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Facts
The assessee, a registered Section 8 company, filed its return claiming exemption under Section 11. The CPC denied this exemption due to issues with registration details. The assessee filed a rectification application and then an appeal to the CIT(A), both of which were dismissed.
Held
The Tribunal condoned the delay in filing the appeal. It held that the CIT(A) erred in dismissing the appeal without considering the grounds on merit. The issues were restored to the CIT(A) for fresh adjudication, considering the granted registration and relevant CBDT circulars.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal without adjudicating on merits, and whether the exemption under Section 11 should be allowed considering the circumstances of registration and relevant CBDT circulars.
Sections Cited
250, 143(1), 154, 11, 12, 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via), 12AA, 12A, 15TD
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Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to Assessment Year 2021-22 is directed against the order dated 07.02.2024 passed by National Faceless Appeal Centre, Delhi passed u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’).
Registry informed that there is delay of 32 days in presenting the appeal before the Tribunal. The assessee has filed a condonation petition stating the reasons which led to delay. Ld. Counsel for the assessee referring to the condonation petition prayed for condoning the delay of 32 days
After going through the averments made in the condonation petition, we find that there was ‘reasonable cause’ which prevented the assessee in filing the appeal within the stipulated time. Therefore, the delay of 32 days occurred in preferring the appeal before the Tribunal is condoned by virtue of decision of Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. MST Katiji (1987) 167 ITR 471 SC .
Assessee has raised following grounds of appeal :
“1. That impugned order passed by the National Faceless Appeal Centre, Delhi is bad in law, without jurisdiction, it is based on incorrect interpretation of law and without allowing proper and reasonable opportunity of being heard, 2. That on the facts and in the circumstances of case and in law, the National Faceless Appeal Centre, Delhi erred in rejecting appeal filed by the assessee summarily by stating that appellant has not filed appeal against intimation order u/s 143(1) and tried to take back door entry by filing appeal against order u/s 154 for which the original cause of action has arisen at the stage of 143(1) itself without appreciating the fact that on first stage appellant has taken the remedy of filing application u/s 154 which is legal and as per the provision of Income Tax Act. Thus the order of the National Faceless Appeal Centre is illegal and liable to be set aside to decide on merits.
2. That on the facts and in the circumstances of the case and in law the National Faceless Appeal Centre, Delhi erred in not deciding the following grounds of appeal on merits: That on the facts and in the circumstances of the case and in law the Ld. A.O. (CPC) erred in making disallowance of 1) Disallowed the aggregate income referred to in section 11, 12 and sections 10(23C)(iv), 10(23C)(v), 10(23C) (vi) and 10(23C)(via) derived during the previous year. 2) Disallowed the application of income for charitable or religious purpose or for the stated objects of the company/institution. without giving nature of the above disallowance and more so without considering the facts of the case and contents of return filed by the appellant.
3. The registration of the assessee appellant is a registered 'Section 8 Company under the Companies Act, 2013' under Section 12AA of said Act has been cancelled vide the impugned order without giving an opportunity to the writ petitioner-assessee and that too for just one AY 2020-21 as the counsel of the petitioner did not file the required application even for subsequent years the application was filed and registration was granted. It is an admitted fact that he benefit of Sections 11 and 12 of said Act vide registration under Section 12AA of said Act is being given to the writ petitioner- assessee for over thirty years and it has suddenly been declined.”
Brief facts of the case are that the assessee is a trust which furnished its return of income on 12.03.2022 duly enclosing Form No.10B and claimed benefit of section 11 of the Act declaring income as Nil and claimed refund of Rs.2,52,256/-. When the return was processed, the CPC vide order dated 08.12.2022 observed that “details of registration or approval under Income Tax Act details of section 12AB or 10(23C)(iv)/10(23C)(v)/ 10(23C)(vi)/10(23C)(via) is not provided in the column “Section under which the registration is applied”. CPC has further observed that “the Act has been amended from 01.06.2020 and all the entities have to get new registration/approval u/s.12AB or 10(23C)(iv)/10(23C)(v)/ 10(23C)(vi)/10(23C)(via) to be eligible for exemption”. Further, CPC has observed that “since in the case of assessee new registration/approval details are not available, exemption claimed in Sl.No. 4i. To 4viii in Schedule Part-B-T1 is not allowable” and accordingly income assessed at Rs.63,34,500/-.
Subsequently, the assessee filed rectification application u/s.154 of the Act but the same was rejected vide order dated 04.01.2013 mentioning the same reason as was quoted in the return processed u/s.143(1)(a)(ii) of the Act.
