URBAN IMPROVEMENT TRUST SIKAR,SIKAR vs. ACIT, CIRCLE-EXEMPTION, JAIPUR, JAIPUR

ITA 658/JPR/2025Status: DisposedITAT Jaipur22 October 2026AY 2019-2024 pages
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What did the Tribunal hold?

The Tribunal held that the reassessment proceedings for assessment years 2014-15 to 2018-19 were valid. It reasoned that the proviso to section 12AA(4) of the Act, which states that exemption under section 11 shall not be denied if registration is granted, applies only if assessment proceedings were pending on the date of registration. In this case, the registration was granted on 05.08.2019, and reassessment notices were issued in March 2021, well after the registration date, and no assessment proceedings were pending on the date of registration. The Tribunal dismissed Ground No. 2 for assessment years 2014-15 to 2018-19, finding that the assessee failed to provide any computation of income application or accumulation, nor did it furnish an audit report in Form 10B. For assessment year 2019-20, the Tribunal upheld the CIT(A)'s direction to the AO to verify the exemption claim under section 11, as the application and accumulation of income had not been verified. The Tribunal dismissed the additional ground regarding the failure to invoke specific provisions, stating that income is charged under section 4 and heads of income are for computation. It also noted that for AY 2019-20, section 11 was invoked. Regarding Ground No. 4 (computation of income), the Tribunal set aside the CIT(A)'s orders for AY 2014-15 to 2018-19 and restored the issue to the AO for a fresh examination, allowing the assessee a reasonable opportunity to be heard. The issues of chargeability under sections 10(20), 10(46), Article 289 of the Constitution, and sections 11 and 12 were not to be reopened. The AO was directed to examine all aspects of computation, including the head of income, based on material on record and produced by the assessee. Ground No. 5 regarding interest was consequential. The appeals for AY 2014-15 to 2018-19 were partly allowed for statistical purposes, and the appeal for AY 2019-20 was dismissed.

What were the facts?

The assessee, Urban Improvement Trust, Sikar, established by the Government of Rajasthan, is challenging six orders of the CIT(A) National Faceless Appeal Centre, Delhi. These orders arose from assessment orders passed by the AO under section 147 read with section 144B of the Income Tax Act, 1961, for assessment years 2014-15 to 2019-20. The assessee did not file returns for AY 2014-15 to 2018-19. Registration under section 12AA was granted on 05.08.2019, effective from AY 2019-20. Reassessment notices were issued in March 2021. The AO treated the surplus income as taxable, denying exemptions under sections 11, 12, 10(20), and 10(46). The CIT(A) largely confirmed the AO's actions, with some modifications for AY 2019-20.

What were the issues?

1. Whether the reassessment proceedings initiated under section 147 of the Act for assessment years 2014-15 to 2018-19 are valid, given that the assessee was granted registration under section 12AA of the Act on 05.08.2019, and reassessment notices were issued in March 2021, after the registration date. 2. Whether the assessee is eligible for exemption under sections 11 and 12 of the Act for assessment years 2014-15 to 2018-19, considering it did not file returns, furnish audit reports in Form 10B, or provide computations of income application/accumulation. 3. Whether the assessee is eligible for exemption under sections 10(20) and 10(46) of the Act for assessment years 2014-15 to 2019-20. 4. Whether the addition of surplus income made by the AO and confirmed by the CIT(A) is valid, and if specific receipts constitute the assessee's income or were collected on behalf of the State Government or were advances. 5. Whether interest under sections 234A, 234B, and 234C of the Act has been correctly charged. Assessee's Contentions: The assessee argued that reassessment proceedings were illegal for want of jurisdiction, limitation, and lack of proper approval. It contended that it should be granted exemptions under sections 11, 12, 10(20), and 10(46). It also argued that additions were made without invoking specific provisions and that certain receipts were not its income. The assessee relied on the principle that exemption under section 11 requires application of income to charitable purposes. For AY 2019-20, it argued that the CIT(A) erred in restoring the matter to the AO for verification despite having registration. The assessee also raised an additional ground that additions were invalid for not invoking specific provisions. Revenue's Contentions: The Revenue contended that Urban Improvement Trusts are not local authorities under section 10(20) and their income is taxable. It also argued that the assessee had not filed returns and its registration was effective only from AY 2019-20. The Revenue pointed out discrepancies in figures claimed by the assessee.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 133(6),Section 148,Section 151,Section 10(20),Section 10(46),Section 11,Section 12,Section 12AA,Section 12AA(4),Section 139(1),Section 234A,Section 234B,Section 234C,Section 4,Section 14,Section 10(46A),Section 289

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, JAIPUR

Before: Shri Kuldip Singh & Shri Prakash

PER BENCH:-

1.

These six appeals by the Assessee are directed against six separate orders of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the learned CIT(A)”] all dated 24.02.2025, arising out of the assessment orders passed by the Assessing Officer (hereinafter referred to as “the AO”) under section 147 read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment years 2014-15 to 2019-20. The particulars are as under:

ITA Nos. 649 651 652 654 657 & 658/JPR/2025

ITA No. A.Y

The order continues below.

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