SHRI VISHWA PUNARNIRMAN SANGH,NAGPUR vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE EXEMPTION, NAGPUR

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ITA 129/NAG/2025Status: DisposedITAT Nagpur10 June 2026AY 2021-226 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the proposed adjustment reasons differed from the actual adjustment made under Section 143(1). Additionally, the intimation for proposed adjustment was not concluded within the prescribed 30-day period. The CIT(A) also erred by adjudicating on merits, which is beyond the scope of Section 143(1).

What were the facts?

The assessee, a public charitable trust running a school, claimed exemption under Section 11. The return was processed under Section 143(1), leading to a demand due to accumulated funds not being utilized. The assessee appealed against the CIT(A)'s order sustaining this demand.

What were the issues?

Whether the adjustment made under Section 143(1) was based on valid reasons and followed procedural requirements, and whether the CIT(A) exceeded their jurisdiction by adjudicating on merits.

Which sections of the Income-tax Act were involved?

Section 11,Section 143(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH :: NAGPUR

For Appellant: Shri Rohan Loya, CA
For Respondent: Shri Surjit Kumar Saha, Sr. DR
Hearing: 08.06.2026Pronounced: 10.06.2026

PER ANUBHAV SHARMA, JM:

This appeal filed by the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals) (for short, “CIT(A)”), dated 24/12/2024 passed under section 250 of the Income Tax Act, 1961 (for short, “Act”) for the Assessment Year (AY) 2021-22.

ITA No. 129/NAG/2025 (Shri Vishwa Punarnirman Sangh)

2.

On hearing both sides, we find that the assessee is a Public Charitable Trust, engaged in the activity of providing education by running the school in the name of “Bharti Krishna Vidya Vihar” (“BKVV”). The Trust is registered under the Bombay Public Trust Act and under Section 12A of the Income Tax Act 1961. The assessee filed return of income after claiming exemption under Section 11 at ‘Nil’, wa , was processed under Section 143(1) and assessee’s s total income at `. 2,47,69,930/– raising a demand of `. 1,07,22,820/– on account of accumulated funds of earlier years being not utilized and the same is sustained by Ld. CIT(A) for which the assessee is in appeal before this Tribunal.

3.

At the time of argument before us, challenging the impugned orders of Ld. Tax Authorities below, Ld. Counsel for the assessee has processed for disposal of ground no. 1, on the assertion that the intimation of proposed adjustment was issued on 23.12.2022 and the intimation under Section 143(1)(1) was passed on 28.12.2022. Thus, the final

ITA No. 129/NAG/2025 (Shri Vishwa Punarnirman Sangh) intimation was passed within five days of the proposed adjustment and reference was made to paper book at page no. 2, where a copy of proposed adjustment has been filed. Apart from that, Ld. Counsel submitted that there is a difference between the reasons for proposed adjustment and the actual adjustment done for which reference was made to page no. 17 of the paper book as part of intimation under Section 143(1). Lastly, it was contended that the Ld. CIT(A) has rather gone on a different tangent altogether wherein Ld. CIT(A) has converted the intimation into a factual adjudication on merits.

4.

Ld. DR has, however, vehemently defended the impugned orders and it was contended that Ld. CIT(A) has co–terminus powers which has been duly exercised.

5.

After taking into consideration the facts and circumstances and the submissions, we find substance in the contention on behalf of the assessee that the proposed adjustment reasons were as follows :–

ITA No. 129/NAG/2025 (Shri Vishwa Punarnirman Sangh) In Schedule PartBTI, Exemptions under section 11 or u/s 10(23C) (iv) or 10(23C)(v) or 10(23C)(vi) or 10(23C)(via) is claimed against Additions in SI no. 5vii of Schedule PartBTI. Exemption is not allowable on income disclosed under Additions which are on account of noncompliance to the provisions of the Act. Hence the entire amount entered in Sr.no.5vii of Part BTI will be chargeable to tax. As entered by taxpayer: 24769930 As computed: 0 Proposed adjustment to total income: 24769930

5.1 However, the same were not the basis for making adjustment under Section 143(1)(a) as is apparent from the intimation under Section 143(1), wherein adjustment has been shown for following reasons:–

In Schedule Part A General–“Details of registration or approval under Income Tax Act” details of Section 12AB or 10(23C)(iv)/10(23C)(v)/ 10(23C)(vi)/ 10(23C)(via) is not provided in the column “Section under which the registration is applied”. The Act has been amended from 01/06/2020, and all the entities have to get new registration/approval u/s. 12AB or 10(23C)(v)/ 10(23C)(vi)/10(23C)(via) to be eligible for exemption. Since in your case, new registration/approval details are not available. Exemption claimed in SI. no. 4i to 4viii in Schedule Part B–TI is not allowable.

6.

At the same time, we find substance in the contention as required under law, the intimation for proposed

ITA No. 129/NAG/2025 (Shri Vishwa Punarnirman Sangh) adjustment when required to be concluded, has not been as per the 1st and 2nd proviso to Section 143(1)(a) as a reasonable period of 30 days as per law, has not been adhered to and for this reliance is placed rightly by Ld. Counsel for the assessee on the decision of Delhi Benches in the case of Samsung C and T Corporation India (P.) Ltd. [2025] 176 taxmann.com 764(Delhi –Trib.).

7.

At the same time, we find that Ld. CIT(A) has not gone into the controversy as raised by way of grounds, but under erroneous belief that co–terminus powers can be used to vary the assessment concluded under Section 143(3) to use those powers qua an intimation under Section 143(1) which has a restricted scope of adjustments within the territory of Section 143(1). However, the Ld. CIT(A) has examined the issue on merits with regard to disallowance of benefit of exemption by examining the genuineness of the activity which as a matter of fact could not have been an issue in proceedings under Section 143(1) also.

ITA No. 129/NAG/2025 (Shri Vishwa Punarnirman Sangh) 8. In the light of aforesaid, we find substance in the grounds as raised. The appeal of the assessee is allowed and impugned orders are quashed.

Order pronounced in open Court on 10.06.2026

Sd/– Sd/– ANUBHAV SHARMA KHETTRA MOHAN ROY ACCOUNTANT MEMBER JUDICIAL MEMBER

Nagpur: Dated: 10/06/2026 Z.U,P.S

Copy to: 1. The Assessee 2. The Revenue 3. The Pr.CIT concerned. 4. The DR, ITAT, Nagpur 5. Guard file. By order

Sr.PS/PS ITAT, Nagpur

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