SHRI.KRISHNABAI GHAT TRUST,SATARA vs. INCOME-TAX OFFICER,(EXEMPTIONS), WARD-1, PUNE

PER R.S.SYAL, VP : This appeal by the assessee emanates from the order passed by the CIT(A)-10, Pune on 01-10-2018 in relation to the assessment year 2014-15.

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for the year under consideration, i.e. A.Y. 2014-15 in view of the Proviso to Section 12A sub-section (2) and the provisions of Section 11 and 12 would apply accordingly”.

a legal issue has been raised therein. Since no investigation of

fresh facts is necessary to adjudicate this ground, I am, ergo,

admitting the same to be taken up for disposal on merits.

trust filed its return declaring total income at Nil. During the

course of assessment proceedings, the Assessing Officer (AO)

observed that the assessee was established to maintain, repair,

preserve and operate Ghat on the banks of Krishna river, Karad,

Dist. Satara. The AO completed the assessment at a total income

at Rs.5,60,430/- in view of the fact that the assessee-trust was

not registered u/s.12AA of the Income-tax Act, 1961 (hereinafter

also called `the Act’). The assessee appealed against the

assessment order contending that the additions made by the AO

were unwarranted. Not convinced, the ld. CIT(A) dismissed the

appeal, against which the assessee has approached the Tribunal.

material on record. First of all, I am espousing the additional

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ground raised by the assessee through which it has been

contended that the assessee was granted registration by the ld.

CIT (Exemptions) vide his order dated 28-09-2017 and as such

the benefit of such registration ought to have been granted for

the extant appeal as well. In order to appreciate the rival

contentions, it would be apposite to note down the relevant part

of the mandate of sub-section (2) of section 12A, which is as

under :

`Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made: Provided that where registration has been granted to the trust or institution 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 and the objects and activities of such trust or institution remain the same for such preceding assessment year: (italicized for emphasis)

assessee has made an application for registration after the date

specified in the sub-section (2), the provisions of sections 11 and

12 of the Act shall apply from the assessment year immediately

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following the financial year in which such application is made.

First proviso to this section is relevant for our purpose. This

proviso states that where the registration has been granted to the

assessee u/s.12AA, then the provisions of sections 11 and 12

shall apply to 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

and the objects and activities of such trust remained the same for

such preceding assessment year”. Crux of the provision is that if

registration has been granted subsequently and the proceedings

for some earlier year are pending before the AO as on the date of

granting the registration, then the benefit of sections 11 and 12

should be granted to such earlier years as well provided the

objects and activities of the trust remained the same. It is

relevant to note that the registration in the extant case was

granted by the CIT (Exemptions), Pune on 28-09-2017. The

assessment in this case was completed u/s.143(3) of the Act on

15-12-2016. Thereafter, the assessee preferred first appeal before

the ld. CIT(A) against the said assessment order, which came to

be decided by means of impugned order dated

01-10-2018. This manifests that as on the date of grant of

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registration by the ld. CIT (Exemptions), though the assessment

order had already been passed but the appeal of the assessee was

pending before the ld. CIT(A). Under such circumstances, a

question arises as to whether or not the benefit of first proviso

can be extended to the assessee?

interpret it strictly, then the pendency of the assessment

proceedings before the AO is sine qua non for getting the

extended benefit of registration in terms of the mandate of the

proviso. Section 250 of the Act deals with the procedure in

appeal before the CIT(A). Sub-section (4) of section 250

provides that the Commissioner (Appeals) may, before disposing

of any appeal, make such further inquiry as he thinks fit. Sub-

section (5) of this section provides that the Commissioner

(Appeals) may, at the hearing of an appeal, allow the appellant to

go into any ground of appeal not specified in the grounds of

appeal. Section 251 deals with the powers of the CIT(A). Clause

(a) of sub-section (1) of section 251 provides that in an appeal

against an order of assessment, he may confirm, reduce, enhance

or annul the assessment. Clause (c) provides that in any other

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case, he may pass such orders in the appeal as he thinks fit.

