GURU NANAK PUBLIC SCHOOL,CHANDIGARH vs. INCOME TAX OFFICER, EXEMPTIONS WARD, CHANDIGARH, CHANDIGARH

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ITA 503/CHANDI/2025Status: DisposedITAT Chandigarh29 April 2026AY 2023-248 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the denial of the benefit of Section 11 and 12 by the CPC and the CIT(A) was erroneous. The Tribunal noted that the benefit of Section 11 and 12 is available to societies and trusts carrying out charitable purposes, and the genuineness of the assessee's activities and procedural compliance for Section 12A registration were not in dispute. The primary issue was the PAN mismatch, which stemmed from the Revenue's failure to allot the correct PAN category to the assessee initially. The Tribunal considered this a case of contributory negligence, where the Revenue erred in allotting the wrong PAN and accepting returns for decades, and the assessee, upon noticing the error, applied for a new PAN. The Tribunal emphasized that such a minor error should not result in a substantial tax liability. Therefore, the orders of the CIT(A) and CPC were set aside, and the issues were remitted to the Assessing Officer (AO) for re-adjudication. The AO was directed to place the record before the Competent Authority/CBDT for amalgamation of PANs or rectification of the error. The benefit of Section 11 and 12 should not be denied during the re-processing of the return solely due to the PAN mismatch. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Guru Nanak Public School, a registered society since 1973, has been enjoying exemption under Sections 11 and 12 of the Income Tax Act, 1961. Due to a substantive amendment in the scheme of assessment for charitable institutions by the Finance Act, 2020, the assessee applied for and was granted registration under Section 12A(1)(ac)(i). However, while filing its return for AY 2021-22, it faced issues with the Income Tax Department's portal. It was discovered that its PAN (AADFG1204D) was allotted under the category of a firm, not a society. The assessee was allotted a new PAN (AAHAG7113N) and filed its return under this new PAN. The CPC Bangalore denied the benefit of Sections 11 and 12 for AY 2023-24 and 2024-25 due to the mismatch between the new PAN and the Section 12A(1)(ac) registration. The CIT(A) upheld this denial. The disputed amounts for AY 2023-24 and 2024-25 were Rs. 9,98,76,259/- and Rs. 11,81,79,230/- respectively.

What were the issues?

1. Whether the denial of the benefit of Section 11 and 12 of the Income Tax Act, 1961, by the CPC while processing the return under Section 143(1)(a) is justified, considering the PAN mismatch. Assessee's contentions: The assessee argued that the issue arose due to the Revenue's failure to allot the correct PAN category (firm instead of society) initially, which was accepted for over 45 years. Upon discovering the error, the assessee applied for a new PAN and informed the department. The registration under Section 12A was granted based on the genuineness of activities and compliance with other laws, not solely on the PAN number. The denial of exemption due to a technical mismatch should not lead to a huge tax liability. Revenue's contentions: The judgment does not record specific contentions from the Revenue. However, the denial by the CPC and upholding by the CIT(A) implies the Revenue's stance was that the procedural requirement of matching PAN with registration was not met, thus disentitling the assessee to the exemption.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 12A(1)(ac)(i),Section 143(1)(a),Section 2(15)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH

Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY

For Appellant: Shri Tej Mohan Singh, Advocate
For Respondent: Shri Manav Bansal, CIT DR
Hearing: 27.04.2026Pronounced: 29.04.2026

PER RAJ PAL YADAV, VP

The present two appeals are directed at the instance of the assessee against the separate orders of ld. Commissioner of Income Tax [in short ‘the CIT(A)’] dated 25.03.2025 passed in assessment year 2023-24 and 2024-25.

2.

The assessee has taken five grounds of appeal in each assessment year, however, its grievance revolves around a single issue, namely, ld.CIT (Appeals) has erred in upholding

ITA No. 503 & 504/CHD/2025 A.Y.2023-24 & 2024-25 2 the denial of benefit of Section 11 and 12 of the Income Tax Act, 1961 by the CPC while processing the return of the assessee u/s 143(1)(a) of the Income Tax Act,1961.

3.

