S. H. Kapadia, J.@mdashBoth the above Appeals raise a common question of law. Hence, they are disposed of by this common judgment.
2. The question of taw, as refrained, is as follows :
"Whether the assessees - Charitable Trusts, whose income is exempted u/s 10(22) was required to file their returns u/s 139(4A) and, therefore, penalty u/s 272A(2)(e) was warranted."
Facts in Income Tax Appeal No. 574 of 2000 :-
3. In this Appeal we are concerned with the Assessment Years 1991-92 and 1992-93. Respondent is a Trust. The Respondent is an Educational Institution. It is running a School. The assessee was required to file its return of income on 31.10.1991. It was filed only on 11.3.1993. Therefore, penalty proceedings u/s 272A were initiated. There was a default in filing the return of 495 days. Therefore, the A.O. Imposed penalty. Being aggrieved, the assessee carried the matter in Appeal to the First Appellate Authority, who came to the conclusion that the assessee was Charitable Trust, which were required to file return of Income only if its income, without giving effect to section 11 and section 12, exceeded the maximum amount which is not chargeable to tax under the Income Tax Act and. since, the assessee was running a School and, since all its income was applied for education, provision of section 139(4A) was not applicable and, therefore, the penalty was cancelled. Being aggrieved by the Order of the A.O.. the matter was carried in Appeal by the Department before the Tribunal, which confirmed the view of the First Appellate Authority and dismissed the Appeal of the Department. Being aggrieved by the Order, the Department has come in Appeal to this Court u/s 260A of the Income Tax Act.
4. The Respondent-assessee have chosen to remain absent though served.
Findings :-
5. In the present matters, we are concerned with the interpretation of section 139(4A) as it stood at the relevant time. The said section is quoted hereinbelow :
"139(4A). Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total Income for this purpose being computed under this Act without giving effect to the provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to income tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1)."
6. In the present matter, it is not in dispute that the income of the assessees is exempt u/s 10(22) of the Act. Further, the present matter is in respect of Assessment Years 1991-92 and 1992-93. u/s 139(4A), every person in receipt of income derived from property held under trust or held under some legal obligation for charitable or religious purposes is required to furnish a return of income if its total income, ignoring exemptions u/s 11 and section 12 of the Act, exceeds the maximum amount not chargeable to income Tax. In other words, section 139(4A) deals with filing of returns by Charitable or Religious Trust or Institution, whose income was exempt u/s 11 and section 12 of the Act. The Tribunal has come to the conclusion that since the income of the assessee was exempt u/s 10(22) and. since, section 10 is not referred to in section 139(4A), and, since, section 11 and section 12 alone have been referred to in the said section 139(4A), the assessee - Trust was not bound to file the returns u/s 139(4A). We do not agree with the view expressed by the Tribunal. Section 139[4A) enjoins upon every person who is in receipt of income derived from property held under trust for charitable or religious purposes to file a return if the total income in respect of which he is assessable exceeds the maximum amount which is not chargeable to Income Tax. The total income for this purpose is to be computed without giving effect to the provisions of section 11 and section 12 of the Act. Once the concept of total income which is required to be computed under the Act is kept in mind then, the assessee will have to file return indicating the manner in which he has computed the total income Even if a Trust or an Institution claims that its income is exempt from tax u/s 11 and section 12 of the Act. it is required to file a return because the assessee''s claim for exemption could be decided by the Department only after the relevant material is placed before the Department by the filing of the assessee''s return. Therefore, if an assessee who claims exemption u/s 11 and section 12 is required to file the return, as stated above, then we do not see any reason as to why an assessee who claims exemption of income u/s 10(22) should not file the return because, ultimately, the assessee''s claim for exemption has to be decided by the Department only after the relevant material is placed before it by filing the returns. In the case of Aditanar Educational Institution v. Addl. C.J.T., it has been held that availability of exemption u/s 10(22) of the Act should be evaluated each year in order to find out whether the institution existed during the relevant period solely for educational purposes and not for profit purposes and in such evaluation one should bear in mind the distinction between the purpose, the object and the powers of the concerned entity. Therefore, it is clearly laid down by the judgment of the Supreme Court that evaluation is warranted each year and for that purposes the return is required to be filed by the assessee even if the assessee claims exemption of income tax u/s 10(22) of the Act. It is correct to say that section 10(22) refers to income of educational institution which do not form part of the total income. However, reading of section 10(22) as a whole, it is clear that in order to avail the said exemption, the Trust should have existed during the relevant period solely for educational purposes and not for purposes of profit and in order to enable the A.O. to ascertain whether the assessee existed solely for educational purposes and not for profit purposes, the return was required to be filed because in the absence of the return, it was not possible for the A.O. to evaluate the exemption as laid down by the aforestated judgment of the Supreme Court, reported in 224 ITR 311.
7. Accordingly, the above question is answered in the affirmative i.e. in favour of the Department and against the assessee.
8. Accordingly, both the Appeals are disposed of. No order as to costs.
