ARULMIGU VENNANKUD MUNIAPPAN THIRUKOIL,SALEM vs. ITO, EXEMPTIONS WARD,, SALEM

आयकर अपीलीय अिधकरण, ‘ए’
यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘A’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं

ी जगदीश, लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No.1421/Chny/2025
िनधारणवष/Assessment Year: 2012-13

Arulmigi Vennankudi –
Muniappan Thirukoil,
Omalur Main Road,
Jagir Ammapalayam PO,
Salem-636 302. v.
The ITO,
Exemptions Ward,
Salem.
[PAN: AAAAV 9249 B]

(अपीलाथ/Appellant)

(यथ/Respondent)

अपीलाथ क ओर से/ Appellant by :
Ms. G. Vardini Karthik,
Advocate
यथ क ओर से /Respondent by :
Mr. Karthik Dasari, JCIT
सुनवाईकतारीख/Date of Hearing
:
15.10.2025
घोषणाकतारीख /Date of Pronouncement
:
26.11.2025

आदेश / O R D E R
PER ABY T. VARKEY, JM:

This is an appeal preferred by the assessee-Trust/Temple against the order of the Learned
Commissioner of Income
Tax
(Appeal)/Addl./JCIT(A)-19, (hereinafter referred to as “the Ld.CIT(A)”),
Mumbai, dated 06.01.2025 for the Assessment Year (hereinafter referred to as "AY”) 2012-13. Arulmigi Vennankudi Muniappan Thirukoil
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different assessee’s and classified them differently under seven (7) heads viz., (i) cases where no return filed (ii) but cash deposits in commensurate to income returned (iii) cash deposits made but no return filed (iv) sale of immovable property - cases where no return of income filed (v) sale of immovable property – cases were return of income is filed but income declared is not commensurate to sale consideration received
(vi) purchase of immovable property – cases where no return of income filed (vii) purchase of immovable property – cases where return of income is filed but income declared is not commensurate to the investments made.
5. In the “reasons recorded”, assessee’s name figure under the third criteria i.e. cash deposits made, but no return of income filed, as Item
No.53 wherein, it is shown that the assessee temple has deposited cash of ₹55,27,489/-. Thereafter, the AO noted in the omnibus “reasons recorded” that even though the assessee deposited substantial cash in its bank account, in the absence of the income tax return, income chargeable to tax has escaped assessment. In the assessment order, the AO is noted to have acknowledged that assessee is a temple and it got registered u/s.12AA of the Act on 04.02.2019 (AY 2019-20). He is noted to have acknowledged that assessee pursuant to the notice u/s.148 of the Act had filed its return of income on 17.12.2019 along with audited financial statements, and further noted that the assessee had shown total receipts
Arulmigi Vennankudi Muniappan Thirukoil
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of ₹1,37,97,350/- and the excess of income over expenditure was shown at ₹84,59,783/-. The AO noted that the assessee maintained several bank accounts with Karur Vysya Bank, Alagapuram Branch, Salem
[Account Nos.1246155000104121 & 1246155000104114] and noted that the first account was meant for fund transfer from the second account and the second account for remittances from the temple. According to the AO, the cash deposits in the bank accounts amounts to ₹1,09,22,321/- [₹55,27,489/- & ₹53,94,832/-]. The assessee explained that deposits were made out of Hundial collections/donation-boxes, ticket sales and donations, which was a joint account, the Executive Officers and the Asst. Commissioner, Hindu Religious & Charitable Endowment [HR &
CE] Department of that time operated the bank account. The AO acknowledged the source of the deposits after due verification with the relevant books of accounts and noted that the financials drawn by the assessee were subject to audit by the HR & CE Department of the Government of Tamil Nadu. Having cross-checked the major expenses claimed by the assessee, the AO treated the assessee as an AOP [since the assessee failed to file the ITR for AY 2012-13 along with Audit Report and since, the assessee didn’t enjoy the registration u/s.12A of the Act during that period]. Hence, he was of the view that the assessee is not entitled to exempt income u/s.11 & 12 of the Act and then, passed the Arulmigi Vennankudi Muniappan Thirukoil
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assessment order on 31.12.2019 by bringing the excess income over expenditure to tax to the tune of ₹84,59,780/-.
6. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) wherein, the assessee brought to his notice as to how the assessee got registration u/s.12AA of the Act on 04.02.2019. The assessee submitted that the Income Tax Department [the Ld.CIT(E) vide order dated
30.07.2018] addressed letter to the State Government of Tamil
Nadu/Commissioner, HR & CE Department requesting their good office to conduct outreach programme (awareness programme) so that temple trust under aegis of HR & CE Department can avail registration u/s.12AA of the Act. Pursuant to such initiative, the assessee-Temple filed an application in Form 10A seeking registration u/s.12AA of the Act on 24.08.2018 and the Ld.CIT(E) granted registration u/s.12AA of the Act finding it to be involved in religious activities vide order dated 04.02.2019
from AY 2019-20. After the registration u/s.12AA was granted to assessee, the AO issued notice u/s.148 of the Act to reopen the assessment for AY 2012-13. Against re-opening of assessment, the assessee asserted before the First Appellate Authority that as per the third proviso to Sec.12A(2) of the Act, the AO was prohibited to issue such a notice u/s.148 of the Act to a Trust for any year preceding the assessment year in which registration u/s.12AA of the Act has been granted and for such a proposition relied on the decision of the Hon’ble
Arulmigi Vennankudi Muniappan Thirukoil
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Karnataka High Court in the case of CIT(E) v. Karnataka State Students
Welfare Fund reported in [2022] 444 ITR 436 (Karnataka) and also the decision of the Hon’ble Punjab & Haryana High Court in the case of Prem
Chand Markanda College for Women v. ACIT (Exemption) reported in [2023] 154 taxmann.com 442 (P&H) and pointed out that the SLP preferred by the Department against the order of the High Court was dismissed by the Hon’ble Apex Court reported in [2024] 460 ITR 495
