ORDER
B.M. Biyani, Accountant Member. – Feeling aggrieved by order of first appeal dated 06.03.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 30.12.2019 passed by learned ITO-1, Harda [“AO”] u/s 144 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on following grounds:
“1. On the facts and circumstances and in law the Ld. CIT(A) erred in conforming the addition made of Rs. 59,02,063/-.
2. On the facts and circumstances and in law the Ld. CIT(A) erred in not considering that the society is an education institution duly approved under section 10(23C)(vi) of the Income Tax Act for AY 2017-18 which was approved beyond the due date of filing of income tax return u/s 139(4C) and also erred in conforming the addition for the reason that the assessee society has not filed the return of income. He failed to appreciate that the provisions of granting exemption u/s 10(23C)(vi) are beneficial provisions and have to be interpreted in favour of the assessee society.
3. On the facts and circumstances and in law, the Ld. CIT(A) erred in relying the case law which was related to the claiming of deduction u/s 80P of the Act and erred in properly appreciating the legal position that claiming of deduction u/s 80P is not identical as to the exemption u/s 10 of the Act.
4. On the facts and circumstances and in law the Ld. CIT(A) failed to see that even the Ld. AO has not adjusted the Deficit of Harda Nagar Bal Vikas Samiti and only assessed the surplus generated by both the school institutions. He also dismissed the ground relating to the charging of tax u/s 115BBE on the addition without considering that the addition was not under section 69A or 69C. “
2. The precise facts of present appeal, as culled out from assessmentorder and as per submissions made by Ld. AR for assessee, are such that the assessee-society named as “Harda Nagar Bal Vikash Samiti Harda” is engaged in educational activity by running two educational institutions (schools) in the names of “Saraswati Vidhya Mandir” and “Saraswati Shishu Mandir” which are affiliated to M.P. Board of Education. Uptill AY 2016-17, the assessee’s income was fully exempted u/s 10(23C)(iiiad) as the annual receipts of educational institutions did not exceed the prescribed eligibility limit of Rs. 1 crore. However, for AY 2017-18, the annual receipts of educational institutions exceeded the eligibility limit of Rs. 1 crore; the data of annual receipts and profit/surplus generated therefrom are as under:
| Name | Annual Receipts | Net Profit |
| Saraswati Vidhya Mandir (Educational institution) | 1,36,05,544 | 30,44,864 |
| Saraswati Shishu Mandir (Educational institution) | 1,00,34,192 | 27,19,994 |
| Harda Nagar Bal Vikash Samiti (Society) | – | (15,17,865) |
| Total | 2,36,39,736 | 42,46,993 |
Since the annual receipts exceeded the eligibility limit, the assessee ceased to be eligible for exemption u/s 10(23C)(iiiad) from AY 2017-18. Therefore, the assessee filed an application to CIT(Exemption), Bhopal [“CIT(E)”] for grant of approval for exemption u/s 10(23C)(vi). Such application was admittedly filed on 18.08.2017 i.e. well before 30.09.2017 being the due date by which the assessee was required to file return of income u/s 139(4C) read with section 139(1). The CIT(E) passed Order No. ITBA/EXM/S/EXM11/2018-19/1011025904(1) dated 10.08.2018 granting approval u/s 10(23C)(vi) from AY 2017-18 (Copy at Page 16-17 of PaperBook). Based on such approval, the assessee became eligible for exemption u/s 10(23C)(vi) from AY 2017-18 under consideration.
