No AI summary yet for this case.
Income Tax Appellate Tribunal, B BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & MAKARAND V. MAHADEOKAR
O R D ER \nPER MAKARAND V. MAHADEOKAR, AM:\nThis appeal by the assessee arises from the order passed under section 250\nof the Income Tax Act, 1961 [hereinafter referred to as “the Act"] by the\nCommissioner of Income Tax (Appeals), National Faceless Appeal Centre,\nDelhi [hereinafter referred to as “CIT(A)”] dated 15.05.2025. The said order\nconfirms the action of the Assessing Officer, CPC Bengaluru in passing the\nintimation under section 143(1) dated 23.08.2022 and the subsequent\nrectification order under section 154 dated 06.03.2023 assessing the income\nof the assessee trust at Rs.3,99,83,342/- and raising a consequential tax and\ninterest demand of Rs.1,87,34,360/-.\nITA 1402/Ahd/2025\nAsst. Year: 2021-22\n2\n2. Facts of the Case\n2.1 The brief factual background of the case, as emanating from the\nassessment records and the orders of the lower authorities, is that the\nassessee, a charitable trust registered under section 12A of the Act since\n05.01.2011, filed its return of income for the Assessment Year 2021-22 in\nForm ITR-7 on 31.12.2021. The assessee declared nil income after claiming\nexemption under section 11. It is on record that the assessee had incurred\nrevenue expenditure of Rs.3,67,53,006 towards its charitable objects and had\nclaimed accumulation under section 11(1)(a) amounting to Rs.59,97,501.\n2.2 The return filed by the assessee was processed by the CPC under section\n143(1). The CPC disallowed the exemption under section 11 on the ground\nthat in the Schedule Part A General of the return of income the details of\nregistration under the amended provisions of section 12AB or section 10(23C)\nwere not filled in the specific column relating to the section under which\nregistration was obtained. The Central Processing Centre noted that the law\nhad been amended with effect from 01.06.2020 requiring all existing\ncharitable entities to apply afresh for registration under section 12AB or\nsection 10(23C). On this basis the CPC considered the assessee as not having\na valid registration for the purpose of claiming exemption under section 11\nfor the year under consideration. Consequently, the CPC computed the total\nincome of the assessee at Rs.3,99,83,342/- by treating the entire receipts as\ntaxable income and disallowed the application of income of Rs.3,67,53,006/-\nand the accumulation of Rs.59,97,501/-. Interest under sections 234A,\n234B, 234C and 234F was also charged and a demand of Rs.1,87,34,360/-\nwas raised.\n2.3 Aggrieved by the intimation under section 143(1), the assessee filed an\napplication for rectification under section 154, however, the CPC passed the\norder dated 06.03.2023 under section 154 reiterating the same computation\nas in the intimation under section 143(1) and confirmed the demand without\ngranting any relief to the assessee.\nITA 1402/Ahd/2025\nAsst. Year: 2021-22\n3\n2.4 The assessee carried the matter in appeal before the CIT(A). The CIT(A)\nconsidered the submissions of the assessee and the documents produced,\nincluding the Form 10A and the registration order in Form 10AC. However,\nthe CIT(A) held that on perusal of the Form 10AC dated 13.01.2022 it was\nevident that the registration granted was valid for Assessment Years 2022-23\nto 2026-27 and not for the Assessment Year 2021-22 which was the year\nunder consideration. On this basis the CIT(A) held that the assessee did not\nhave a valid registration under section 12AB for the relevant year and that\nthe CPC was justified in denying exemption under section 11. The CIT(A) also\nupheld the view that the CPC had correctly processed the return under section\n143(1) and there was no mistake apparent from the record to be rectified\nunder section 154. The CIT(A) thus dismissed the appeal of the assessee and\nsustained the demand.\n3. Being dissatisfied with the order of the CIT(A), the assessee has preferred\nthe present appeal before us raising the following grounds of appeal:\n1. “Order passed U/s 250 passed by the Ld. Commissioner of Income Tax (Appeal)\nNFAC and Ld AO at CPC, Bengaluru is bad in Law and against the natural\njustice.\n2. On the facts and in circumstances of the case and in law Ld CIT(A), NFAC\ngrossly erred in confirming the disallowance made by the Ld AO. Therefore, the\nappellate order so passed deserves to be quashed.\n3. That the CIT (A) NFAC was not Justified in upholding the disallowance of\nexemption claimed u/s 11 amounting to Rs.3,67,53,006 and Exemption U/s\n11(1)(a)/11(1)(b) Rs 59,97,501.\n4. That the CIT (A) NFAC while sustaining the addition failed to appreciate that the\nassessee was registered as Charitable Trust u/s 12A as per the previous\nhistory the exemption u/s 11 was allowed to the assessee.\n5. That the CIT (A) NFAC had given a wrong finding that the new registration as\nper the amended provisions of sec 12AB are applicable to AY 2020-21 whereas\nthe same are applicable from A.Y 2022-23.