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Facts
The assessee, a charitable trust, claimed exemption under Section 11 of the Income Tax Act, 1961. The Assessing Officer denied this exemption and taxed the gross receipts, treating the assessee as not registered under Section 12A. The CIT(A) upheld this order.
Held
The Tribunal held that the assessee had a valid registration under Section 12A and had inadvertently applied for fresh registration which was later withdrawn. Therefore, the denial of exemption under Section 11 by the lower authorities was incorrect.
Key Issues
Whether the assessee, a charitable trust, was validly registered under Section 12A of the Income Tax Act, 1961, and thus entitled to exemption under Section 11, despite withdrawing a subsequent application for registration.
Sections Cited
11, 12A, 144, 144B, 250, 10(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES “SMC”, JAIPUR
Before: DR.MANISH BORAD
आदेश / ORDER
The captioned appeals at the instance of assessee pertaining to A.Ys. 2018-19, 2019-20, 2020-21 are directed against the separate orders dated 31.01.2025 passed by National Faceless Appeal Centre, (NFAC) Delhi u/s 250 of the Income-tax Act, 1961 arising out of respective Assessment Orders dated 28.04.2021, 07.09.2021, 06.09.2022 passed u/s.144 r.w.s144B/ 144(3) r.w.s144B of the Act.
Since common issues have been raised in these three impugned assessment years, I proceed to dispose these appeals by way of this consolidated order for the sake of convenience. for A.Y. 2018- 19 as the lead case. Assessee has raised following grounds of appeal :
“1. The Ld. CIT(A), NFAC has erred on facts and in law in upholding the action of AO in denying exemption u/s.11 of the Act by incorrectly holding that copy of registration certificate u/s 12(A)(a) dt. 21.08.2006 granted by CIT(E), Ajmer was subsequently withdrawn or cancelled by CIT(Exemption), Jaipur vide order dt. 27.07.2019 whereas the correct fact is that order dt. 27.07.2019 withdrawing or cancelling the registration is in respect of fresh registration applied by the assessee u/s 12A of the Act vide application dt. 20.01.2019 which was later on withdrawn by the assessee vide letter dt. 25.07.2019. Hence for the year under consideration assessee is validly registered u/s.12A of the Act vide registration certificate dt. 21.08.2006.
2. The Ld. CIT(A), NFAC has erred on facts and in law in taxing the gross receipts of Rs.30,92,606/- without allowing deduction for the expenditure of Rs.36,82,290/- incurred by the assessee against such receipt and ignoring that receipt includes agriculture income of Rs.55,000/- which is otherwise exempt from tax u/s 10(1) of the Act.
The appellant craves to alter, amend and modify any ground of appeal.
4. At the outset, Ld. Counsel for the assessee submitted that ld. Assessing officer has denied the benefit of section 11 of the Act by treating the assessee being not registered u/s.12A of the Act but ld. Assessing Officer ignored the fact that actually the assessee holds valid registration u/s.12A of the Act for the impugned assessment years and therefore ld. Assessing Officer ought to have granted the benefit of section 11 rather than making the additions for the gross receipts for the years. He also raised alternate contention that even otherwise only the net income (Gross receipts less Expenditure) deserves to be taxes and not the gross receipts.
On the other hand, ld. Departmental Representative supported the orders of the lower authorities.
I have heard the rival contentions and perused the record placed before me. I observe that the assessee is a charitable trust and is registered under Goushala Act, 1960 as on 16.07.1955 having its registered office at Kekri, Ajmer. For A.Y. 2018-19, return of income e-filed on 30.09.2018 declaring income of Rs.30,92,606/- which was invalidated by CPC. Later assessee filed a revised return on 30.09.2018 declaring Nil income. In this return, assessee claimed exemption u/s.11 of the Act at Rs.30,92,606/-. Ld. Assessing Officer after selecting the case for scrutiny issued notice to the assessee but there was non-compliance resulting into the best judgment assessment u/s.144 r.w.s.144B of the Act and the benefit of section 11 at Rs.30,92,606/- was denied and added in the hands of assessee. Assessee preferred appeal before ld.CIT(A) furnishing copy of registration u/s.12A(a) dated 21.08.2006 granted by ld.CIT(E), Ajmer effective from 01.04.2005. Thereafter, ld.CIT(E) has observed that assessee has filed an application online on 20.01.2019 on Form 10A seeking registration u/s.12A(a) of the Act. Assessee vide letter dated 05.07.2019 withdrew the application filed on Form 10A on 20.01.2019. On receiving the withdrawal application, ld.CIT(E) passed the order on 27.07.2019 rejecting the assessee’s application filed on 20.01.2019 in limine.
On going through these details, ld.CIT(E) while carrying out the proceedings for A.Y. 2018-19 came to conclusion that since assessee has himself withdrawn the application for registration, therefore, it is not registered u/s.12A of the Act. Accordingly, ld.CIT(E) confirmed the order of ld. Assessing Officer.
Now before me, Ld. Counsel for the assessee has demonstrated that assessee has ignorantly filed an application for registration u/s.12A of the Act on 20.01.2019 on Form 10E because the assessee at that point of time was already holding valid registration u/s.12A(a) granted on 21.08.2006. Thereafter, when the laws were amended, assessee was required to file application for provisional registration and regular registration, Assessee has been granted registration u/s.12A(1)(ac)(i) vide order dated 07.04.2022 from A.Y. 2022-23 to 2026-27. Copy of the same is placed at pages 30 to 32 of the paper book. Thus, undisputedly assessee holds valid registration certificate u/s.12A(1)(ac)(i) of the Act w.e.f. 01.04.2005 and the same having not been cancelled by ld.CIT(E). Thereafter assessee inadvertently filed application for registration u/s.12A of the Act on 20.01.2019 which was subsequently withdrawn on 05.07.2019 and finally after amendment in section 12A and new section 12AB was inserted assessee has procured regular registration u/s.12A of the Act dated 07.04.2022 for the period A.Y. 2022-23 to 2026-27. It shows that for the impugned assessment year assessee holds valid registration certification u/s.12A(a) of the Act. If the assessee fulfils the conditions of section 11 and 12 of the Act, then assessee deserves to get the benefit of exemption u/s.11 of the Act which in the instant case has been denied by ld. Assessing Officer. Considering the facts in entirety, I am of the considered opinion that assessee is entitled to exemption u/s.11 of the Act for A.Y. 2018-19. Impugned finding of ld.CIT(A) is set aside and grounds of appeal No.1 raised by the assessee for A.Y. 2018-19 is allowed.
9. So far as remaining assessment years, i.e. A.Y. 2019- 20, A.Y. 2020-21 are concerned, I find that facts and issues for the A.Ys.2019-20 and 2020-21 are similar to that of A.Y. 2018-19. Therefore, the finding given by me for A.Y. 2018- 19 allowing the benefit of exemption u/s.11 of the Act shall apply mutatis mutandis to these appeals as well and Ground No.1 for A.Y. 2019-20 and A.Y. 2020-21 is allowed.
10. Common issue raised in Ground No.2 for the impugned assessment years is alternate in nature and since I have allowed common issue raised in Ground No.1 and allowed the claim of exemption/deduction u/s.11 of the Act for all the three assessment years, dealing with Ground No.2 will be merely academic in nature and is therefore rendered infructuous.
In the result, all the three appeals of the assessee are allowed as per terms indicated above.
Order pronounced on this 29th day of July, 2025.