3. While the application of assessee dated 18.08.2017 for approval u/s 10(23C)(vi) was pending before CIT(E), the AO, on the basis of information available in ITBA AIMS Module regarding cash deposits of Rs. 21,49,200/-made by assessee in bank a/cs during demonetization period and on finding that the assessee has not filed any return of AY 2017-18, issued a notice dated 27.12.2017 u/s 142(1)(i) requiring the assessee to file return of income of AY 2017-18. However, the assessee did not file any return. Then, the AO took assessee’s case for assessment u/s 144. During proceedings, the assessee filed a written-reply dated 24.06.2019 alongwith certain documents, which is acknowledged by AO. The assessee also filed a copy of aforesaid Order dated 10.08.2018 passed by CIT(E) giving approval for exemption u/s 10(23C)(vi) and requested the AO to allow exemption. After considering assessee’s submissions and documents, the AO, however, computed total income at Rs. 59,02,063/- as under without giving exemption requested by assessee:
| Return income (not filed) | Rs. Nil |
| Additions:- | |
SARASWATI VIDYA MANDIR:
Net surplus as per Income & Expenditure account
Expenditure disallowed – Donation | Rs. 30,44,864/-
Rs. 1,33,500/- |
SARASWATI SHISHU MANDIR:
Net surplus as per Income & Expenditure account
Expenditure disallowed – Donation | Rs. 27,19,994/-
Rs. 3,705/- |
| Total assessed income | Rs. 59,02,063/- |
4. Aggrieved, the assessee carried matter in first-appeal before CIT(A) but did not get any success. Now, the assessee has come in next appeal before us.
5. We have heard learned Representatives of both sides and considered their submissions and also perused the case-record.
6. Ld. AR for assessee submitted that the assessee’s main grievance in present case is such that the lower-authorities are wrong in not granting exemption u/s 10(23C)(vi) despite assessee’s eligibility as per approval granted by CIT(E). Ld. AR submitted that although the lower-authorities do not have any dispute against the approval granted by CIT(E) but they have denied exemption for the sole reason that the assessee has not filed its return of income in accordance with section 139(4C) for AY 2017-18 under consideration.
7. In this regard, Ld. AR made two-fold contentions. Firstly, he explained facts of case and justified the non-filing of return by assessee. He submitted that the assessee filed application to CIT(E) on 18.08.2017 much before 30.09.2017 [being the due for filing of return u/s 139(4C) r.w.s. 139(1)] but since the application was not disposed of by CIT(E) until 30.09.2017, the assessee did not file income-tax return because the statutory form of return required filling of details of CIT(E)’s order granting approval u/s 10(23)(vi) and if the assessee would have filed return without giving those details, the income of assessee would have been taxed by department at a very high figure without giving benefit of exemption u/s 10(23C)(vi). Therefore, the assessee was compelled to adopt a safer course and wait for order of CIT(E). Ultimately, the CIT(E) passed Order on 10.08.2018 granting approval to assessee but by then, the time-limit for filing of return u/s 139(1) or even belated return u/s 139(4) had already expired [according to Ld. AR, the last date for filing belated return u/s 139(4) was 30.03.2018] and the assessee had no way to file return. Therefore, in this peculiar situation, the assessee was unable to file return although the assessee was very much eligible to claim exemption u/s 10(23C)(vi) as approved by CIT(E)’s order.
7.1 Ld. AR submitted that the assessee, however, filed a copy of CIT(E)’s order to AO while the AO was carrying out assessment-proceedings and requested the AO to allow exemption u/s 10(23C)(vi) as approved by order of CIT(E). When it is so, the AO must have allowed exemption to assessee while assessing total income. Ld. AR relied upon CBDT Circular No. 14(XL-35) dated 11.04.1955 wherein the CBDT has given following instructions to assessing authorities:
“3. Officers of the Department must not take advantage of ignorance of on assessee as to his rights. It is one of their duties to assist a taxpayer in event reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate in some refund or relief is due to him. This attitude would in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed Ly law, officer’s should-
(a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other;
(b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs.”