Explanation to section 251 provides that in disposing of an

appeal, the CIT(A) may consider and decide any matter arising

out of the proceedings in which the order appealed against was

passed, notwithstanding that such matter was not raised before

him. A close scrutiny of the above provisions abundantly shows

that the CIT(A) can not only allow the appellant to go into any

fresh ground of appeal not specified in the grounds of appeal, but

he can suo motu consider and decide any matter arising out of

the assessment proceedings even if such a matter was not raised

before him. Thus, it is overt that he can take up new issues

arising from the assessment at his own volition as well as at the

instance of the assessee. Further, he is empowered to confirm,

reduce, enhance or annul the assessment. It is thus clearly borne

out from the above provisions that the CIT(A) has got plenary

powers in an appeal before him against an assessment order.

What AO can do, can be done by CIT(A) in an appeal before

him. Even what the AO could have done but failed to do, can

also be done by him. It shows that the powers of a CIT(A) in an

appeal against an assessment order are almost similar to those of

an AO. If extend this analogy to the provisions of section

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12A(2), an irresistible conclusion which follows is that the

benefit of the proviso is available not only when the assessment

proceedings are pending before the AO but also when an appeal

against the assessment order is pending before the ld. CIT(A). It

is so for the reason that the appeal proceedings are nothing but

continuation of the assessment proceedings.

object of proviso to section 12A(2) is to liberally grant the

benefit of registration when the trust is otherwise engaged in

genuine charitable activities and the registration has been

actually granted albeit after the close of the relevant period.

Purpose of this proviso is to benefit assessees in the given

circumstances subject to the fulfillment of other conditions. In

such a situation, the object of the proviso is furthered if its

benefit is made available to the extended assessment

proceedings, being, the proceedings before CIT(A). As at the

time of granting registration by the ld. CIT (Exemptions) to the

assessee, the appeal of the assessee was pending before the ld.

CIT(A), in my considered opinion, the benefit of first proviso to

section 12A(2) ought to have been granted. My view is fortified

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by the judgment of Hon’ble Rajasthan High Court in CIT

(Exemptions) Vs. Shree Shyam Mandir Committee (2018) 400

ITR 466 (Raj.) in which it has been held that “an assessment

proceedings which is pending in appeal before the appellate

authority should be deemed to be “assessment proceedings

pending before the AO.” within the meaning of the term as

envisaged under the proviso. It follows there from that the

assessee which obtained registration u/s.12AA of the Act during

the pending of appeal was entitled for exemption claimed u/s.11

of the Act”. The additional ground thus raised is allowed by

holding that the assessee would be entitled to exemption u/ss. 11

and 12 of the Act for the year under consideration on the raison

d’etre that the registration was, in fact, granted to the assessee

u/s.12AA during the pendency of proceedings before the ld.

CIT(A).

ground, the impugned order is set-aside and the matter is

restored to the file of AO for framing a de novo assessment as

per law after allowing a reasonable opportunity of hearing to the

assessee. Needless to say, the assessee in such assessment

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proceedings would be considered to have been granted

registration and the provisions of sections 11 and 12 shall apply

pro tanto.

Order pronounced in the Open Court on 03rd May, 2019.

Sd/- (R.S.SYAL) उपा�य� उपा�य�/ VICE PRESIDENT उपा�य� उपा�य�

पुणे Pune; �दनांक Dated : 03rd May, 2019 सतीश

आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत / Copy of the Order is forwarded to : अ�ेिषत आदेश आदेश आदेश अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals)-10, Pune 4. The Pr. CCIT, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. // True copy // आदेशानु आदेशानुसार सार/ BY ORDER, आदेशानु आदेशानु सार सार

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

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Date 1. Draft dictated on 02-05-2019 Sr.PS 2. Draft placed before author 02-05-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *