SHRI. BHADRESHWAR EDUCATION AND SOCIAL WELFARE TRUST,BIJAPUR vs. INCOME TAX OFFICER, WARD-1 EXEMPTION , GULBARGA

5. The ld. CIT(A) erred in not considering the submission made by Appellant, explaining the facts of the case. The addition confirmed by the CIT(A) ought to have deleted.

7. The learned assessing authority erred in levying the interest us 234 of the Act 8. For these and other grounds that may urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.”

i. On the facts and in the circumstances of t5he case, the learned Commissioner of Income Tax (Appeals) has erred in not appreciating that the Appellant is duly registered under section 12AA of the Income Tax Act, 1961 and has been issued Form 10AC for the relevant assessment year. Therefore, the Appellant is eligible for exemption under section 11 of IT Act, and the same ought to have been allowed in accordance with law. ii. The learned CIT(A) ought to have considered and verified the fact that the Appellant was holding a valid registration under section 12AA of Income Tac Act, 1961. Failure to do so and confirming the additio0n of the entire gross receipts as taxable

Page 3 of 9 income of the Appellant Trust is erroneous, contrary to law, and liable to be deleted. iii. The learned CIT(A) ought to have appreciated that the order passed by the learned Assessing Officer under section 143(1) of the Income Tax Act, 1961 disallowed the exemption claimed under section 11 without affording any opportunity of being heard to the Appellant. The said disallowance was made purely on an assumptive basis and without proper verification, and therefore, the addition is arbitrary and liable to be deleted.

3.1. Before us, the Ld. A.R. of the assessee drew our attention to a memo dated 18/06/2025, praying for admission of additional grounds of appeal wherein it is stated that these are legal grounds and arising from the fact already before the lower authority. Further, it is submitted that, in fact, no specific ground was raised. Hence, now the assessee is raising the particular ground and accordingly prayed that the additional ground now raised may kindly be linked up with the original grounds of appeal and the same may be admitted and disposed of on merits in the interest of justice.

3.2 We have heard both parties on admission of additional grounds. In our Opinion, all the facts are already on record, and there is no necessity for the investigation of any fresh facts for the purpose of the adjudication of the above grounds. Further, we are also of the opinion that the additional grounds raised in the present case are legal in nature & therefore these are critical for a fair adjudication of the matter. Hence, we are inclined to admit these additional grounds raised before us and admit the same for adjudication.

6. The Ld. ADDL/JCIT(A)-1, Gurugram dismissed the appeal of the assessee by observing that the assessee filed its return of income in Form ITR-7 for the year under consideration on 31.03.2022, i.e. after the due date, which was 15.03.2022. Further, the assessee had not filed the audit report in Form No.10B. As per the provision of section 12A(ba) of the Act provides that the exemption u/s. 11 of the Act can be availed only if the return of income was filed in the manner prescribed under the provisions of section 139(4A) of the Act which in turns requires that an assessee claiming exemption u/s.11 of the Act to file the return of income within the due date prescribed u/s. 139(1) of the Act. Further, as per Rule 17B and Rule 12(2) of the Income Tax Rules, 1962, the audit report is to be furnished electronically. As per section 12A(1)(b) of the Act, the audit report in form No.10B is required to be filed one month prior to the due date for furnishing the return of income u/s. 139(1) of the Act. Considering the facts and legal position, the Ld. ADDL/JCIT(A)-1, Gurugram held that the CPC has rightly disallowed the exemption claimed by the assessee u/s. 11 and 12 of the Act and accordingly dismissed the appeal of the assessee.

Page 7 of 9 any audit report in the prescribed format in Form No.10B/10BB as required u/s. 12A(1)(b) of the Act. It is an undisputed fact that the assessee trust was provisionally registered under sub clause (vi) of clause (ac) of sub section (1) of section 12A of the Act on 27.05.2021 w.e.f. AY 2021-22 to AY 2023-24 vide provisional registration no. AANTS2522GE20206. It is also an undisputed fact that the assessee trust has also been provisionally approved u/s. 80G(5) of the Act on 28.05.2021 effective from 28.05.2021 to AY 2024-25 vide provisional approval no. AANTS2522GF20214. The assessee had audited its books of accounts only on 16.03.2023, i.e. only after passing of the intimation u/s. 143(1) of the Act. Further, on going through the audit report dated 16.03.2023, we also take note of the fact that it is not in the prescribed Form No.10B/10BB and therefore we are inclined to agree with the view of ld. ADDL/JCIT(A)-1, Gurugram, that as the audit report in Form No.10B was not filed by the date of passing intimation u/s. 143(1) of the Act, the exemption u/s. 11 and 12 of the Act can not be granted to the assessee even if the assessee trust is provisionally registered u/s. 12AB of the Act. We are of the considered opinion that section 12A specifies the conditions for the applicability of sections 11 & 12 of the Act. One of such conditions is that the accounts of the trust for that year have been audited by an accountant, and the person in receipt of the income furnishes the audit report in the prescribed form within the due date.

10.1 Further, we take note of the fact that the CPC, while passing the intimation u/s. 143(1) of the Act, treated the entire gross receipts of the assessee trust as income of the assessee trust without giving the benefit of any expenditures incurred towards earning such gross receipts. As per Section 4 of the Act, the income tax shall be charged for any assessment year in respect of the total

Page 8 of 9 income of the previous year of every person. Thus, the basis of charge of income tax is always on Total Income & not on Gross Receipts/Turnover.

10.2 Merely because the assessee trust had filed a belated return and also submitted the belated audit report, which was also not in the prescribed Form 10B, that doesn’t mean that the AO will also deny all the legitimate expenditures incurred to earn those Gross receipts. We understand that in the absence of fulfilling the conditions as mentioned in section 12A, the CPC had rightly not granted the benefit of exemption u/s 11 of the Act, but the basic cardinal principle for charging income tax is always on the real income earned by the assessee. Therefore, the total income should be calculated after allowing the deductions of the legitimate expenditure as per the provisions of the Act from the gross receipts; however, in the present case, no expenditure has been granted to the assessee trust for the purpose of levying tax on income. This being so, in the interest and justice of fair play, we remit this limited issue to the file of AO/ AO(Exemptions) for examining these expenditures as claimed by the assessee in its audit report submitted before us and allow the same in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce the audited books of accounts along with bills/vouchers to substantiate its claims. It is ordered accordingly.