Aggrieved assessee preferred appeal before the ld.CIT(A) against the order u/s.154 of the Act but failed to succeed as ld.CIT(A) dismissed the appeal by observing as under :
“4. CIT's decision:
All the grounds of appeal are clubbed together for the sake of convenience and disposed as under :
4.1 The appellant has filed the return of income for AY 2021-22 on 12.03.2022. The CPC processed the return u/s 143(1) of the IT Act, 1961 on 08.12.2022 by disallowing an amount of Rs.2,21,49,718/- stating that the appellant has not filed fresh registration under 12AA before filing of return during the year under consideration. Thereafter, the appellant filed a rectification applications u/s 154 on 04.01.2023 before the CPC, which has been rejected by the CPC and passed the order on 04.01.2023. The appellant has challenged the order u/s 154 in the present appeal.
4.2 In this case, the appellant could have filed an appeal against the intimation u/s 143(1) as per the provisions of the Act. However, it appears that the appellant has not filed an appeal against the intimation u/s 143(1). Thereafter, the appellant has filed an application u/s 154 before the CPC which has been rejected and hence the appellant has filed the present appeal against the order u/s 154. In this regard, it is stated that the original cause of action in the present case had arisen at the stage of the proceedings u/s 143(1) and not u/s.154. The appellant is trying to make a back door entry by filing an appeal against the order u/s 154, the original cause of action for which had arisen at an earlier point of time during the proceedings u/s 143(1). Therefore, as the original cause of action has arisen at the stage of 143(1), the issue cannot be adjudicated upon in the present appeal and further there is no mistake apparent from record at the stage of 154. Therefore, the grounds of appeal are dismissed.
5. In the result, appeal is dismissed.”
Now the assessee is in appeal before the Tribunal.
Narrating the above facts, Ld. Counsel for the assessee referred to the CBDT Circular No.22/2022 dated 01.11.2022 wherein delay in filing of Form No.10A is extended upto 25.11.2022. He also referred to CBDT Circular No.6/2023, dated 24.05.2023 wherein clarifications regarding provisions relating to charitable and religious trusts have been given namely :
(i) regarding application of section1 15TD for failure to apply to registration/approval,
(ii) extension of due date for furnishing Form No.10BD,
(iii) clarification regarding applicability of provisional registration,
(iv) clarification regarding denial of exemption in case where the statement of accumulation is not filed by the due date; and (v) clarification regarding audit report to be furnished in Form No.10B 9(a) He further stated that ld.CIT(A) erred in dismissed the assessee’s appeal merely by stating that assessee is trying to take a back door entry by filing appeal against the order u/s.154 rather than filing the appeal against the order u/s.143(1) of the Act.
Ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.
We have heard both the sides and perused the record placed before us. In the instant case, assessee is aggrieved with the order of CPC passed u/s.143(1)(a) dated 08.12.2022 denying the exemption claimed by the assessee at Rs.2,21,49,718/-. Thereafter, the assessee has filed rectification application u/s.154 of the Act and the said application has also been rejected by the CPC. Subsequently assessee filed an appeal before the ld.CIT(A) against the order u/s.154 of the Act and the ld.CIT(A) dismissed the appeal stating that original cause of action arose at the time of processing the return u/s.143(1) and the assessee has filed the appeal u/s.154 of the Act.
We further observe that in Form No.36 filed by the assessee for appealing before this Tribunal the assessee has mentioned to section 143(1) of the Act under which the original order is passed. However, the impugned order dated 07.02.2024 has been passed against the appeal filed by the assessee aggrieved with the order u/s.154 of the Act dated 04.01.2023. We further notice that the reason given for denying the benefit of section 11 to the assessee is on account of not mentioning the details of registration or approval u/s.12AB of the Act. Before us, ld. Counsel for the assessee has referred to various CBDT circulars (supra) where the time limit for filing Form No.10A has been extended on account of technical difficulties faced by the various assesses on the income-tax portal. The assessee in the instant case has filed Form No.10A on 16.11.2022 which was subsequent to the date of filing the return on 12.03.2022 and the same was duly acknowledged by the Department and Form No. 10AC dated 30.11.2022 was issued and registration was granted u/s.12AB of the Act from A.Y. 2022-23 in place of A.Y. 2021-22. We note that due to technical difficulties faced by the assessee on the income-tax portal the application for registration could not be filed in time and after the form was filed successfully the assessee has been granted the registration u/s.12A of the Act and assessee is claiming that benefit of section 11 of the Act should be allowed for A.Y. 2021-22 for the income applied for charitable objects.
We thus taking note of the CBDT circulars (supra) and the facts and circumstances of the instant case, are of the considered view that the issues raised before us needs to be restored to the file of ld.CIT(A) for fresh adjudication and to pass a speaking order considering the registration u/s.12A of the Act granted to the assessee. Assessee is also directed to file necessary details along with the CBDT circulars referred above. Ld.CIT(A) shall take into consideration these CBDT circulars and decide as per law. Grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 22nd day of April, 2025.