The brief facts of the case are that assessee was registered as a Society with Registrar of Firms & Societies, Chandigarh on 08.11.1973. The assessee Society is also affiliated with Central Board of Secondary Education and it was running school in the name of Guru Nanak Public School. The assessee Society was allotted PAN No. AADFG1204D by the Income Tax Department, though this PAN is under the category of the firm. The assessee has been enjoying the benefit of Section 11, 12, 10(23) etc. of the Act and its income was always exempt i.e. right from inception upto these assessment years. The Legislature has made a substantive amendment in the Scheme of assessment of ‘Charitable Institutions’ by Finance Act, 2020 w.e.f. 01.04.2021. The assessee has applied for grant of registration under the new scheme in Form No. 10AC and it was granted registration u/s 12A(1)(ac)(i). At the time of filing of the Income Tax Return in January,2022 for assessment year 2021-22 (Financial Year 2020-21) it has faced the problem because the Portal of the Income Tax Department did not allow the assessee to

ITA No. 503 & 504/CHD/2025 A.Y.2023-24 & 2024-25 3 upload the return. This problem was brought to the notice of the Department and ultimately it was decided that assessee should apply for a new PAN. It has been allotted new PAN bearing No. AAHAG7113N and under this PAN, return was uploaded. Since the PAN did not match with the registration granted u/s 12A(1)(ac) sub-clause (i), which is valid from assessment year 2022-23 to assessment year 2026-27, the CPC Bangalore has denied the benefit of Section 11 and 12 and in this way, a huge demand has been raised against the assessee in both the years. The exemption claimed u/s 11 in assessment year 2023-24 was of Rs.9,98,76,259/- whereas in assessment year 2024-25, such claim was at Rs.11,81,79,230/-. Thus, while processing the return, this claim has been declined by the CPC.

4.

The appeal to the CIT (Appeals) did not bring any relief to the assessee. The ld. ld.CIT (Appeals), instead of resolving the issue has simply observed that Income Tax Act provides a specific manner for doing certain things and assessee failed to do the things in that particular manner, then benefit will not be available to the assessee.

5.

With the assistance of ld. Representative, we have gone

ITA No. 503 & 504/CHD/2025 A.Y.2023-24 & 2024-25 4 through the record carefully. The assessee has filed two letters whose copies are available on page No. 16 and 17 of the Paper Book. We deem it appropriate to take note of these letters :

ITA No. 503 & 504/CHD/2025 A.Y.2023-24 & 2024-25 5

6.

It is pertinent to note that benefit of Section 11 and 12 is available to a Society or a Trust who carries out its activities for charitable purposes as contemplated in Section 2(15) of the Income Tax Act. As far as genuineness of its activities and fulfilment of procedural requirements u/s 12A(1) and 12AB are concerned, that is not in dispute. The

ITA No. 503 & 504/CHD/2025 A.Y.2023-24 & 2024-25 6 registration of a Society is not to be made by looking into its PAN number, rather registration u/s 12A is being granted after looking into genuineness of its activities and the compliance made by an assessee qua other allied laws. The role of the PAN number is only of an identification number vide which concerned authority could lay its hands on the assessment record of an assessee. In other words, it is a unique identity number of a taxpayer. It was a failure at the end of the Revenue to allot a PAN number of a firm to the assessee. On this very PAN number, the Department has been accepting its returns since 1973 upto 2020 and when softwares have been updated and online processing system has been developed by the Revenue, only then a hurdle came into the passage of the assessee that return was not allowed to be uploaded under this PAN. So, it has obtained a new PAN but disclosed every fact to the Revenue. In such a situation, ld.CIT (Appeals) has committed an error by imputing fault at the end of the assessee. It is contributory negligence by the Revenue as well as by the assessee. Firstly, the Revenue ought to have not allotted this PAN of the firm and if allotted, it should have been objected in last more than 45 years. Secondly, if an error has been noticed by the assessee qua

ITA No. 503 & 504/CHD/2025 A.Y.2023-24 & 2024-25 7 category of its PAN, it should have been rectified well in advance. But this small error should not be construed in such a manner that would put the assessee under a huge tax liability. Therefore, we set aside the orders of ld.CIT (Appeals) as well as CPC, Bangalore in both the years. We remit these issues to the file of AO for re-adjudication. The ld. AO shall place the record of this assessee before the Competent Authority/CBDT for amalgamation of these PAN numbers or remove the error in the identification of the PAN. After adjudication of that by a Competent Authority, return of the assessee would be processed again. The benefit of Section 11 and 12 of the Act would not be denied while processing the return simply for the reason of mis-match of the PAN.

7.

In the result, both the appeals are allowed for statistical purposes.

Order pronounced on 29.04.2026.

Sd/- Sd/-

(KRINWANT SAHAY) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam”

ITA No. 503 & 504/CHD/2025 A.Y.2023-24 & 2024-25 8

आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��यथ�/ The Respondent 2. आयकर आयु�/ CIT 3. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 4. गाड� फाईल/ Guard File 5.

सहायक पंजीकार/ Assistant Registrar

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