BAPTIST WOMEN WELFARE AND EVANGELISTIC WORK,KAKINADA vs. THE INCOME TAX OFFICER, EXEMPTION WARD, RAJAHMUNDRY

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ITA 92/VIZ/2026Status: DisposedITAT Visakhapatnam17 June 2026AY 2022-237 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that once valid registration under Section 12AB is granted, the Assessing Officer must rectify the assessment order to give consequential effect to the registration. The denial of exemption on technicalities during the original assessment is not sustainable when subsequent registration is obtained.

What were the facts?

The assessee, a charitable trust, claimed exemption under Section 11 for AY 2022-23. Although it had provisional registration, its application for permanent registration was initially rejected. The assessment was completed disallowing the exemption due to lack of valid registration. Subsequently, permanent registration was granted, covering the assessment year in question.

What were the issues?

Whether a rectification under Section 154 is permissible to allow exemption under Section 11 when permanent registration is granted retrospectively, and if a penalty under Section 270A levied on the disallowed exemption is sustainable.

Which sections of the Income-tax Act were involved?

Section 11,Section 12AB,Section 154,Section 250,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH,

Before: SHRI UDAYAN DAS GUPTA, HON’BLE & SHRI OMKARESHWAR CHIDARA, HON’BLE

For Respondent: Dr. Aparna Villuri, Sr.AR

आदेश / ORDER PER UDAYAN DAS GUPTA, JUDICIAL MEMBER: Both these appeals filed by the assessee, are heard and disposed off together for the sake of convenience. Firstly, we proceed to adjudicate the appeal i.e., ITA No.93/VIZ/2026 (A.Y. 2022-23).

ITA 92 & 93/VIZ/2026 BAPTIST WOMEN WELFARE AND EVANGELISTIC WORK ITA No. 93/VIZ/2026 (A.Y. 2022-23)

This appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] passed under section 250 of Income Tax Act, 1961 [hereinafter in short “the Act”] dated 07.11.2025 which has emanated from the order of Income Tax Officer (Exemption), Ward-Rajahmundry, passed under section 154 of the Act dated 18.06.2025 refusing to rectify the mistake apparent from the face of the record.

2.

Brief facts of the case are that, the appellant is a Charitable Trust established with an object to render social service to the poor and destitute and was granted provisional registration ( Form 10AC ) u/s 12AC on 23rd September, 2021 for the period Asst years 2022-23 to 2024-25 and has filed its return of income for the asst year 2022-23 ( i.e., the year under appeal ) claiming exemption u/s 11 amounting to Rs.6,85,248/-, on 18th August, 2022.

3.

Meanwhile the application for permanent registration filed by the assessee has been rejected by the Ld CIT(E) on 23rd September, 2022 , being deficient in factual evidence and a fresh application seeking permanent registration ( Form 10AB ) was filed on 27th March, 2024 , which was approved on 5th September, 2024 , by the Ld.CIT ( E ) Hyderabad, granting exemption for the period Asst year 2022-23 to Asst year 2026-27.

4.

Meanwhile pending the application for permanent registration u/s 12AB(1)(b), the assessment for the year was completed u/s 143(3) in the status of an AOP

ITA 92 & 93/VIZ/2026 BAPTIST WOMEN WELFARE AND EVANGELISTIC WORK disallowing the claim for exemption u/s 11 , in absence of any valid registration u/s 12A on the date of completion of the assessment u/s 143(3) on 28th March, 2024.

5.

Thereafter, after receipt of the order for permanent registration / approval dated 5th September, 2024, the assessee filed a rectification petition on 7th February, 2025 under section 154 of the Act, before the AO (on the strength of the approval granted u/s 12AB(1)(b) ( Form 10AD ) by Ld CIT ( E ), claiming exemption u/s 11 as per return originally filed the same being consequential in nature , flowing from the permanent approval granted u/s 12AB , covering the year under assessment ( AY 2022-23 to 2026-27 ) and the same as per the assessee constitute a mistake apparent from record which needs to be rectified giving resultant effect to the Ld CIT ( E ) order, more so since the exemption has been granted at a subsequent date the Trust should not be deprived of the registration already available before it.

6.

However, the application u/s 154 has been rejected by the AO , vide a single sentence order dated 18th June, 2025, stating “ not within the purview of section 154”.

7.

The matter carried in appeal before the Ld. CIT(A) and has been dismissed by observing as follows:

“4.1 I have carefully perused the grounds of appeal, statement of facts and material on record. The appellant is a charitable trust, which filed return of income declaring NIL income and claiming exemption u/s 11. Assessment u/s 143(3) r.w.s. 144B dated 28.03.2024 denied exemption as no valid registration u/s 12A/12AB existed. Subsequently penalty u/s 270A of Rs.1,02,750/- was levied in July 2024 for underreporting of income. Aggrieved assessee filed this appeal. The penalty has been levied on the assessed income of Rs. 6,85,248/- which was determined in the assessment order dated 28.03.2024. That assessment has not been appealed against and has thus attained finality.

