SHRI OMKARESHWAR DEVASTHAN,PUNE vs. ITO EXEMPTION WARD 1(2), PUNE, PUNE

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ITA 2061/PUN/2026Status: DisposedITAT Pune22 July 2026AY 2019-205 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CPC, under Section 143(1), has limited powers to make adjustments and cannot disallow exemption claims when the assessee has valid registration. The denial of exemption by the CPC was found to be outside the purview of Section 143(1).

What were the facts?

The assessee, a trust registered under Section 12A, filed its return of income claiming exemption under Section 11. The CPC processed the return under Section 143(1) and denied the exemption, taxing the entire receipts. The assessee argued that the CPC lacked jurisdiction to disallow exemption once valid registration was granted.

What were the issues?

Whether the CPC has the jurisdiction to deny exemption under Section 11 during the processing of a return under Section 143(1) when the assessee holds a valid registration under Section 12A.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI PAVAN KUMAR GADALE & SHRI Dr. DIPAK P. RIPOTE

For Appellant: Shri Suhas Kulkarni
For Respondent: Shri Chaitanya P. Medshikar, JCIT

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the order of the Learned Additional/Joint Commissioner of Income Tax (Appeals)-2, Bengaluru [Ld. Addl./JCIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2019-20 on 17.02.2026.

Submission of Ld. AR:

2.

The Ld. AR filed factual and case laws paper book. The Ld. AR submitted that the assessee is a trust duly approved u/s 12A of the Act on 22.06.2019 by the Ld. CIT(Exemption). A copy of the approval is at pages 3-5 of the paper book. The Ld. AR submitted that the assessee filed return of income on 22.10.2019 for AY 2019-20. The said return of income was processed u/s 143(1) of the Act. The Centralized Processing Center (CPC) has denied the assessee’s claim for exemption u/s

ITA No. 2061/PUN/2026 11 of the Act and taxed entire receipts. The Ld. AR submitted that only the profit can be taxed and not the entire receipts. During the year, there was loss. Therefore, CPC has grossly erred. The Ld. AR further submitted that the CPC do not have any jurisdiction to disallow the assessee’s claim for exemption once the assessee has valid registration certificate u/s 12A of the Act for the relevant year. The assessee had received registration u/s 12A of the Act on 22.06.2019 from the Ld. CIT(Exemption). Therefore, once the trust was registered u/s 12AA of the Act, the CPC has no jurisdiction to disallow the assessee’s claim of exemption. The Ld. AR relied on the following case laws : i. Institute of Hotel Management Catering Technology and Applied Nutrition in ITA No. 233/PAT/2025; ii. Shri Krishnabai Ghat TGrust Vs. ITO in ITA No. 44/PUN/2029, order dated 03.05.2019; iii. Adhar Projects Welfare Society in ITA No. 2677/PUN/2024; iv. St. Johns Marthoma Syrian Church in ITA No. 2625/Mum/2026; v. Tripura Bambu and Cane Development Centre in ITA No. 2380/Del/2025; vi. Namdeo Shimpi Samaj Mandir in ITA No. 2384/PUN/2025; vii. Serum Institute of India Research Foundation, 90 taxmann.com 229; viii. Financial Inclusion Trust, (2023) 156 taxmann.com 415 (Delhi-Trib.) and ix. Pune Cantonment Board Kamgar Cooperative Credit Society Vs. ITO in ITA No. 2481/PUN/2024, order dated 14.11.2025.

ITA No. 2061/PUN/2026

Submission of Ld. DR

3.

The Ld. DR relied on the order of the Assessing Officer (AO) and the Ld. CIT(Exemption).

Findings & Analysis :

4.

We have heard both the parties and perused the records. In this case, the CPC vide its order dated 13.07.2020 for AY 2019-20 has denied assessee’s benefit of exemption u/s 11 of the Act. The reason mentioned by the CPC at page No. 8 of the order of CPC is as under :

4.1 Thus, the CPC has said in the order that there was changes in the objects of the assessee, hence, the assessee should have filed fresh application for registration.

5.

Even otherwise as per section 143(1) of the Act only limited adjustments are possible. The relevant part of section 143(1) of the Act is reproduced here as under : “(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, - (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return;

ITA No. 2061/PUN/2026

(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure [or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under [section 10AA or under any of the provisions of Chapter VI-A under the heading "C.—Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode:” 5.1 Thus, as per provisions of section 143(1) of the Act, the CPC is authorized to make adjustments only when there is an arithmetical error. Admittedly, there is no arithmetical error. Only when there is incorrect claim which is apparent from record. We could not understand how the CPC can state there are changes in the objects without verifying the entire trust deed. Therefore, it cannot be presumed without verifying the entire trust deed that there were changes in the objects. Thus, section 143(1)(a)(ii) is not applicable in the case of the assessee as the information is not apparent from the record. All other clauses will not be applicable. In these facts and circumstances of the case, when the assessee was having registration u/s 12AA of the Act issued by the Ld. CIT(Exemption), Pune on 22.06.2019, the CPC had no jurisdiction to disallow assessee’s claim for exemption u/s 11 of the Act. Most important fact is that even subsequently Revenue has granted registration to the assessee u/s 12A vide order dated 20.06.2024. It is not the case of the Revenue that subsequently Revenue has issued any notice u/s 143(2) for AY 2019-20 to verify the trust deed. In these facts and circumstances of the case, disallowance of

ITA No. 2061/PUN/2026

exemption claimed by the assessee u/s 11 of the Act by the CPC is outside the purview of section 143(1) of the Act for reasons discussed above. Accordingly, we direct the AO to allow assessee’s claim of exemption u/s 11 of the Act.

6.

Even otherwise only the profit can be taxed. In this case, it is evident from the return of income filed by the assessee that there was loss. Therefore, the CPC had no jurisdiction to tax the entire receipts even for this reason order u/s 143(1) of the Act of CPC is not maintainable.

7.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on 22nd July, 2026

Sd/- Sd/- (PAVAN KUMAR GADALE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 22-07-2026 Ravi Kumar आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr. CIT, Pune 4. DR, ITAT, ‘SMC’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण,पुणे / ITAT, Pune

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