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Facts
The assessee, a public charitable trust, filed a return for AY 2014-2015 claiming exemption under Section 11. The return was processed under Section 143(1) and exemption was denied. The assessee's appeal to the CIT(A) was dismissed solely on the ground that the return was not filed within the due date prescribed under Section 139(1).
Held
The Tribunal held that the amendment requiring filing of the return by the due date for claiming exemption under Section 11, which took effect from 01.04.2016, was not applicable to AY 2014-2015. Therefore, the CIT(A)'s decision to dismiss the appeal on this ground was incorrect.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal solely on the ground that the return was not filed within the due date, when the relevant amendment was not applicable for the assessment year in question.
Sections Cited
11(2), 11(5), 139(1), 143(1), 154, 250, 12A, 139(4A)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “DB” BENCH, COCHIN
Date Conclusion of hearing : 21.08.2025 Pronouncement of order : 22.09.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
The present appeal preferred by the Assessee is directed against the order, dated 12/11/2024, passed by National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 04/11/2020, passed under Section 154 of the Act for the Assessment Year 2014-2015.
The Assessee has raised following grounds of appeal :
1. The Order of the Commissioner of Income Tax (Appeals) is against facts and law.
2. The Commissioner of Income Tax (Appeals) failed in Assessment Year 2014-2015 disallowing the claim for accumulation of income u/s 11(2) and 11(5) on the ground that no evidence is filed as per Income Tax Rule 17 before the expiry of time allowed u/s 139(1). As per Section 11(2), as applicable for AY 2014-15 there was no date specified as to the period within which the form has to be filed for availing exemption. The amendment in section 11(2) that filing of necessary forms before the due date of filing return as a pre-condition to claim the exemption under section 11(2) was substituted by the Finance Act with effect from 01.04.2016 which is not applicable for AY 2014- 15. Hence the Commissioner of Income Tax (Appeals) went wrong in denying the exemption.
The Commissioner of Income tax (Appeals) went wrong in upholding the demand as per CPC Intimation and in not considering the application of income while processing of the return of income. Thus the gross income is treated as the taxable income. While processing of return of income u/s 143(1), the assessing officer is allowed only to make adjustments towards arithmetical error in the return or correction of incorrect claim if it is apparent on the records. Hence, the Commissioner of Income Tax (Appeals) failed by dismissing the grounds of appeal when the action of the assessing officer was beyond the powers granted 'under section 143(1).
4. The Commissioner of Income Tax (Appeals) failed to consider the submissions made regarding the claim of investment through the Copy of the resolution for opening a bank account and bank confirmation Appellant had filed bank confirmation in the name of 'WORLD SPICE CONGRESS' instead of 'All India Spices Exporters Forum'. World Spice Congress 2014 is the name of a project under which the project for Sustainable Spice Industry was conducted and funds were collected for the same. Copy of the resolution for opening a bank account shows that the name 'World Spice Congress 2014' is a project under ALL INDIA SPICES EXPORTER'S FORUM.
5. The Commissioner of Income Tax (Appeals) failed to consider that the filing of the return on the due date is a precondition for claiming exemption u/s 11 which was introduced by the Finance Act 2015 effective from 01.04.2016. During the year the return is to be filed within the due date is not a precondition and CIT (A) is not justified in dismissing the appeal on this grounds.”
2 Assessment Year 2014-2015 3. The facts as emerging from the record are that the Assessee is public charitable trust registered under Section 12A of the Act. The return of income for the Assessment Year 2014-2015 was filed by the Assessee on 31/03/2015 disclosing ‘Nil’ income after claiming exemption under Section 11 of the Act. The aforesaid return of income was processed under Section 143(1) of the Act vide Intimation, dated 16/03/2016. The Assessee was denied the exemption under Section 11 of the Act on the ground that (a) the Audit Report in Form 10B of the Act was filed by the Assessee beyond the due date prescribed under Section 139(1) of the Act, (b) the investments were not made in the mode prescribed under Section 11(5) of the Act and (c) notice of accumulation under Section 11(2) of the Act was not made before the due date. Being aggrieved, the Assessee filed application Section 154 of the Act for rectification of the aforesaid Intimation Order which was rejected. Being aggrieved by the Order, dated 04/11/2020, passed under Section 154 of the Act, the Assessee preferred appeal an appeal was filed before the CIT(A) which was also dismissed by way of the impugned Order, dated 12/11/2024 solely on the ground that the return of income was not filed by the Assessee within the due date prescribed under Section 139(1) of the Act.
Being aggrieved the Assessee is in appeal before this Tribunal on the grounds reproduced at Paragraph 2 above.
We heard both the sides and have perused the material on record.
The present appeal pertains to Assessment Year 2014-2015. As per Section 139(4A) of the Act an assessee was required to file return of income for claiming benefit of Section 11 of the Act. We note that Clause (ba) was inserted in Section 12A(1) of the Act by the Finance Act, 2017 to provide clarity as to the time limit within which the aforesaid return was to be filed. The Memorandum to Finance Bill, 3 Assessment Year 2014-2015 2017 dealing with the aforesaid amendment provided as under:
“Clarity of procedure in respect of change or modifications of object and filing of return of income in case of entities exempt under sections 11 and 12 The existing provisions of section 12A of the Act provide for conditions for applicability of sections 11 and 12 in relation to the benefit of exemption in respect of income of any trust or institution. xx xx xx xx Further, as per the existing provisions of said section, the entities registered under section 12AA are required to file return of income under sub-section (4A) of section 139, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. However, there is no clarity as to whether the said return of income is to be filed within time allowed u/s 139 of the Act or otherwise.
In order to provide clarity in this regard, it is proposed to further amend section 12A so as to provide for further condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Act.
These amendments are clarificatory in nature.
These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years.”
Thus, the requirement to file return of income by a charitable institution claiming exemption under Section 11 of the Act within the time specified under Section 139 of the Act was application from the Assessment Year 2018-2019 and therefore, did not apply to the Assessment Year 2014-2015 to which the present appeal pertains to. Accordingly, the impugned order, dated 12/11/2024, passed by the CIT(A) is set aside with the directions to the CIT(A) to adjudicate the 4 Assessment Year 2014-2015 grounds raised by the Assessee in appeal afresh after granting the Assessee a reasonable opportunity of being heard. It is clarified that the CIT(A) shall not reject the contentions of the Assessee merely on account of income tax return having been filed after the expiry of time specified under Section 139(1) of the Act. The Assessee has not placed on record a copy of rectification application filed before the Assessing Officer. Even the date on which Form 10B was filed by the Assessee is not clear from the material on record. The Assessing Officer has recorded that Form 10B was filed on 09/07/2018 whereas the intimation under Section 143(1) of the Act was issued on 16/03/2016. Therefore, the CIT(A) is directed to verify the underlying facts while deciding the appeal preferred by the Assessee afresh. Since we have restored the issues back to the file of the CIT(A), all the rights and contentions of the Assessee (including those related to compliance of the provisions contained in Section 11(5) of the Act) are left open. In terms of the aforesaid, Ground No. 5 raised in the present appeal is allowed, Ground No.2 is partly allowed, while all the other grounds are dismissed as having been rendered infructuous.