\n6. That the CIT (A) NFAC failed to appreciate that disallowance of exemption u/s\n11 could not have been made while processing the return u/s 143 (l)(a).\n7. Intimation passed U/s 143(1) is against fact that, though we have filled the\naudit report in Form 10B vide Ack No. 521657880220922 on 22/09/2022, in\nthe Intimation it has been mentioned that “NO FORMS FILED\".\n8. Intimation passed U/s 143(1) is itself erroneous, as correct amount worked out\nin the Annexure Schedule ER (Revenue Expenditure) at Sl No F of Rs\n36753006, which was mentioned ZERO in the calculation sheet at Sr No 4(i).\n9. Your appellant craves, leave to add, alter, & or to emend modify substitute all\nor any ground of appeal before final hearing if necessity so arise”.\n4. The learned Authorised Representative (AR) reiterated the facts and\nsubmitted that the assessee is a charitable educational trust duly registered\nunder section 12A of the Act since
05. January 2011 and has been enjoying\nexemption under sections 11 and 12 year after year. The learned AR referred\nthe certificate of registration granted vide order dated 05.01.2011 placed on\npage No. 6 of the paper book.\n4.1 The learned AR pointed out that the assessee thereafter filed an\napplication under section 154 explaining that the assessee had already filed\nForm 10A for re-registration on 06.01.2022 within the extended due date\ngranted by CBDT and that registration had been granted by the learned\nPrincipal CIT in Form 10AC dated 13.01.2022. The AR also placed on records\nthe copy of the Form 10AC (Paper book page No.
7. The AR further stated\nthat in spite of this, the CPC passed rectification order under section 154\ndated 06.03.2023 confirming the disallowance on the very same ground that\nthe details of new registration were not available.\n4.2 The learned AR submitted that the CIT(A) also upheld the disallowance\nwithout appreciating the factual submissions and the statutory position. The\nCIT(A) proceeded on the footing that Form 10AC issued on 13.01.2022\ngranted registration for AYs 2022-23 to 2026-27 and that since the year under\nappeal was AY 2021-22, the assessee was not eligible. The learned AR\nsubmitted that this finding was contrary to the statutory scheme.\nITA 1402/Ahd/2025\nAsst. Year: 2021-22\n4\n4.3 The learned Authorised Representative submitted that pursuant to the\namendments brought into the statute by insertion of section 12AB with effect\nfrom 01.06.2020, all existing charitable institutions were required to apply for\nre-registration on or before 30.06.2021. It was submitted that due to the\ndifficulties faced by trusts in electronic filing, the Central Board of Direct\nTaxes (“the Board”) extended the due dates for filing Form 10A under section\n119 of the Act on multiple occasions. The AR placed reliance on the series of\nextensions granted by CBDT as under:\nExtended date\nCircular No.\n31.08.2021\nNo. 12 of 2021 dated 25.06.2021\n31.03.2022\nNo. 16 of 2021 dated 29.08.2021\n25.11.2022\nNo. 22 of 2022 dated 01.11.2022\n30.09.2023\nNo. 6 of 2023 dated 24.05.2023\n4.4.\nIt was submitted that in view of the above CBDT Circulars, the\nassessee's earlier registration under section 12A continued to remain valid up\nto 30.09.2023. It was therefore argued that for the previous year 2020-21\nrelevant to AY 2021-22, the assessee's registration under section 12A/12AA\nwas fully valid and subsisting and the assessee was eligible for exemption\nunder sections 11 and 12. The learned Authorised Representative submitted\nthat the CIT(A) failed to appreciate the effect of the extension of time granted\nby the CBDT and wrongly proceeded as if the new provisions were applicable\nfor AY 2021-22.\n4.5.\nThe learned AR submitted that the assessee had applied for re-\nregistration in Form 10A on 06.01.2022, i.e., within the extended time\npermitted by CBDT. It was further submitted that the return of income was\nfiled on 31.12.2021 and the order granting re-registration under section 12AB\nwas passed only on 13.01.2022. Therefore, it was impossible for the assessee\nITA 1402/Ahd/2025\nAsst. Year: 2021-22\n5\nto mention the new registration details in the ITR which had already been filed\nmuch earlier on 31.12.2021. The AR argued that the non-mentioning of the\nnew registration number in the ITR was purely technical and could not be\nused as a ground to deny exemption.\n5. The learned Departmental Representative, on the other hand, supported\nthe orders of the lower authorities.\n6. We have carefully considered the rival submissions and perused the\nmaterial placed on record. The central issue for adjudication is whether the\nassessee trust, which was originally registered under section 12A since\n05.01.2011 and was subsequently granted provisional registration under\nsection 12AB vide Form 10AC dated 13.01.2022, was eligible to claim\nexemption under sections 11 and 12 for the Assessment Year 2021-22, and\nwhether the CPC was justified in denying the exemption under section\n143(1)(a) and in reiterating the same in the rectification order passed under\nsection 154.\n6.
1. The principal objection of the CPC and the Commissioner (Appeals) was\nthat the assessee had not furnished “registration/approval details” under the\nnew regime of section 12AB in the return of income and, therefore, the\nexemption claimed in Schedule Part B-TI could not be allowed. The CIT(A)\nfurther held that the registration granted through Form 10AC was effective\nonly from AY 2022-23 to AY 2026-27 and did not cover the relevant\n assessment year. The learned Departmental Representative has also relied on\nthis reasoning.\n6.
2. The assessee, on the other hand, has asserted that its registration under\nsection 12A was valid and subsisting throughout the previous year 2020-21\nrelevant to the assessment year under consideration. It has been\ndemonstrated from the record that the assessee had already applied for re-\nregistration in Form 10A on 06.01.2022, which was well within the extended\ntime permitted by the Central Board of Direct Taxes through successive\ncirculars issued under section 119. The return of income was filed earlier on\nITA 1402/Ahd/2025\nAsst. Year: 2021-22\n6\n31.12.2021, whereas the order granting re-registration under section 12AB\nwas passed only on 13.01.2022. In such circumstances, the absence of the\nnew registration number in the ITR is merely a timing and technical mismatch\narising out of the statutory process itself, and not a substantive ground to\ndeny exemption.\n6.
3. The scheme of the statute post-amendment is important to examine.\nSection 12A continues to govern the conditions for eligibility to exemption\nunder sections 11 and 12. Sub-section (2) of section 12A, along with its\nproviso, explicitly provides that where a trust or institution has obtained\nregistration, the benefit of exemption shall be available for any assessment\nyear for which an application for registration was made, provided the objects\nand activities remain the same. The proviso further grants relief by ensuring\nthat where the registration is granted after the due date, the exemption shall\nnot be denied merely on the ground that the application for registration was\nfiled belatedly, so long as the objects and activities remain unchanged.\n6.
4. The legal effect of the proviso to section 12A(2), read in its proper context,\nmakes it clear that the registration once existing and validly continued under\nthe pre-amended law cannot be ignored to deny exemption for an assessment\nyear during which the trust's application for renewal or revalidation is\npending or eventually approved. The assessee has placed on record its earlier\nregistration under section 12A, which had not been withdrawn, suspended or\ncancelled at any time. The re-registration under section 12AB granted\nsubsequently from AY 2022-23 onwards does not extinguish the earlier\nregistration for the period prior thereto. The transition from section 12A/12AA\nto section 12AB was legislatively intended to be non-disruptive, ensuring\ncontinuity of benefits while administrative processes were being realigned.\n6.5.\nViewed thus, the reasoning of the CPC and the CIT(A) that exemption\nwas not allowable merely because the new registration number was not filled\nin the ITR cannot be sustained. The exemption under sections 11 and 12 flows\nfrom the existence of a valid registration under section 12A/12AA, and in the\nITA 1402/Ahd/2025\nAsst. Year: 2021-22\n7\nassessee's case such registration was undisputedly extant for the relevant\nprevious year. The assessee's act of applying for renewal within the extended\ntime further fortifies its position, and the granting of registration vide Form\n10AC is a substantive affirmation of the trust's eligibility and continuity.\n6.