Income Tax Appellate Tribunal - Delhi
Income-Tax Officer vs Guru Nanak Vidya Bhandar Trust on 23 May, 1988
Equivalent citations: [1989]29ITD195(DELHI)
ORDER
S.K. Chander, Accountant Member
1. This appeal by the Revenue and the cross-objection by the assesses are directed against the order of the CIT (Appeals)-IX, New Delhi dated 2-9-1985 relating to the assessment year 1982-83. The solitary ground taken in the appeal projects the following grievance:
On the facts and in the circumstances of the case as well as in law the CIT(A) erred in allowing accumulation Under Section 11(2).
2. In order to appreciate the grievance of the revenue emanating from this ground, we bring into focus the entire factual backdrop of the case, which is as under:
3. This is a case of a Trust which has been given the benefits of Section 11 in the earlier assessment years. The assessee-trust filed the return for the year under appeal on 28th August, 1982 declaring a deficit of Rs. 34,167. The Income-tax Officer during the course of assessment proceedings, inter alia, examined the applicability of the provisions of Sections 11(2) and 11(3) of the Income-tax Act in relation to the assessment of the assessee. He determined the total income at Rs. 21,43,054. In doing so he included under Section 11(3) into the income of the Trust an amount of Rs. 17,26,000. The Income-tax Officer also refused to accept the plea of the assessee-trust for accumulation of part of the income under Section 11(2) for the current year. The assessment was framed on 23-3-1985. This was challenged in appeal before the CIT (Appeals). The CIT (Appeals) directed the Income-tax Officer to exclude the sum of Rs. 17,26,000 from the computation of total income after examining the factual accumulation provided by the assessee from the financial year 1970-71 onwards. Thereafter, the learned Commissioner considered the non-acceptance of the assessee's plea for accumulation of a part of the income under Section 11(2) for the current year. In not accepting the assessee's plea the Income-tax Officer had taken into consideration the past record of the assessee, whereby amounts accumulated from 1972-73 not utilised for the purpose of the Trust had been taken into account. The learned Commissioner observed under Section 11(3) would take care of such unutilised accumulations and the Act does not give to the Income-tax Officer the authority for non-acceptance of the assessee's decision to accumulate a part of its total income as long as the legal requirements laid down in Sub-section (2) of Section 11 are fulfilled Apparently, according to the learned Commissioner, the requirements of Section 11(2) had been fulfilled and he, therefore, directed the Income-tax Officer to accept the assessee's plea for accumulation of part of its income in accordance with the provisions of Section 11(2) of the Act. From this background the revenue has projected before us grievance in the solitary ground that we have reproduced supra.
4. We have heard the parties and carefully considered the rival contentions. The order of the Income-tax Officer shows that the assessee had filed its return on 28th August, 1882 declaring a deficit of Rs. 34,167 and there was Form No. 6 filed by the assessee asking for extension of time beyond the original statutory limitation provided under Section 139(1) of the Act. The Income-tax Officer, in his impugned order, records that "the contention of the Trust that it has requested for extension of time by filing Form No. 6 is of no avail since it has not been able to produce any evidence to prove that the extension of time had, in fact, been allowed to it for filing the return of income". This observation of the Income-tax Officer is material in the context that Section 11(2) provides a right of accumulation to an assessee Trust on fulfilment of certain conditions. One of such conditions is that the assessee Trust applies in Form No. 10 for such accumulation along with the return. The Income-tax Officer observes that the return had been filed late along with Form No. 10. Therefore, the time allowed to the assessee for filing Form No. 10 under Subsection (1) of Section 139 had expired. Since he did not consider Form No. 6 for extension of time for filing the return Form No. 10 was considered as filed late for consideration of the plea of assessee for accumulation.
5. We find that the learned Commissioner of Income-tax (Appeals) has directed the Income-tax Officer to allow the benefit of accumulation to the assessee Trust of part of its income in accordance with the provisions of Section 11(2) of the Act. The grievance of the Revenue against this order is in the form of solitary ground taken up in this appeal before us." However, in our considered view the grievance of the Revenue is not at all justified.