7.2 Ld. AR relied upon a decision of ITAT, Indore in Akshay Academy v. ITO (Indore – Trib.) wherein the assessee filed return of income claiming exemption u/s 10(23C)(iiiad) and during assessment-proceedings, the assessee informed AO that the exemption u/s 10(23C)(iiiad) was wrongly made and further pointed out that it had been granted registration u/s 12AA with effect from relevant assessment-year and consequently made a new claim u/s 11 and 12. The AO denied assessee’s claim on the ground that the assessee has not filed revised return for making a new claim. On appeal, the ITAT agreed that the registration u/s 12AA was granted during pendency of assessment proceedings and in such circumstance, the assessee was not supposed to make any claim of exemption u/s 11/12 in original return and the limitation for filing revised return had also expired by the time the registration u/s 12AA was granted. On these facts, the ITAT allowed assessee’s claim u/s 11/12.
8. Secondly, Ld. AR explained the legal position of various provisions of Income-tax Act, 1961. He submitted that it is true that the section 139(4C) obligates an assessee claiming exemption u/s 10(23C) to file return by due date u/s 139(1) but non-compliance of section 139(4C) i.e. non-filing of return does not disentitle assessee from claiming exemption u/s 10(23C)(vi) in AY 2017-18 under consideration. He submitted that the Parliament has subsequently amended section 10(23C) by introducing 20th proviso thereto, reading as under, through Finance Act, 2022 from AY 2023-24 and further amending such Proviso through Finance Act, 2023 from AY 2024-25 as under:
Finance Act, 2022:
“Provided also that the fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall furnish the return of income for the previous year in accordance with the provisions of sub-section (4C) of section 139 within the time allowed under that section. “
Finance Act, 2023:
“Provided also that the fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall furnish the return of income for the previous year in accordance with the provisions of sub-section (4C) of section 139 within the time allowed under subsection (1) or sub-section (4) of that section.”
Ld. AR submitted it is after introduction of the 20th Proviso to section 10(23C), as noted above, that the assessees have been made dis-entitled from claiming exemption u/s 10(23C) from AY 2022-23 for non-filing of return u/s 139(4C). But there was no provision, prior to AY 2022-23, denying exemption to assessee in such cases. Therefore, the lower-authorities are clearly wrong in denying exemption to assessee on the premise of non-filing of return.
9. Having explained thus, Ld. AR also drew us to Para 6.3.2 of impugned order passed by Ld. CIT(A), reading as under:
“6.3.2 In this connection the decision rendered by the Hon’ble ITAT Bangalaore in the case of Madhu Souharda Pathina ITA No.969/Bang/2023 forA.Y. 2017-18 dated 02.01.2024 is reproduced hereunder:
“9. It is clear from the above section that for claiming deduction under Chapter VIA under the head, “Deductions to be made in computing total income”, which covers section 80P also, the assessee has to file return of income. However, the assessee did not file return of income at all and therefore the assessee is not eligible for deduction u/s. 80P of the Act. The Hon’ble Kerala High Court in the case of Nileshwar Rangekallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. CIT(Kerala) has held as under-
11. On a consideration of the rival submissions and on a perusal of the statutory provisions, we find that a reading of section 80A(5) and Section 80AC of the IT Act as they stood prior to 1-4-2018, when the latter provision was amended by Finance Act 2018, would reveal that the statutory scheme under the IT Act was to admit only such claims for deduction under section 80P of the IT Act as were made by the assessee in a return of income filed by him. That return can be under sections 139(1), 139(4), 142(1) or section 148, and to be valid, had to be filed within the due date contemplated under those provisions. Under section 80A(5), the claim for deduction under section 80P could be made by an assessee in a return filed within the time prescribed for filing such returns under any of the above provisions. The amendment to Section 80AC with effect from 1-4-2018, however, mandated that for an assessee to get a deduction under section 80P of the IT Act, he had to furnish a return of his income for such assessment year on or before the due date specified in section 139(1) of the IT Act. In other words, after 1 -4-2018, even if the assessee makes his claim for deduction under section 80P in a return filed within time under sections 139(4), 142(1) or section 148, he will not be allowed the deduction, unless the return in question was filed within the due date prescribed under section 139(1). Thus, it is clear that the statutory scheme permits the allowance of a deduction under section 80P of the IT Act only if it is made in a return recognised as such under the IT Act, and after 1 -4-2018, only if that return is one filed within the time prescribed under section 139(1) of the Act. As the return in these cases, for the assessment years 2009-10 and 2010-11, were admittedly filed after the dates prescribed under sections 139(1) and 139(4) or in the notices issued under section 142(1) and section 148, the returns were indeed non-est and could not have been acted upon by the Assessing Officer even though they were filed before the completion of the assessment.
