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Facts
The appellant, a charitable trust registered under Section 12AA, failed to re-register under Section 12AB by the initial deadline for AY 2022-23. This led to a disallowance of exemptions under Sections 11 & 12 by the CPC under Section 143(1). Subsequently, the appellant applied for and obtained provisional registration under Section 12AB within the extended deadline provided by CBDT Circular No. 07/2024, but the ld. CIT(A) dismissed the appeal.
Held
The ITAT acknowledged that CBDT Circular No. 07/2024 extended the re-registration deadline to June 30, 2024, and the assessee obtained provisional registration within this extended period. Considering the bona fide nature of the appellant's default and the CBDT Circular, the ITAT set aside the orders of the lower authorities. The matter was remitted back to the Assessing Officer for fresh examination and to pass a speaking order.
Key Issues
Whether disallowance of exemptions under Sections 11 and 12 for non-registration under Section 12AB is justified, especially when the assessee obtained provisional registration within the extended deadline provided by CBDT Circular No. 07/2024.
Sections Cited
11, 12, 12AA, 12AB, 119, 143(1)
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2022-2023 Akhil Bharatvarshiya CH KSH Mahasabha,..Appellant C/o. Agarwal Vishwanath & Associates, 133/1/1A, S.N. Banerjee Road, Pushkal Bhawan, 3rd Floor, Kolkata-700013, West Bengal [PAN:AAAAA8373R] -Vs.- Centralized Processing Centre (CPC),……...Respondent Bengaluru, Income Tax Department, Post Box No. 1, Electronic City Post Office, Bengaluru-560100 Appearances by: Shri Deep Agrawal, A.R. and Shri Subhankar Ghosh, A.R., appeared on behalf of the assessee Shri Somnath Das Biswas, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing: May 19, 2025 Date of pronouncing the order: July 28, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of Id. Additional/Joint Commissioner of Income Tax (Appeals)-1, Mumbai, dated 12.12.2024 passed for Assessment Year 2022-2023.
(A.Y. 2022-2023) Akhil Bharatvarshiya CH KSH Mahasabha 2. Facts in brief are that the appellant is an Association of Persons with the status of a Resident Public Charitable Trust. Registered under the West Bengal Registration of Societies Act, 1961, since 23rd July, 1912 bearing Registration No. 02145/030 and duly registered under section 12AA of the Income Tax Act, 1961, effective from 1st April, 2006/ The appellant has a longstanding history of charitable activities and has consistently complied with all substantive requirements under the Act for claiming exemptions under Sections 11 and 12, including maintenance of proper books of account, application of income for charitable purposes, and filing of income tax returns within the prescribed time limits. For the assessment year 2022-23, the appellant filed its return of income on 6th November, 2022 declaring total income of Rs.2,49,340/- after claiming exemptions under sections 11 & 12 of the Act. On 28.03.2023, the appellant received an intimation under section 143(1) of the Act from the Centralized Processing Centre (CPC), Bangalore, disallowing exemptions under sections 11 & 12 amounting to Rs.25,13,870/- and raising a consequential demand of Rs.7,87,530/-. The reason for disallowance in the intimation was the non-registration of the appellant under section 12AB of the Act, a requirement introduced by the Finance Act, 2020. The appellant being unfamiliar with the technical and procedural changes introduced by the Finance Act, 2020, inadvertently failed to apply for re-registration under section 12AB within the initially prescribed time limit. Upon discovering the oversight, the appellant took immediate corrective action by filing Form 10A for re-registration under section 12AB on 04.10.2023. The appellant was granted provisional registration (A.Y. 2022-2023) Akhil Bharatvarshiya CH KSH Mahasabha under section 12AB on 11.10.2023 with effect from assessment years 2024-25 to 2026-27. Meanwhile, the Central Board of Direct Taxes (CBDT) recognizing the widespread difficulties faced by charitable organizations in comply with the re-registration requirements, issued Circular No.07/2024 dated 25.04.2024, extending the deadline for re-registration under section 12AB to 30th June, 2024. Despite these developments, the ld. Addl./JCIT(Appeals) in his impugned order dated 12th December, 2024 summarily dismissed the appellant’s appeal without adequately considering the impact of the CBDT Circular and the Bonafide nature of the appellant’s default.