(SC). However, the Ld.CIT(E) is noted to have called for Remand Report from the AO, but acknowledges that the AO didn’t furnish any Remand-
Report. But he brushed aside the objections/grounds of appeal preferred by the assessee and dismissed the appeal without passing any speaking order by merely stating that assessee in AY 2012-13 neither enjoyed registration u/s.12AA of the Act nor filed ITR, therefore, he dismissed the appeal of the assessee.
7. Aggrieved, the assessee is in appeal before us.
8. Having heard both the parties and after perusal of the records, it is noted that the assessee claims to be 500 years old religious Trust and has been granted registration u/s.12AA of the Act vide order dated
04.02.2019 (AY 2019-20). After assessee Trust have been granted registration, the AO is noted to have issued notice u/s.148 of the Act on 25.03.2019 on the strength of “reasons recorded” along with ‘96’ different
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persons/assessees. The omnibus “reasons recorded” as noted supra has been classified under eight (8) heads and the assessee is noted to have been placed under 3rd head i.e. ‘cash deposits made, but no return of income filed’ wherein the assessee’s name figures in at Serial No.53
where a figure of ₹55,27,489/- is seen to be recorded as ‘cash deposits’, which fact is assumed to be the basis for believing that income has escaped assessment. From a reading of the “reasons recorded”, it is obvious that there is no separate objective satisfaction qua assessee is noted to have made in the impugned “reasons recorded”. It is seen that the main reason for re-opening of assessment was deposit of cash of ₹55,27,489/- which according to the AO represented the income escaping tax. It is noted that the assessee is a 500 years old religious temple which filed RoI pursuant to the notice u/s.148 of the Act along with complete set of audited accounts before the AO. The AO is noted to have verified and cross-verified the sources of the deposit with the books of accounts of the assessee and found that the financials of the temple were subject to audit by the Government of Tamil Nadu. It is noted that the AO in the assessment order has not made any addition on account of unexplained cash deposits of ₹55,27,489/- [no addition u/s.68/69 of the Act]. Rather, it is noted that the AO while framing the assessment order, he has changed tact and assessed the net income of the temple on the ground that there was no registration u/s.12 of the Act during the AY
Arulmigi Vennankudi Muniappan Thirukoil
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2012-13. Therefore, according to the AO, the benefit of exemption u/s.11/12 of the Act can’t be given. Such an action of the AO can’t be countenanced in the light of the bar placed by the third proviso to Sub- section (2) of Section 12A of the Act which prohibits the AO in the first place not to reopen the assessment of a Trust or Institution for any assessment year preceding the first assessment year for which the registration has been granted. The relevant provisions is noted as under:
Section 12A(2) of IT Act -
(2) 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:]
[ ]ייי
[Provided that the provisions of sections 11 and 12 shall apply to a trust or institution, where the application is made under-
(a) sub-clause (1) of clause (ac) of sub-section (1), from the assessment year from which such trust or institution was earlier granted registration;
(b) sub-clause (iii) of clause (ac) of sub-section (1), from the first of the assessment year for which it was provisionally registered:
Provided further that where registration has been granted to the trust or institution under section 12AA or section 12AB], 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:
Provided also] that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year.
Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under [section 12AA ог
section 12AB].][emphasis given by us]
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assessee didn’t enjoy registration in the preceding assessment year.
Admittedly, in this case assessee-Temple was granted registration u/s.12AA of the Act on 04.02.2019 [AY 2019-20] and then the AO reopened the assessment for preceding AY 2012-13 and then brought to tax excess income over expenditure as an AOP, because assessee didn’t enjoy registration during that relevant AY, which impugned action of AO, according to us falls in the teeth of 3rd proviso to section 12A(2) of the Act and the CBDT Circular (supra), which prohibits AO to reopen preceding assessment years for non-registration u/s 12. Hence, we agree with the Ld.AR that the reason given by the AO to assess net income of the assessee-Trust was in defiance to the CBDT directions which can’t be sustained in the light of the decision of the Hon’ble Karnataka High Court in the case of CIT(E) v. Karnataka State Students Welfare Fund (supra) and the Hon’ble Punjab & Haryana High Court in the case of Prem Chand
Markanda College for Women (supra) [the SLP dismissed]. Viewed from another angle, we note that even though the AO reopened the assessment taking note of deposit of unexplained cash deposits of ₹55,27,489/-, the AO in the assessment order is noted to have not made any addition u/s.68/69 of the Act of the said cash deposit, and instead has only assessed net-income of the assessee-Temple by treating it as an AOP [because it didn’t had registration u/s.12A of the Act for AY 2012-13]
which impugned action can’t be sustained, since the juri ictional fact
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[unexplained cash deposits of ₹55,27,489/-], on the basis of which the AO reopened the assessment no longer exist in the present case, so the AO lost his power to assess any other income as held by Hon’ble Bombay
High Court in the case of Jet Airways 331 ITR 236 (BOM). In the light of the foregoing discussion, we are of the view that the AO erred in passing the assessment order by making an addition of the net income of ₹84,59,780/-. Hence, we direct deletion of the addition.
11. In the result, appeal filed by the assessee is allowed.

Order pronounced on the 26th day of November, 2025, in Chennai. (जगदीश)
(JAGADISH)
लेखा सद /ACCOUNTANT MEMBER
(एबी टी. वक
)
(ABY T. VARKEY)

याियक सदय/JUDICIAL MEMBER
चे ई/Chennai,
!दनांक/Dated: 26th November, 2025. TLN
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