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

The ld. CIT(A) ought to have appreciated that claim of the Appellant was in accordance with law and was also supported by the juri ictional precedence and accordingly disallowance was liable to be deleted. 4. The ld. CIT(A) ought to have appreciated that the Appellant has not claimed any exemption u/s 11 of the Act since there was no 12A registration with the Appellant trust during the year. Further the id. CIT(A) ought to have appreciated that the income received by the Appellant was from tuition fees, bus fees and other income and accordingly expenditure was also incurred paying in salaries to staff bus drivers etc. Thus, the Addition confirmed has to be deleted. 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. 6. Without prejudice the addition is excessive arbitrary and unreasonable and liable to be reduced substantially. 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.”

The assessee has also raised the following additional grounds of appeal: - 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.

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.

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. Shri Bhadreshwar Education and Social Welfare Trust

Now the brief facts of the case are that the assessee is a charitable, educational and integrated trust established with objects of education, health, relief to the poor, old people, persons with disabilities, and empowerment of women. The Trust runs more than 10 educational institutions. The assessee trust filed its return of income for the AY 2021-22 belatedly on 31.03.2022 by declaring a total income of Rs. NIL, whereas the extended due date to furnish the return of income was 15.03.2022. The assessee had not filed any audit report in the prescribed format in Form No.10B/10BB as required u/s. 12A 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 is also 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 trust had audited its books of accounts only on 16.03.2023, i.e. way after the due date of furnishing the return of income. In fact, the books of accounts were audited after passing of the intimation u/s. 143(1) of the Act. The CPC, while processing the return u/s. 143(1) of the Act did not allow the benefit of exemption u/s. 11 of the Act on the ground that the audit report in Form No.10B had not been filed by the assessee trust one month prior to the due date for furnishing the return u/s. 139(1) of the Act and accordingly raised a demand of Rs.1,42,31,710/- vide its intimation dated 20.09.2022. Shri Bhadreshwar Education and Social Welfare Trust

Aggrieved by the intimation passed u/s. 143(1) of the Act dated 20.09.2022, the assessee preferred an appeal before the CIT(A)/ADDL/JCIT(A).

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.

Aggrieved by the order of the Ld. ADDL/JCIT(A)-1, Gurugram, dated 07.02.2025, the assessee has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising 12 pages containing therein the copy of the order of provisional approval granted u/s.80G(5) of the Act, a copy of the order of provisional registration granted u/s. 12A of the Act, as well as a Shri Bhadreshwar Education and Social Welfare Trust

Before us, the ld. A.R. of the assessee vehemently submitted that the authorities below had wrongly considered the entire receipts of the trust as income of the trust without allowing any expenditures incurred by the assessee trust. Further, A.R. submitted that the authorities below completely ignored the basic principles of charging income tax, which is always in respect of the total income of the previous year. Further, the AR submitted that in the present AY, the assessee trust had incurred a loss of (Rs.53,79,642/-) and therefore no additions should have been made. Lastly, the ld. A.R. submitted that the assessee is also provisionally registered by the ld. PCIT/CIT u/s. 12A(1) of the Act and therefore the disallowance u/s. 11 of the Act is unjustified.

The ld. D.R., on the other hand, relied on the order of the Ld. ADDL/JCIT(A)-1, Gurugram and submitted that the assessee has filed the return belatedly and also did not file the audit report in Form 10B and therefore the CPC had rightly disallowed the claim of exemption u/s. 11 of the Act.

We have heard the rival submissions and perused the materials available on record. The assessee is a charitable, educational and integrated trust established with the objects of education, health, relief to the poor, old people, persons with disabilities, and empowerment of women. That Trust runs more than 10 educational institutions. The assessee trust filed its return of income for the AY 2021-22 belatedly on 31.03.2022 by declaring a total income of Rs. NIL, whereas the extended due date to furnish the return of income was 15.03.2022. The assessee had not filed Shri Bhadreshwar Education and Social Welfare Trust

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 Shri Bhadreshwar Education and Social Welfare Trust

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. Shri Bhadreshwar Education and Social Welfare Trust

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file