On being aggrieved, the assessee preferred an appeal before the ITAT and raised the following grounds:- (1) That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the disallowance of exemption under section 11 and section 12 of the Income Tax Act, 1961, amounting to Rs.25,13,870/-, solely on the ground of nonregistration under section 12AB. without appreciating that the appellant was already registered under section 12AA since 01.04.2006. (2) That the Ld. C1T(A) erred in law and in fact by failing to consider that the delay in filing Form 10A for re-registration under section 12AB was inadvertent and beyond the control of the appellant, given that the appellant is a public charitable trust run by laypersons with limited knowledge of tax procedures. Further, the Ld. CIT(A) did not appreciate that the Central Board of Direct Taxes (CBDT) had extended the deadline for filing Form 10A to 30.06.2024, and the appellant has since obtained provisional registration under section 12AB covering Assessment Year 2022-23, making the denial of exemption unjust and contrary to the principles of natural justice. (3) That the Ld. CIT(A) grossly erred in not considering that the appellant had duly applied for re-registration under section 12AB. received approval vide Form 10AC, and subsequently (A.Y. 2022-2023) Akhil Bharatvarshiya CH KSH Mahasabha complied with all procedural requirements, thus making the disallowance of exemption under section 11 and 12 legally unsustainable. (4) That the Ld. CIT(A) erred in dismissing the appeal on account of a delay of 243 days, without appreciating that the delay was due to genuine reasons, including the appellant’s lack of awareness of the requirement to re-register and the subsequent efforts taken to rectify the procedural lapse in line with CBDT's relaxation measures. (5) That the Ld. C1T(A) has violated the principles of natural justice by not considering the merits of the case and rejecting the appeal without providing due relief, despite the appellant being a long-standing charitable institution duly registered under section 12AA.
4. I have heard both the sides. The ld. Counsel for the assessee has filed a written submission before the ITAT, which reads as under:- Your Honour, The Central Board of Direct Taxes (CBDT), exercising its powers under Section 119 of the Act, issued Circular No. 07/2024 dated 25.04.2024. extending the deadline for reregistration under Section 12AB to 30.06.2024. This circular represents an instruction issued to mitigate hardship faced by charitable organizations due to the procedural changes introduced by the Finance Act, 2020. The legal effect of this circular is to effectively condone any delay in obtaining registration under Section 12AB until the extended deadline of 30.06.2024. The appellant, having obtained provisional registration under Section 12AB on 07.05.2024, is well within this extended deadline and should, therefore, be entitled to the benefit of this condonation. Reliance is placed on the decision of the decision of Delhi Bench of ITAT in LT.A. No. 3536/Del/2024, dated 19.03.2025 in case of “Smt. Ashrafi Devi Shiksha Samiti vs. ITO, Ward- Exemption', wherein an almost identical issue had arisen for adjudication, where the ITAT held in favour of the assessee by allowing the exemption in line with the CBDT circular.
(A.Y. 2022-2023) Akhil Bharatvarshiya CH KSH Mahasabha In light of the above submissions and the judicial precedents cited, it is respectfully submitted that the disallowance of exemptions under Sections 11 and 12 in the present case is legally untenable and should be set aside. The appellant has substantively complied with all requirements for claiming exemptions and has now obtained provisional registration under Section 12AB within the extended deadline provided by the CBDT. The procedural lapse was unintentional and has been effectively condoned by the CBDT through Circular No. 07/2024. Therefore, the appellant most humbly prays that this Hon'ble Tribunal may be pleased to: 1. Direct the Assessing Officer to give effect to the provisional registration obtained by the appellant under Section 12AB, which is effective from AY 2022-23; and 2. Grant such other and further reliefs as this Hon'ble Tribunal may deem fit and proper. The ld. Counsel pleaded before the Bench to allow the claim of exemption for re-registration under section 12AB in conformity with the CBDT Circular and by relying on the decision of the ITAT, Delhi Bench in dated 19th March, 2025 in the case of Smt. Ashrafi Devi Shiksha Samiti -vs.- ITO, Ward- Exemption”.
On the other hand, ld. Departmental Representative relied on the orders passed by the ld. Addl./JCIT(Appeals) and submitted that the appellant-assessee not even filed application for provisional registration under section 12AB of the Act, which was filed one month’s prior to commencement of previous year in which charitable activities have to be started, therefore, CPC has rightly rejected the claim of the assessee under sections 11 & 12 of the Income Tax Act. The ld. Addl./JCIT(Appeals) rightly confirmed the order passed by the CPC. He, therefore, pleaded to uphold the order passed by the ld. Addl./JCIT(Appeals). 5 (A.Y. 2022-2023) Akhil Bharatvarshiya CH KSH Mahasabha 6. I have heard both the sides and perused the material available on record. The main grievance of the appellant-assessee is that the ld. Addl./JCIT(Appeals) dismissed the appeal of the assessee without considering the impact of the CBDT Circular and the bonafide nature of the appellant’s difficulty. It is an admitted fact that the CBDT issued a Circular bearing No. 7 of 2024 dated 25.04.2024 extending the deadline for re-registration under section 12AB of the Act to 30th June, 2024. The issuance of the Circular is to effectively condone the delay in obtaining registration under section 12AB until the extended period of 30.06.2024 is over. It is also an admitted fact that the appellant-assessee obtained provisional registration under section 12AB on 7th May, 2024, which is well within the extended period. Therefore, considering the submissions of the assessee and as per the Circular issued by the CBDT vide Circular No. 7 of 2024 dated 25.04.2024 and considering the extending period for re- registration under section 12AB, I am of the view that it is a fit case to set aside the orders passed by the lower authorities and remit the matter back to the file of ld. Assessing Officer to consider the written submission filed by the assessee as well as to examine the facts of the case afresh and pass a speaking order.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 28/07/2025.