Commissioner Of Income Tax-Exemption, Jaipur, Jaipur v. M/S Krishi Upaj Mandi Samiti, Beawar Road, Daurai, Ajmer

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No.168/2018 Commissioner Of Income Tax-Exemption, Jaipur, Jaipur Versus ----Appellant M/s Krishi Upaj Mandi Samiti, Beawar Road, Daurai, Ajmer. ----Respondent For Appellant(s) : Mr. K.K. Bissa HON'BLE MR. JUSTICE SANGEET LODHA HON'BLE MR. JUSTICE DINESH MEHTA 07/01/2019 Judgment 1.The appellant has preferred the present appeal challengingthe order dated 19.03.2018, passed by Income Tax AppellateTribunal, Jodhpur Bench, Jodhpur in appeal No.23/Jodh/2018. 2.Succinctly stated the facts in brief are that the respondentsociety, a unit of Rajasthan Agriculture Market Board, registeredunder Section 12AA of the Income Tax Act, 1961 being aCharitable trust, filed its return of income for assessment year2014-15, declaring its taxable income as NIL while claimingexclusion of a sum of Rs.2,30,32,139/- having been set apart tobe used for specific purposes. 3.During the course of assessment proceedings, the assessingofficer issued a notice dated 21.10.2016 inter alia asking as to why the amount of Rs.2,30,32,139/- remained unutilized may notbe added to assessee’s income. The assessee thereafter filedreply, requisite Form No.10 and resolution of the Society on08.12.2016 and in light of judgment of Supreme Court in the caseof Nagpur Hotel Owners’ Association, 247ITR201(SC), requestedto drop the proceedings. The Assessing Officer however made anaddition of Rs.2,30,32,139/-, vide its order dated 28.12.2016 asthe assessee has failed to submit Form No.10 along with thereturn. 4.The respondent assessee preferred an appeal against theaforesaid order dated 28.12.2016, which came to be rejected bythe appellate authority, vide its order dated 27.11.2017. Theappellate authority observed that the resolution for setting apartthe amount of Rs.2,30,32,139/- was not even passed on the dateof filing of the return i.e. 30.11.2014 and Form 10B came to befiled on 08.12.2016, after the return of income had been filed andconfirmed the addition of Rs.2,30,32,139/-. 5.Feeling aggrieved of the orders of the authorities below, theassessee preferred an appeal before the Income Tax AppellateTribunal, Jodhpur Bench, Jodhpur. While allowing the assessee’sappeal, the learned Members of the Tribunal relied upon thejudgment of Hon’ble the Supreme Court rendered in case ofNagpur Hotel Owners Association, reported in 247ITR201(SC). 6.Challenging the aforesaid order passed by the Tribunal dated19.3.2018, Mr. Bissa, learned counsel for the appellant contendedthat the Tribunal has erred in relying upon the judgment ofHon’ble the Supreme Court in case of Nagpur Hotel OwnersAssociation inasmuch as the said judgment of Hon’ble theSupreme Court deals with a situation where Form No.10 was filed after completion of assessment and the appeal of the departmentin any case was allowed. Mr. Bissa submitted that language ofRule 17 is unambiguous and it requires Form 10 to be furnishedalong with the return and on assessee’s failure to do the same,the assessing officer was justified in making the addition of theamount in question. 7.We have heard learned counsel for the appellant and perusedthe material available on record. 8.It is not in dispute that after filing of the return and beforethe assessment was completed, the assessee had furnishedrequisite details including resolution and the notice to the AO asrequired under Section 11(2) of the Act in the prescribed Form 10.The entitlement of the assessee for seeking setting apart of theamount of Rs.2,30,32,139/- is not in dispute. The assessingofficer has made the addition of the amount only on account ofthe fact that the respondent assessee had submitted Form No.10subsequently. 7.We have heard learned counsel for the appellant and perusedthe material available on record. 8.It is not in dispute that after filing of the return and beforethe assessment was completed, the assessee had furnishedrequisite details including resolution and the notice to the AO asrequired under Section 11(2) of the Act in the prescribed Form 10.The entitlement of the assessee for seeking setting apart of theamount of Rs.2,30,32,139/- is not in dispute. The assessingofficer has made the addition of the amount only on account ofthe fact that the respondent assessee had submitted Form No.10subsequently. 