DESIRE FOUNDATION, JAIPUR,JAIPUR vs. INCOME TAX OFFICER, JAIPUR

ITA 1646/JPR/2026Status: DisposedITAT Jaipur21 October 2026AY 2024-254 pages
AI SummaryRemanded

What were the facts?

The assessee, Desire Foundation, filed an appeal against an order dated 13.03.2026 passed by the Addl./Joint Commissioner of Income Tax, Appeal-Panaji, for Assessment Year 2024-25. The dispute concerns the denial of exemption under Section 11 of the Income-tax Act, 1961, during the processing of the assessee's return under Section 143(1). The assessee had provisional registration under Section 12A from AY 2023-24 to 2025-26. An application for regular registration under Section 12A(1)(ac)(iii) was rejected on 08.02.2024. Consequently, the return for AY 2024-25 was processed under Section 143(1) denying the Section 11 exemption, determining total income at Rs. 15,18,963. The order rejecting the regular registration was challenged before the Tribunal, which restored the matter for fresh consideration. Subsequently, the CIT(E) granted registration under Section 12AB for AY 2023-24 to 2027-28.

What did the Tribunal hold?

The Tribunal held that the subsequent development of the learned CIT(E) granting registration under Section 12AB of the Act, covering the assessment year under consideration, has a direct bearing on the assessee's claim for exemption under Section 11. This subsequent development requires consideration by the appellate authority. Therefore, the Tribunal set aside the impugned order of the learned CIT(A) and restored the matter to his file for fresh adjudication. The learned CIT(A) is directed to consider the order dated 07.09.2026 passed by the learned CIT(E) and the applicable provisions of law, and afford the assessee a reasonable opportunity of being heard before passing a speaking order. The appeal of the assessee is accordingly allowed for statistical purposes.

What were the issues?

1. Whether the denial of exemption under Section 11 was justified on the ground that no valid registration existed, when the assessee held a valid provisional registration under Section 12A from AY 2023-24 to 2025-26, which was operative during AY 2024-25? (Question of law and fact, concerning Section 11 and Section 12A). 2. Whether the rejection of the application for regular registration under Section 12AB was correctly treated as a cancellation of the provisional registration, when proceedings for regular registration were restored and pending before the Commissioner of Income Tax (Exemptions)? (Question of law and fact, concerning Section 12AB). 3. Whether the adjustment under Section 143(1) denying exemption under Section 11 was valid, given that the issue was debatable and supported by judicial and departmental precedents, thus not amenable to a prima facie adjustment under Section 143(1)(a)? (Question of law, concerning Section 143(1)(a) and Section 11). Assessee's contentions: The assessee argued that it held a valid provisional registration. The rejection of the regular registration application was under challenge and subsequently restored. The CIT(E) later granted registration under Section 12AB. The adjustment under Section 143(1) was not permissible for a debatable issue. The assessee relied on judicial and departmental precedents. Revenue's contentions: The judgment records no specific contentions for the revenue.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 12A(1)(ac)(iii),Section 12AB,Section 143(1),Section 143(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

Before: SHRI OM PRAKASH KANT & SHRI T. R. SENTHIL KUMAR

For Appellant: Shri Naman Maloo, C.A
Hearing: 15.10.2026Pronounced: 21.10.2026

Per Shri Om Prakash Kant, AM :- This appeal by the assessee is directed against order dated 13.03.2026, passed by the Addl./Joint Commissioner of Income Tax, Appeal-Panaji (hereinafter referred to as “Ld. CIT(A)”) for assessment year 2024-25, raising following grounds:-

2 Asst. Year: 2024-25

1.

In the facts and circumstances of the case and in law, the Id CIT A erred in upholding the denial of exemption under Section 11 on the ground that no valid registration existed. The appellant held a valid provisional registration under Section 12A granted vide Form 10AC, effective from A.Y. 2023 24 to A.Y. 2025 26, which remained valid and operative during A.Υ. 2024 25. 2.

The order continues below.

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