BADU SHIVA NANDA SEVASHRAM,KOLKATA vs. INCOME TAX OFFICER WARD1(2), EXEMPT, KOLKATA, KOLKATA

Brief facts of the case are that the case of the assessee was selected for compulsory scrutiny because it fell under the category of cases where registration or approval under various sections such as 12A, 12AB, 35(1)(ii)/(iia)/(iii), or 10(23C) had either not been granted or had been cancelled by the competent authority. Despite this, the ITA No(s). 209/KOL/2026 Assessment Year(s) 2022-23 assessee was found to be claiming tax exemption/deduction in its return and had filed a NIL return of income on 05.11.2022. During the course of the assessment proceedings, multiple notices u/s 143(2), 142(1) and centralized communication was issued to the assessee for which the assessee sought adjournment on 06.12.2023 and later submitted a partial reply on 16.12.2023 wherein the assessee submitted a note on activities and furnished Form No. 10AC granting registration to it on 02.12.2022 u/s 12A(1)(ac)(i) of the Act effective for AY 2022-23 to AY 2026-27 and Form No. 10AC granting approval to it on 02.12.2025 u/s 80G(5) of the Act for the same period. The assessee had also submitted details of various expenses incurred and details of account. The assessee had filed an application in Form No. 10AB for registration u/s 12A(1)(ac)(iv) of the Act which was rejected by the Ld. CIT (Exemption), Kolkata vide order dated 26.12.2022 as necessary documents were not furnished. Similarly, the application in Form No. 10AB for registration u/s 80G(5) of the Act was also rejected vide order dated 20.12.2022. The Assessing Officer (hereinafter referred to as Ld. 'AO') reiterated that despite the assessee’s submissions, both applications under Form No. 10AB (for registration u/s 12A and approval u/s 80G) had been rejected by the Ld. CIT(Exemption), Kolkata, on 26.12.2022 and 20.12.2022 respectively due to non- production of supporting documents. The Ld. AO also noted that the case was rightly selected for scrutiny since the assessee was claiming exemption despite rejection of the application for registration. Although notice u/s 143(2) of the Act was issued on 28.06.2023, the assessee did not furnish any reply. Further notices u/s 142(1) dated 11.08.2023, 06.10.2023, and 01.12.2023 were also issued. The assessee responded belatedly on 16.12.2023 with copies of Form No. 10AC registration and ITA No(s). 209/KOL/2026 Assessment Year(s) 2022-23 approval dated 02.12.2022. However, since the Ld. CIT(Exemption) had already rejected the Form No. 10AB applications on 20.12.2022 and 26.12.2022, the Ld. AO held that the reply was untenable. Subsequently, a show cause notice dated 02.02.2024 was issued proposing to treat the assessee as an Association of Persons (AOP) and to deny exemption of ₹38,03,527 claimed u/s 11 of the Act. Since no reply was received to this notice, accordingly the Ld. AO concluded that the assessee Trust was to be assessed as an AOP, and the claimed exemption of ₹38,03,527 u/s 11 of the Act was disallowed and the total income was taxed at the Maximum Marginal Rate (MMR). The assessment was completed u/s 143(3) r.w.s. 144B of the Act after making addition of ₹38,03,527/- and penalty proceedings u/s 270A of the Act were also proposed for under reporting of income. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who vide order dated 30.11.2025 dismissed the appeal of the assessee as per his findings as under: “7.0 Appellate decision: Adjudication on Grounds relating to denial of exemption under sections 11 and 12

1 I have given careful consideration to the assessment order, the grounds of appeal and the submissions and documents filed by the appellant. The facts of the case are that the appellant filed its return of income for A.Y. 2022-23 on 05.11.2022 declaring Nil income and claiming exemption under sections 11 and 12 of the Act. The Assessing Officer has denied the said exemption on the ground that the appellant did not possess valid registration under section 12A/12AB. It is recorded in the assessment order that the applications for registration under section 12A(1)(ac)(iv) and for approval under section 80G(5) were rejected by the learned CIT (Exemption), Kolkata, on 20.12.2022 and 26.12.2022 respectively for nonsubmission of documents.

2 During the appellate proceedings, the appellant has furnished a copy of Form No. 10AC dated 02.12.2022 issued by the Principal Commissioner/Commissioner of Income Tax granting provisional registration under sub-clause (i) of clause (ac) of sub-section (1) of section 12A, valid for the period from A.Y. 2022-23 to A.Y. 2026-27. The said Form bears a distinct Document Identification Number (DIN AAAAB5433HE2013101) and Unique Registration Number AAAAB5433HE20131. The document is rtal also. The document as copied from Department portal is reproduced below: . . . However, I find that the return of Income was filed on 5.11.2022, while the above said approval was granted only in the next month i.e. on 2.12.2022. As such I find that there was no occasion for the appellant to claim exemption and file NIL return when the approval was granted only later.

4 In view of the above discussion and given the fact that the subsequent applications for regular approval were rejected, it is held that the appellant did not have any approval u/s 12A as on the date of return filing and, therefore, the denial of exemption by the AO is upheld and the appeal is dismissed.”

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. The Ld. AR stated that the assessee was registered u/s 12A of the Act from the year 2008. The appeal relates to AY 2022-23. The Ld. AO did not allow the claim of exemption as the registration was cancelled. Subsequently, the assessee was granted the registration for AY 2022-23 on what and initially the existing registration was extended till 2024 on account of amendment in the provision. The earlier registration granted was not cancelled and was granted from 15.02.2008 in perpetuity. On 02.12.2022 the assessee was granted registration for the AY 2022-23 to AY 2026-27. However, vide order dated 26.12.2022, the earlier application filed seeking registration was rejected and the registration was cancelled. The return was processed u/s 143(1) of the Act on 28.03.2023 and as per para 3.3, the Ld. AO did not allow the claim of exemption. The Ld. CIT(A) also did not allow the claim as according to him the registration was granted subsequent to the filing of the income tax return. The Ld. AR stated that this reasoning for denial of exemption is fallacious as the subsequent approval related to the AY 2022-23 and the exemption ought to have been allowed by the Ld. CIT(A).

The Ld. DR requested that the order of the Ld. CIT(A) may be confirmed.

We have considered the facts of the case, the submissions made and the documents filed. Since the Ld. CIT (Exemption) had granted the registration vide order dated 02.12.2022, even though it was subsequent to the filing of the return of income, but as the registration was granted and the same was available even at the time of processing the return of income and was also relevant for the impugned assessment year, the claim of exemption u/s 11 of the Act ought to have been allowed. Therefore, we set aside the order of the Ld. CIT(A) and direct the Ld. AO to grant the exemption claimed u/s 11 of the Act as per law on the basis of the registration granted by the Ld. CIT (Exemption) for AY 2022-23. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 6th May, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 06.05.2026 Bidhan (Sr. P.S.)

CIT(A)-NFAC, Delhi.

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order