessment order dated 31.03.2016, the revised ROI and Form No. 10 were rejected by the AO.
Aggrieved by the order of the AO, the respondent/assessee filed an appeal before the Commissioner of Income Tax (Appeals) [“CIT(A)”]. The CIT(A)allowed the ground raised in the appeal that related to the amount claimed as an “application of income”. It noted that Rs. 5,85,00,000/- was offered for tax and Form No. 10 was filed during the reassessment proceedings. Furthermore, the CIT(A) also held that the AO had not returned a finding that the conditions provided in Section 11(2) of the Act, for the accumulation of income, had not been fulfilled.
The Court in Association of Corporation & Apex Societies Handlooms v. ADIT, 2013directed the AO to recompute the income of the respondent/assessee by Section 11 of the Act, after allowing for accumulation under sub-section (2) of the said section.
It is not in dispute that to claim the benefit of sub-section (2) of Section 11, the respondent/assessee was required to file a statement in the prescribed format i.e., Form No. 10, as per Rule 17 of the Income-tax Rules, 1962 [“Rules”].
The point of inflexion between the respondent/assessee and the appellant/revenue was whether a revised Form No. 10 could have been filed by the respondent/assessee during the reassessment proceedings.
As indicated above, to claim the benefit of the provisions of subsection (2) of Section 11, the respondent/assessee had to file a statement in the prescribed form, i.e., Form No. 10. The Tribunal has noted that there is no adverse finding by the AO concerning the fulfilment of conditions subject to which the accumulation of income was allowed under Section 11(2).
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the respondent/assessee is not precluded from filing a revised Form No. 10 during reassessment proceedings.
The record also showed that the appellant/revenue had carried the judgment rendered in the Association of Corporation & Apex Societies of Handlooms in appeal to the Supreme Court. The appeal preferred by the appellant/revenue was dismissed as withdrawn, on account of low tax effect. In the absence of substantial question of law, the court dismissed the petition.
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