12. There is yet another aspect of the matter. The requirement of making the claim for deduction in a return of income filed by the assessee can be seen as a statutory pre-condition for claiming the benefit of deduction under the IT Act. It is trite that a provision for deduction or exemption under a taxing Statute has to be strictly construed against the assessee and in favour of the Revenue. Thus viewed, a failure on the part of an assessee to comply with the pre-condition for obtaining the deduction cannot be condoned either by the statutory authorities or by the courts.
Though the decision is rendered in respect of claim of deduction u/s 80P of the Act the case law is squarely applicable to the facts of the case, wherein also no return of income has been filed but requested to allow exemption u/s 10(23C)(vi). In view of the discussion made above and the decision rendered by the Hon’ble Kerala High Court duly relied by the Hon’ble ITAT Bangalore the disallowance made by the AO is upheld. This is not a issue of advantage taken by AO of ignorance of appella appellant, therefore the stand of the appellant has no merits. Ground no.1 of appeal is dismissed.”
Ld. AR submitted that the CIT(A) has made a wrong adjudication by relying upon decision of ITAT, Bangalore. He submitted that the said decision dealt a case of deduction u/s 80P whereas the present case of assessee concerns with exemption u/s 10(23C)(vi). He submitted that the law of section 80P is not at parity with the law governing exemption u/s 10(23C)(vi).
10. With above submissions, Ld. AR prayed that the AO should be directed to grant exemption u/s 10(23C)(vi) available to assessee. Further, the AO should also be directed to take care of following points while computing total income and tax liability of assessee:
| (i) | | The AO has not considered deficiency of Rs. 15,17,865/- suffered by society. This deficiency had been suffered on account of revenue expenses incurred by society for its activities. Therefore, the AO needs to consider this deficiency. |
| (ii) | | The AO has disallowed donations of Rs. 1,33,500/- and Rs. 3,705/- in assessment-order. These disallowances are acceptable to assessee. |
| (iii) | | The AO has invoked taxing section 115BBE for calculation of tax liability which is not applicable even if there remains any total income after re-computation. |
11. Per contra, Ld. DR for revenue made following submissions:
| (i) | | The provision of section 139(4C) obligating the assessee to file return is a mandatory provision, hence the assessee must have filed return in terms of section 139(4C). |
| (ii) | | In Akshay Academy (supra), the return of income was filed by assessee. But in present case, the assessee did not file any return at all. Therefore, the said decision is not helpful to assessee. |
| (iii) | | In aforesaid Order dated 10.08.2018, the CIT(E) has given approval u/s 10(23)(vi) to assessee with the condition that the assessee shall file return [Condition No. (V)-6 & 7]. Therefore, when the assessee has not complied with condition imposed, the approval has no use. |
| (iv) | | The Hon’ble Supreme Court has held in Pr. CIT v. Wipro Ltd. ITR 1 (SC) that the mandatory condition of law has to be complied with. |
12. In rejoinder, Ld. AR submitted that the condition imposed in CIT(E)’s order requiring the assessee to file return may be treated in tune with section 139(4C) but such condition mentioned by CIT(E) cannot deny exemption when there was no provision in Income-tax Act, not even in section 139(4C) or 10(23C), prescribing denial of exemption for non-filing of return. He re-iterated that the 20th Proviso to section 10(23C) was introduced subsequently from AY 2023-24 which was not applicable to AY 2017-18 under consideration. Without prejudice, Ld. AR also submitted that the CIT(E) passed his order on 10.08.2018 and the condition imposed by him, even if any credence to be given, shall have prospective application only. In the case of assessee, there was no way of filing return on or after 10.08.2018 for AY 2017-18, therefore it is impossible to satisfy the condition imposed by CIT(E). Alternatively, Ld. AR submitted that the assessee has no problem at all in filing a physical return to AO if the bench directs so or the AO desires so.
