Exemption us 11 can not be denied if not filled in Schedule-F when the verification clause of ITR-7 was duly filled – Allahabad High Court

Exemption us 11 can not be denied if not filled in Schedule-F when the verification clause of ITR-7 was duly filled – Allahabad High Court

ABCAUS Case Law Citation:
ABCAUS 1167 (2017) (03) HC

Question for determination:
Whether the finding of the Tribunal that Schedule-F to the return was not verified and consequently there was no claim of exemption made by the assessee, is perverse? 

Assessment Year : 2009-10

Brief Facts of the Case:
The appellant assessee filed ITR-7 for the assessment year 2009-10 claiming exemption under section 11 of the Income Tax Act, 1961 (‘the Act’). The claim for the exempt income was mentioned in Schedule-F to the return of income.

However, in the computation of Income Tax which was contained in Part-B of the said return, field no.24 had been left blank.

However, the Assessing Officer (AO), in the intimation issued u/s 143(1) did not grant benefit of exemption claimed by the assessee in Schedule-F of his return. The assessee filed a rectification application under Section 154 of the Act to claim the benefit of Section 11 as per Schedule-F of its return but the said application was rejected by the Assessing Officer.

The assessee filed the first appeal which was also dismissed by the CIT (Appeals) 

The appellant carried the matter to the Tribunal which recorded a finding that the claim made by the assessee could not have been allowed as the same was made in Schedule-F to the return which Schedule had not been verified and, therefore, according to the Tribunal there was no claim made by the assessee in accordance with law. Based on such finding, the Tribunal further concluded that the Assessing Officer did not commit any mistake apparent from record in not allowing the claim of exemption to the assessee while issuing acknowledgment under Section 143(1) of the Act. 

Observations made by the High Court:
The Hon’ble High Court observed that in the return filed by the assessee the verification clause was duly filled which was read as under:- 

“I, ……… son/daughter of …………….., holding permanent account number ………….  solemnly declare that to the best of my knowledge and belief, the information given in this return and the schedules statements, etc., accompanying it is correct and complete and that the amount of total income/fringe benefits and other particulars shown therein are truly stated and are in accordance with the provisions of the Income Tax Act, 1961, in respect of income/fringe benefits chargeable to income tax for the previous year relevant to the assessment year 2009-10. I further declare that I am making this return in the capacity as_________ and I am also competent to make this return and verify it.

The Court observed that the plain (emphasis supplied) reading of the verification showed that the assessee had specifically verified the contents of all schedules to the return to be true which necessarily included schedule-F to that return.

In view of the admitted fact that in the schedule-F to the return the claim made by the assessee under Section 11 was duly recorded, the Court opined that the finding of the Tribunal that the schedule was not verified and, therefore, there was no claim made by the assessee, was patently perverse. 

Held:
The matter was remitted back to the ITAT to decide the appeal afresh in accordance with law.