ITA 92 & 93/VIZ/2026 BAPTIST WOMEN WELFARE AND EVANGELISTIC WORK Consequently, the finding of under-reporting stands conclusive and binding for penalty purposes. On the date of the penalty order, the assessee had no subsisting registration u/s 12A/12AB, and its claim u/s 11 was not legally tenable. Therefore, the AO was justified in treating the income as under- reported and in levying penalty at the prescribed rate. The subsequent grant of registration on 05.09.2024 is a later event and cannot retrospectively affect the validity of the penalty order. Section 270A contains no provision for review of penalty on the basis of future developments. The appellate authority is confined to examining the correctness of the penalty order on the facts existing when it was passed and cannot extend relief for subsequent changes. In view of the above discussion, the penalty levied by the Assessing Officer is sustained. Thus, the grounds of appeal are dismissed.”

8.

Now the assessee is in appeal before the Tribunal on the grounds contained in Memorandum of Appeal as follows: -

“1. The order of learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in upholding the action of the assessing officer in rejecting the application filed by the appellant u/s 154 of the Act for rectification of the assessment order u/s 143(3) r.w.s.144B and for allowance of exemption claimed u/s 11 of the Act. 3. The learned Commissioner of Income Tax (Appeals) ought to held that the registration granted u/s 12AA for the impugned assessment year vide order dt.05.09.2024 resulted in an error in the assessment order dt.28.03.2024 and hence the same needs to be rectified. 4. Any other ground that may be urged at the time of appeal hearing.”

9.

In course of hearing, the Ld AR of the assessee reiterated the facts and submitted that there is no fault of the assessee for not getting the exemption as it is a procedural matter before the Ld CIT ( E ) and subsequently when the permanent registration / approval is granted covering the assessment year under appeal, consequential effect should be given to the said approval , because not granting the same would tantamount to a legal error apparent on the face of the record .

ITA 92 & 93/VIZ/2026 BAPTIST WOMEN WELFARE AND EVANGELISTIC WORK 10. Ld. Departmental Representative (hereinafter in short “Ld. DR”) relied on the order of the Ld CIT ( A ) .

11.

We have heard the rival submission and considered the materials on record. We are of the opinion that once a valid section 12AB registration is granted the AO cannot deny this claim due to technicalities during original assessment because the approval granted by the Ld CIT ( E ) , covering the year under appeal , fundamentally alters the foundation of completed assessment and it is mandatory on the part of the AO to rectify the assessment to align with the Ld CIT ( E ) order and the same is rectifiable u/s 154 of the Act , because the exemption u/s 11 of the Act, is a substantive statutory benefit which cannot be denied on technicalities.

12.

As such we direct the AO to rectify the order giving consequential effect to the Ld CIT ( E ) , approval granted u/s 12AB of the Act and the assessee will get consequential relief.

13.

In the result, appeal of the assessee is allowed.

ITA No. 92/VIZ/2026 (A.Y. 2022-23) – PENALTY APPEAL

14.

This appeal is against the order of Ld. CIT(A) order dated 07.11.2025, passed under section 250 of the Act arising out of the penalty order passed under section 270A of the Act, dated 09.07.2024 for alleged under reporting of income. Grounds of appeal taken by assessee are as follows: -

ITA 92 & 93/VIZ/2026 BAPTIST WOMEN WELFARE AND EVANGELISTIC WORK “1. The order of learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) ought to have held that levy of penalty u/s 270A is not justified in respect of addition made in the assessment order towards disallowance of exemption u/s 11 of the Act when the appellant was in fact granted registration u/s 12AA of the Act vide order dt.05.09.2024. 3. Any other ground that may be urged at the time of appeal hearing.”

15.

As we have directed the AO to rectify the assessment order by giving consequential effect to the Ld CIT ( E ) , approval granted u/s 12AB of the Act in ITA No. 93/VIZ/2026 (A.Y. 2022-23), the consequential penalty imposed u/s.270A of the Act will not sustain. In the circumstances, since the very basis for levy of penalty i.e. assessment order will stand to be rectified the penalty will not survive. Thus, we allow the grounds raised by the assessee and set-aside the order of the Ld.CIT(A).

16.

In the result, appeal of the assessee is allowed.

17.

To sum-up, both the appeals filed by the assessee are allowed.

Order pronounced in the open court on 17.06.2026.

Sd/- Sd/- OMKARESHWAR CHIDARA UDAYAN DAS GUPTA ACCOUNTANT MEMBER JUDICIAL MEMBER Visakhapatnam Dated: 17.06.2026 Giridhar, Sr.PS

ITA 92 & 93/VIZ/2026 BAPTIST WOMEN WELFARE AND EVANGELISTIC WORK Copy to: BAPTIST WOMEN WELFARE AND EVANGELISTIC WORK, 1 D.NO.67-11-4, LALBAHADUR NAGAR, KAKINADA-533003, ANDHRA PRADESH THE INCOME TAX OFFICER, EXEMPTION WARD, INCOME TAX OFFICE, 2 AAYAKAR BHAVAN, VEERABHADRA PURAM, RAJAHMUNDRY-533105, ANDHRA PRADESH 3 THE PCIT / CIT, 4 THE D.R., ITAT, VISAKHAPATNAM BENCH 5 GUARD FILE

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