MOHINIDEVI CHUNILAL SOMANI ABMM EDUCATIONAL FOUNDATION,KOLKATA vs. D.C.I.T., CIRCLE - 1(1), KOLKATA

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ITA 2394/KOL/2025Status: DisposedITAT Kolkata28 April 2026AY 2020-20216 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(Appeals) order and remitted the matter back to the Assessing Officer. The AO was directed to verify the expenditure as application of funds and determine its eligibility under Section 11, providing the assessee with another opportunity to be heard.

What were the facts?

The assessee, a charitable trust, received a corpus donation of Rs. 20,00,000/-. The Assessing Officer added this donation to the total income, and a rectification petition was rejected. The CIT(Appeals) dismissed the appeal, citing non-compliance with Section 12A/12AB registration and Form 10B filing.

What were the issues?

Whether corpus donation is exempt under Section 11(1)(d) without fulfilling Section 12A/12AB registration and Form 10B filing requirements, and whether expenditure qualifies as application of income.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 12AB,Section 143(1),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA

Before: Shri Duvvuru RL Reddy, Vice-(KZ)

The present appeal is directed at the instance of assessee against the order of Id. Additional/Joint Commissioner of Income Tax (Appeals)-7, Mumbai, dated 25.08.2025 passed for Assessment Year 2020-2021. 1

ITA No. 2394/KOL/2025 (A.Y. 2020-2021) Mohinidevi Chunilal Somani ABMM Educational Foundation

2.

Brief facts of the case are that the appellant-assessee is a Public Charitable Trust registered with the Income Tax Department and having certificate under section 80G of the Act. During the year under consideration, the Trust had received Corpus donation of Rs.20,00,000/-. The appellant filed its original return of income on 22.12.2020 and the revised return of income on 22.12.2020 before the extended due date (15.02.2021) of filing return of income declaring income at NIL. The said return was processed by the ld. Assessing Officer, CPC and the intimation order under section 143(1) of the Act was passed on 20.11.2021 enhancing the total income to Rs.20,00,000/-. Being aggrieved, the assessee-appellant-Trust filed the rectification petition under section 154 of the Act stating the corpus donation to the public charitable trust is exempt under section 11(1)(d) of the Act. However, the ld. Assessing Officer, CPC did not provide any relief to the assessee-Trust and passed order under section 154 dated 06.04.2023.

3.

On being aggrieved, the assessee-Trust preferred an appeal before the ld. CIT(Appeals). The ld. Addl./JCIT(Appeals) was of the view that corpus donation cannot be automatically excluded from total income merely on disclosure in ITR, and the statutory conditions under sections 11 & 12A of the Act must also be fulfilled. Since the assessee-Trust failed to establish both (i) registration under section 12A/12AB of the Act and (ii) compliance with section 12A(1)(b) read with Rule 17B (filing of Form 10B within due date), the ld. Assessing Officer, CPC was fully justified

ITA No. 2394/KOL/2025 (A.Y. 2020-2021) Mohinidevi Chunilal Somani ABMM Educational Foundation in treating the corpus donation of Rs.20,00,000/- as taxable income while processing the return and in rejecting the rectification application under section 154 of the Act. The ld. Addl./JCIT(Appeals) dismissed the ground saying that there was no mistake apparent from record that could be rectified. With regard to the issue of allowing expenditure amounting to Rs.1,89,757/- as application of income, the ld. CIT(Appeals) dismissed this ground of appeal saying that as the assessee- appellant did not produce any registration certificate, approval order or registration number under section 12A/12AB of the Act, wherein registration under section 12A/12AB of the Act is mandatory precondition for claiming benefit of exemption under section 11 of the Act including the allowance of application of income. Therefore, in absence of proof of such registration, the assessee-appellant cannot be granted exemption under section 11(1)(d).

4.

Not being satisfied with the order of ld. Addl./JCIT(Appeals), the assessee-appellant preferred an appeal before the ITAT. It was the submission of the ld. Counsel for the assessee that the ld. Addl/JCIT(Appeals) was not justified in confirming the action of CPC Bengaluru in adding corpus donation amounting to Rs.20,00,000/- while processing the return under section 143(1) of the Act and not rectifying the same under section 154 as the same was exempt under section 11(a)(d). The ld. Counsel for the assessee also pleaded that the ld. CIT(Appeals) was not justified in confirming the action of CPC, Bengaluru in not allowing the

ITA No. 2394/KOL/2025 (A.Y. 2020-2021) Mohinidevi Chunilal Somani ABMM Educational Foundation expenditure incurred of Rs.1,89,757/- as application of fund. He pleaded to set aside the order of ld. Addl./JCIT(Appeals).

5.

On the other hand, it was the submission of the ld. Departmental Representative that the appellant-assessee has neither substantiated its claim of registration under section 12A/12AB of the Act nor complied with the mandatory requirement of furnishing audit report in Form 10B within the prescribed time. He argued that in absence of such primary and statutory compliances, the exemption claimed under section 11(1)(d) of the Act in respect of corpus donation as well as allowance of expenditure as application of income cannot be granted. Ld. D.R. pleaded before the Bench to uphold the order of ld. Addl./JCIT(Appeals).

6.

I have heard both the sides and perused the material available on record. From the record, I find that appellant-assessee has neither substantiated its claim of registration under section 12A/12AB of the Act nor complied with the mandatory requirement of furnishing audit report in Form 10B within the prescribed time. In absence of such primary and statutory compliances, the exemption claimed under section 11(1)(d) of the Act in respect of corpus donation as well as allowance of expenditure as application of income was not granted by the lower authorities. It is also evident that the ld. Addl./JCIT(Appeals) has not discussed the issue on merits and dismissed the appeal due to non-furnishing of mandatory precondition for claiming benefit of exemption under section 11 of the Act including the allowance of

ITA No. 2394/KOL/2025 (A.Y. 2020-2021) Mohinidevi Chunilal Somani ABMM Educational Foundation application of income. I also find that the assessment order has been passed u/s.154 of the Income Tax Act as the assessee failed to produce audit report in Form 10B with the return of income as well as non-furnishing audit report during rectification proceedings in order to claim for exemption of income applied for charitable purposes. Considering the facts and circumstances of the case, I am inclined to set aside the order passed by the ld. CIT(Appeals) and in order to meet the principle of natural justice, remit the matter back to the file of the ld. Assessing Officer to verify the expenditure as application funds while passing rectification order u/s 154 afresh and also to determine whether expenditure qualifies as application of income under section 11 of the Act necessarily requires verification of facts, supporting documents and compliance with statutory conditions and with a direction to provide one more opportunity of being heard to the assessee. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the ld. Assessing Officer failing which the ld. Assessing Officer shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. Thus, the grounds raised by the assessee are partly allowed for statistical purposes. 7. In the result, appeal of the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 28/04/2026.

Sd/- (Duvvuru RL Reddy) Vice-President (KZ) Kolkata, the 28th day of April, 2026 5

ITA No. 2394/KOL/2025 (A.Y. 2020-2021) Mohinidevi Chunilal Somani ABMM Educational Foundation

Copies to :(1) Mohinidevi Chunilal Somani ABMM Educational Foundation, Room No. 517, 5th floor, Diamond Heritage, 16, Strand Road, Kolkata-700001, W.B. (2) Deputy Commissioner of Income Tax, Circle-1(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) Addl./JCIT(A)-7, Mumbai; (4) CIT - , Kolkata; (5) The Departmental Representative; (6) Guard File TRUE COPY By order

Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha

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