13. We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. The core dispute in present case relates to the allowability of exemption u/s 10(23C)(vi). Admittedly, the assessee is having requisite approval granted by CIT(E) vide order dated 10.08.2018 for AY 2017-18 under consideration. The only reason for denial of exemption advanced by lower-authorities is that the assessee has not filed return of income in terms of section 139(4C). It is a fact that the assessee has not filed any return of income to Income-tax Department for AY 2017-18 under consideration. But the Ld. AR for asseassee has given a detailed justification as to why the assessee did not and could not file return. Ld. AR has submitted that the assessee’s application filed to CIT(A) for grant of approval for exemption u/s 10(23C)(vi) was filed on 18.08.2017 before 30.09.2017 which was the due date for filing of return u/s 139(1) and such application was pending at the level of CIT(E) on 30.09.2017 rendering it difficult for the assessee to file return by due date. Thereafter, the CIT(E) disposed of assessee’s application on 10.08.2018 but by that time, the time-limit for filing even belated return u/s 139(4) also expired. Ld. AR has submitted that the assessee has no problem at all in filing physical return to AO, if the bench directs or the AO desires. The facts shown by Ld. AR do not lack bona fides and it cannot be said that the assessee has deliberately or for some ulterior purpose or for some mala fide purpose, did not file return. More importantly, we also find on a consideration of legal provisions of Income-tax Act that there is no authority to deny exemption u/s 10(23C)(vi) to assessee for the reason of non-filing of return. Ld. AR has successfully shown that the 20th Proviso to section 10(23C) denying exemption for non-filing of return u/s 139(4C) came into statute from AY 2023-24 only and prior to that there was no such provision. We may gainfully refer certain judicial rulings holding so in the context of similar scheme of section 11/12 where the assessee was required to file return u/s 139(4A) but the provision disentitling exemption for non-filing of return was brought in section 12A(a)(ba) by Finance Act, 2017 from AY 2018-19. These ruling are:
| (i) | | ITAT, Delhi in United Educational Society v. Jt. CIT ITA No. 2733, 2734/Del/2018: |
“1 9. We have heard the rival submissions and perused the relevant findings given in the impugned order. The core issues here is, whether the computation of income of the assessee society should be in accordance with section 11 or not; and whether, the filing of audit report alongwith the return filed in response to notice u/s 148 will entitle the assessee for benefit of computation of section 11. The AO has denied to compute the income in accordance with the provisions of section 11 of the Act on the reasoning that assessee has not filed the return under section 139 (4A) reads with section 12A (b) of the Act. Thus, what we have to adjudicate is, whether assessing officer was right in not applying the provisions of section 11 while computing income of the assessee. It is an admitted fact that the assessee is a society, who has been granted registration under section 12A of the Act by CIT looking to its objects of charitable purpose, i.e., it is engaged in imparting education and running various educational institutions. Thus, the registration u/s 12A is fait accompli and consequently the computation of income has to be in accordance with sections 11 to 13 of the Act. The assessee society had not filed its return of income and it was only in response to notice issued by the Assessing Officer under section 148, the assessee has filed its return of income alongwith the audited Balance Sheet and Profit & Loss Account. Now, whether the income of the assessee society is to be computed in accordance with the provisions of section 11 of the Act, as it has not filed the return as required under section 139(4A) of the Act, but has filed return in response to notice under section 148.