9.In our considered opinion, the judgment of Hon’ble theSupreme Court rendered in case of Nagpur Hotel OwnersAssociation (supra) squarely applies to the facts of present case,wherein Hon’ble the Supreme Court has held that Form No.10should be submitted before framing of the assessment order. Itwould not be out of place to reproduce the relevant excerpt of theabove referred judgment of Hon’ble the Supreme Court in case ofNagpur Hotel Owners Association, which reads thus :- “It is abundantly clear from the wordings of sub-section(2) of Section 11 that it is mandatory for the personclaiming the benefit of Section 11 to intimate to theassessing authority the particulars required, under Rule 17 in Form No.10 of the Act. If during the assessmentproceedings the Assessing Officer does not have thenecessary information, question of excluding such incomefrom assessment does not arise at all. As a matter of fact,this benefit of excluding this particular part of the incomefrom the net of taxation arises from Section 11 and issubjected to the conditions specified therein. Therefore, itis necessary that the assessing authority must have thisinformation at the time he completes the assessment. Inthe absence of any such information, it will not be possiblefor the assessing authority to give the assessee the benefitof such exclusion and once the assessment is socompleted, in our opinion, it would be futile to find faultwith the assessing authority for having included suchincome in the assessable income of the assessee.Therefore, even assuming that there is no valid limitationprescribed under the Act and the Rules even then, in ouropinion, it is reasonable to presume that the intimationrequired under Section 11 has to be furnished before theassessing authority completes the concerned assessmentbecause such requirement is mandatory and without theparticulars of this income the assessing authority cannotentertain the claim of the assessee under Section 11 of theAct, therefore, compliance of the requirement of the Actwill have to be any time before the assessmentproceedings.” 10.That apart, as long as the entitlement of the assesseeregarding setting apart of the accumulated profit is not doubted,no addition can be made on the pretext that Form No.10 was filedbelatedly. 11.This view of ours is fully fortified by a Division Bench of thisCourt rendered in case of Commissioner of Income Tax Vs.Anjuman Moinia Fakharia, reported in (1994)208ITR568(Raj)wherein this Court has held as under :- “From the circular issued by the Department dated June 3,1980 and the judgment of the apex court referred to 10.That apart, as long as the entitlement of the assesseeregarding setting apart of the accumulated profit is not doubted,no addition can be made on the pretext that Form No.10 was filedbelatedly. 11.This view of ours is fully fortified by a Division Bench of thisCourt rendered in case of Commissioner of Income Tax Vs.Anjuman Moinia Fakharia, reported in (1994)208ITR568(Raj)wherein this Court has held as under :- “From the circular issued by the Department dated June 3,1980 and the judgment of the apex court referred to above, it can be considered that the requirement toprescribe (sic) the time-limit is only directory and notmandatory. Non-compliance within the stipulated timeshould not disentitle an assessee from the exemption towhich he is otherwise entitled. The Income Tax Officer hasrejected the claim of the assessee only on the ground thatthe notice for accumulation under Section 11(2) is beyondtime. The Appellate Assistant Commissioner hasexamined this matter and has observed that the IncomeTax Officer has not doubted the correctness of theresolution or the accounts of the trust and for that purposethe Income Tax Officer was directed to verify theassessee’s claim and allow the exemption in respect ofaccumulations as claimed by the assessee. There isanother point that the provisions of Rule 17 which areframed under Section 11(2) before April 1, 1971, did notprescribe any time-limit for filing Form No.10 and withoutthere being any amendment in the provisions of the Act,the rule was substituted with effect from April 1, 1971,prescribing the time-limit from the assessment year 1971-72. Prior to the assessment year 1971-72, the form couldhave been submitted upto the stage of assessment.” 12.We do not find any question of law much less a substantialquestion of law, requiring adjudication by this Court. The appealis, therefore, dismissed. (DINESH MEHTA),J (SANGEET LODHA),J 22-ArunV/-