6. The Income-tax Officer does not controvert the fact that the assessee had filed application in Form No. 6 for extension of time and the return filed by the assessee will be within time if the extension application was considered and time allowed. However, he threw the burden upon the assessee of not showing that time was allowed. This is against the settled position of law. The Hon'ble Supreme Court in the case of CIT v. Behari Lal Ram Charan Ltd. [1987] 165 ITR (St.) 352 has held that an officer cannot take advantage of his own failure. This observation of the Hon'ble Court was in the context of determination of carry forward of loss. However, in our considered opinion it applies with equal force to a position where the assessee has complied with the provisions of law and an order is required to be passed by the Income-tax Officer to give the necessary benefit of a provision. In this case before us the assessee had applied in Form No. 6 for extension of time. There is no dispute that the return was filed within the period for which the extension was sought. The Income-tax Officer has not passed an order on that application and, therefore, he cannot take advantage of his failure of not passing an order on that application for extension of time filed in Form No. 6. We have, therefore, to proceed on the assumption that when the return was filed by the assessee along with Form No. 10 for accumulation of part of the income Form No. 10 was in time on the facts stated above.
7. The Hon'ble Supreme Court in the case of CIT v. M. Chandra Sekhar [1985] 151 ITR 433 has held that when time is extended by the Income-tax Officer for furnishing the return it is done in the exercise of authority conferred by the statute and the additional time available to the assessee consequent upon such extension is "for all relevant purposes", of the same character and as effective as the statutory period specifically enacted by Parliament. We have shown (supra) that on the facts of the case the time for filing the return is to be taken up to the extended period for which the extension was sought in Form No. 6 by the assessee. Since the return was filed within the extended period so determined, we have to take that Form No. 10 filed by the assessee that was within time and was available for consideration for all intents and purposes under the Act.
8. It has been held by the Bombay High Court in the case of Lachman Chaturbhuj Java v. R.G. Nitsure [1981] 131 ITR 631 that in a tax proceedings it is not only right and proper but preeminently essential and imperative that the Department should intimate to the assessee its refusal to extend time without expecting the assessee to dance attendance on the Department by making enquiries whether the department proposes to grant the assessee's application or not. If the Department does not desire to grant the assessee's application for extension of time, it is the duty of the Department to inform the assessee, accordingly, well in advance so that the assessee is put on his guard that unless he files his return within the prescribed period, penal consequences are likely to follow. If the Department chooses not to reply to the assessee's application within the time applied for by the assessee, time is deemed to be extended as prayed for the assessee, and he would be justified in assuming that his application has been granted by the Department.
9. We have a judgment from the Hon'ble Punjab and Haryana High Court, which directly covers the issue before us. In the case of Harmanjit Trust v. CIT [1984] 148 ITR 214 (Punj. & Har.) the Court has held that it is plain from the proviso to Section 139(1) of the Act and Rule 13 of the IT Rules, 1962 that extension of time can be prayed for before or even after the expiry of the date fixed for filing the return. In relation to claiming exemption conceived of under Sub-section (2) of Section 11, Rule 17 prescribes that Form No. 10 be employed for the purpose which shall be delivered by the assessee to the Income-tax Officer before the expiry of the time allowed under Sub-section (1) or Sub-section (2) of Section 139, whether fixed originally or on extension, for furnishing the return of income and the text of Form No. 10 conforms to the time limit as set under Rule 17 to convey that before the expiry of the time originally fixed, or the time for which extension had been granted, the return of income shall be furnished by the assessee. In other words, if the assessee is a person who intends to claim benefit under Section 11 of the Act, he must do so before the time for filing the return runs out, whether fixed originally or on extension. For the purpose of construing Rule 17 the language of Rule 13 and the statutory Form No. 6 can neither be ignored nor isolated. If the date for furnishing the return of income can be extended for the purpose of Section 139 and be a legally extended date for furnishing the return of income, it logically follows that notice under Sub-section (2) of Section 17 read with Rule 17 to be given to the Income-tax Officer in Form No. 10 can also be delivered to him before the expiry of the time extended under Sub-section (1) or (2) of Section 139 for furnishing the return of income. The duty is cast on the Income-tax Officer to intimate to the assessee whether the request for extension of time for furnishing the return had been granted or refused. If there is no reply within a reasonable time from the Income-tax Officer, the assessee could presume that his request for extension of time had been granted. In view of what is stated above, it is abundantly clear that neither on facts nor on law the Revenue has any case for an interference in the order of the learned CIT (Appeals). The appeal of the Revenue is dismissed.
10. At the time of hearing the learned counsel for the assessee did not press the cross-objection for determination on merits. It is, therefore, dismissed as withdrawn.