20. Section 139 falls under Chapter XIV-‘Procedure for assessment’ which provides procedures and conditions for filing of return of income. Section 139(1) mandates every person having income exceeding the maximum amount not chargeable to tax to file return of income. Similarly, section 139(1) (4A) mandates that every person in receipt of income derived from property held under trust, i.e., charitable trust, etc., to file its return of income in case its total income exceeds the maximum amount not chargeable to tax without giving effect to the provisions of section 11 & 12 of the Act. In case of failure to file such return of income under this section 139, penalty has been prescribed. In case of failure to file return by any person under section 139(1) penalty has been prescribed under section 271F. Similarly, in case of failure to file return by charitable society under section 139 (4A) penalty has been prescribed under section 272A (2)(e). On a plain reading of the relevant provisions, in our opinion, failure to file the return under section 139(4A) cannot be interpreted to mean that income cannot to be computed in the case of a charitable trust under section 11 of the Act. During the relevant assessment years impugned in these appeals, there is no such provision in the Act that in case return is not filed by charitable society under section 139(4A), then its income cannot to be computed in accordance with the provision of the Act.
XXX
25. Our above view gets further supported from the amendment made by the Finance Act, 2017 whereby a further clause (ba) has been inserted imposing a further condition that such return of income is to be furnished in terms of section 139(4A), within the time allowed under that section. Firstly, this requirement was not there before this amendment; and secondly, this insertion of additional clause clearly shows that such condition was not there in existing clause (b) of section 12A. Had such condition being there in clause (b) itself, then there was no need to insert a further clause (ba) by the Legislature for denying benefit ofsection 11 & 12 in case return is not filed in time as per provision of section 139 (4A) of the Act. It is relevant to note that clause (b) has not been amended, but a new clause (ba) which has been inserted to put a further condition w.e.f 1.04.2018, which was not there for the assessment years under consideration. It is also important to note that this condition of furnishing the return within the time allowed under section 139(4A) has been made applicable from A.Y. 2018-19 as has been specifically stated in the Finance Act, 2017 and not for the A.Y. under consideration.
We are also not in agreement with the contention of the Ld. DR that this amendment is clarificatory in nature. As rightly pointed out by the Ld. Counsel that this amendment has been made by the Finance Act, 2017 effective from A.Y. 2018-19, meaning thereby that this clause has not been made applicable even for the A.Y. 2017-18, the return of which were still to be filed. Thus, the Legislature has thought fit to make this amendment applicable from next assessment years onwards and not even to the current A. Y. 2017-18. ”
[Emphsis supplied]
| (ii) | | ITAT, Hydrabad in Anjuman E Khadimul Muslimeen Refah-E Aam v. Dy. CIT |
“1. We have heard the rival contentions, perused the material available on record and gone through the order of the Ld. First Appellate Authority. The revenue authorities did not allowed the exemption claimed u/s 11 of the Act of Rs.82,83,576/- contending that the assessee had not filed the ROI and form 10B within the due date specified under the Act and finally raised a demand of Rs.34,47,810/-. As far as the delay in filing of form no. 10B is concerned the Ld. CIT(E) has condoned the delay of filing of form 10B vide his order dated 06.08.2024. Therefore, in our considered opinion, on this issue there should not be any denial of exemption u/s 11 of the Act. However, with regards to delay in filing of ROI, section 12A(1)(ba) of the Act stipulates that to claim exemption u/s 11 of the Act, the return must be filed in accordance with the provisions of section 139(4A). However section 12A(1)(ba) have been inserted w.e.f. 01.04.2018 I.e. applicable w.e.f. A.Y.2018-19 only and hence the same is not applicable to the year under consideration. Therefore, in our considered view, due to delay in filing of ROI for the year under consideration also, there cannot be any denial of exemption u/s 11 of the Act. Hence, we are of the considered opinion that the assessee is eligible for exemption u/s 11 of the Act for the year under consideration and we direct the revenue authorities to allowed the exemption u/s 11 of the Act for the year under consideration to the assessee. Accordingly, we allowed the appeal of the assessee.”
