ARYA SAMAJ,BANGALORE vs. INCOME TAX OFFICER, WARD-1, BANGALORE

Voluntary Contributions other than corpus 12,27,281-00 3. Aggregate of income referred in section 11 and 12 derived during the previous year excluding voluntary contribution included in 1 and 2 above 14,03,257-00 4. i. Amount applied to charitable purposes in India during the previous year – Revenue Account 26,30,538-00 vii. Total (4i) 26,30,538-00 16. Gross total income NIL”

The return was processed and an intimation u/s. 143(1) of the Act dated 30.09.2019 was passed by DCIT, CPC with reference to the return of income filed by it on 31.03.2019. As per this intimation demand of Rs. 9,08,797/- is determined as against refund of Rs.1,20,720/- claimed in the return of income. The demand also includes following interests: Interest u/s 234A Rs. 48,377/- Interest u/s 234B Rs. 1,24,398/- Interest u/s 234C Rs. 34,901/- Interest u/s 234F Rs. 10,000/- 4. The following variations in the income computed are noticed in the intimation:

Being aggrieved by the aforesaid intimation u/s.143(1) of the Act, the Assessee filed appeal before CIT(A) contending that while processing return, the CPC cannot issue intimation under section 143(1) denying benefit of deduction under section 11 of the Act. The First Appellate Authority however dismissed the appeal of the Assessee for non-prosecution. Hence, this appeal by the Assessee before the Tribunal.

I have heard the rival submissions. One of the conditions for grant of exemption u/s.11 of the Act, is that the Assessee should get itself registered as a charitable organization u/s.12A of the Act from the Commissioner of Income Tax. It appears that the Assessee did not enjoy registration u/s.11 of the Act for Assessment Year 2018-19. The Assessee made an application for grant of registration u/s.12A of the Act on 31.8.2019, vide application dated 31.8.2019 and was granted registration u/s.12A of the Act on 20.9.2019 but that registration was valid only for AY 2019-20. In so far as IT(TP)A No.984/Bang/2022 Page 4 of 7 AY 2018-19 is concerned, the return of income was filed by the Assessee on 31.8.2019 and the assessment on the basis of such return of income was made by CPC vide intimation u/s.143(1) of the Act, dated 30.9.2019. Therefore when the registration u/s.12A of the Act, was granted on 20.9.2019, the assessment of the Assessee for AY 2018-19 was pending. On the above facts, the learned counsel for Assessee submitted that in terms of the 1st proviso to Sec.12A(2) of the Act, the benefit of registration has to be extended to pending assessment for earlier AY immediately preceding the Assessment year, (i.e., AY 2018-19 in this case) from which registration is granted u/s.12A of the Act. (i.e., AY 2019-20 in this case). The said provisions reads thus:

In terms of the first proviso, where the registration has been granted to the Trust under Section 12AA, then, the provisions of Sections 11 and 12 shall apply in respect of any income derived from property held under Trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration. The objects and activities of such Trust remain the same for such preceding assessment year.

The intimation u/s.143(1) of the Act does not spell out the reason as to why the benefit of Sec.11 of the Act was not given to the Assessee for AY 2018-19. The submissions of the parties were made on the premise that it is only for want of registration u/s.12A of the Act, that the benefit of exemption u/s.11 was not given to the Assessee. In terms of the 1st proviso to Sec.12A (2) of the Act, the action of the revenue authorities cannot be sustained. The learned DR however made reference to CBDT Circular No.1/2015 dated 21.1.2015 wherein the purpose of the first proviso has been explained as a measure to remove hardship in genuine cases, where the application for registration u/s.12A of the Act is unduly delayed by the revenue authority and such facts do not exist in the present case. I am of the view that on a plain reading of the proviso, such condition for claiming the benefits of the proviso has not been laid down therein. Hence, I am of the view that the argument advanced by the learned DR cannot be accepted.

The scope of powers of CPC while processing a return of income electronically is laid down by Sec.143(1)(a) of the Act which reads as follows: “Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; [***] (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under [sections 10AA or under any of the provisions of Chapter VI-A under the heading “C. – Deductions in respect of certain incomes”, if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made;”

The only clause that could possibly apply in the present case in clause (ii) of Sec.143(1)(a) of the Act, which says that if an incorrect claim is IT(TP)A No.984/Bang/2022 Page 7 of 7