[Emphsis supplied]
14. We also refer a recent decision dated 01.10.2024 of ITAT, Kolkata in Haringhata Mahavidyalay v. ITO [IT Appeal No. 11 (Kol.) of 2024, dated 1-10-2024], which is a case for exemption u/s 10(23C)(iiiad) but equally applicable to section 10(23C)(vi) because the legal provisions of section 139(4C) and 10(23C) are same. In this case, the Hon’ble Kolkata Bench held as under:
” 2. The first issue involved in this appeal is as to whether the exemption u/s 10(23C)(iiiab) of the Act can be denied to the assessee trust for late filing of the income tax return i.e. beyond time specified u/s 139(1) of the Act and secondly, if the return is required to be mandatorily filed then whether, the filing of the return u/s. 139(4D) instead of section 139(4C) of the Act disentitles the assessee from claiming the exemption u/s. 10(23C)(iiiab) of the Act.
3. The Ld. Counsel for the assessee has contended that there is no provision under the Income Tax Act vide which the exemption u/s. 10(23C)(iiiab) of the Act can be denied to an assessee for non-filing or late filing of the income tax return as required u/s. 139 of the Act and within the period specified u/s 139(1) of the Act.
4. The Ld. DR could not point out any relevant provision or section under the Income Tax Act which disentitles the assessee from claiming exemption u/s. 10(23C)(iiiab) of the Act for non-filing/late filing of the income tax return. Therefore, the action of the lower authorities in denying the exemption to the assessee on this ground is not sustainable.
5. The second issue as to whether the filing of the return in wrong form i.e. Form u/s 139(4D) instead of Form u/s. 139(4C) becomes irrelevant.
In view of the above stated legal position the action of the lower authorities in denying exemption to the assessee cannot be held to be justified. The impugned order of the Ld. CIT(A) is set aside and the Ld. AO is directed to grant exemption to the assessee as claimed u/s. 10(23C)(iiiab) of the Act.
6. In the result, the appeal of the assessee stands allowed. “
15. From the judicial decisions discussed above, we can safely conclude that the amendment in section 10(23C) by way of insertion of 20th proviso prescribing dis-entitlement of exemption u/s 10(23C)(vi) for non-filing of return, is applicable from AY 2023-24 and the same was not applicable to AY 2017-18 under consideration. Therefore, in present case, the lower-authorities are wrong in denying exemption to assessee on the premise of non-filing of return. Needless to mention that the assessee has also filed justification for non-filing of return and the assessee’s justification could not be controverted by department. Therefore, the condition imposed by Ld. CIT(E) for filing of return, as relied by Ld. DR, cannot be said to be acceptable for AY 2017-18 with which are concerned in present appeal. So far as reliance of Ld. DR for revenue on the decision of Hon’ble Supreme Court in Wipro Ltd. (supra) is concerned, that decision is not applicable in present case for the reasons that (i) the said decision involved deduction u/s section 10B whereas the present-appeal is concerned with exemption u/s 10(23C)(vi) and (ii) the said decision involved interpretation of sub-section (8) of section 10B which is a negative provision i.e. it provides that if the assessee did not want to apply section 10B, then the assessee had to file a declaration but this is not a case in section 10(23C)(vi).
16. In view of above discussions, we hold that the assessee is eligble for exemption u/s 10(23C)(vi) as per approval granted by CIT(E) vide order dated 10.08.2018 for AY 2017-18 under consideration. Accordingly, we direct the AO to allow exemption u/s 10(23C)(vi) after necessary verification as he may consider appropriate. We further direct the AO to consider the deficiency of Rs. 15,17,865/- suffered by assessee-society by incurring expenses; to consider the disallowance of donations of Rs. 1,33,500/- and Rs. 3,705/- made in original assessment-order as agreed by Ld. AR and also not to apply section 115BBE which is not applicable to any taxable income as may be arrived at.
17. Resultantly, this appeal is allowed for statistical purposes in terms mentioned above.