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Facts
The appellant, a charitable trust registered under Section 12A, did not file its income tax return under Section 139(1) for AY 2017-18. After a notice under Section 142(1), it filed the return belatedly on 04.09.2019. The AO denied Section 11 exemption and taxed cash deposits under Section 115BEE, which the CIT(A) deleted, but upheld the denial of Section 11 exemption due to the late filing.
Held
The Tribunal condoned the delay in filing the appeal. However, it held that the belated return filed by the assessee was "non est in the eyes of law" and failed to meet the mandatory condition under Section 12A(1)(ba) for claiming exemption under Section 11, which requires furnishing the return within the time allowed under Section 139(4A). Consequently, the assessee was not entitled to the exemption.
Key Issues
Whether the belated filing of an income tax return by a charitable trust, even in response to a notice under Section 142(1), disentitles it from claiming exemption under Section 11 of the Income Tax Act, particularly in light of Section 12A(1)(ba). Whether the delay in filing the appeal should be condoned.
Sections Cited
11, 12, 12A, 139(1), 139(4A), 142(1), 144, 115BEE
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 26.07.2024 for Assessment Year (AY) 2017-18. The appellant also filed a stay application for stay of collection of outstanding demand of Rs. 48,88,492/-.
Brief facts of the case are that he appellant is a charitable trust duly registered under the Trust Act. It is also registered u/s. 12A of the Income Tax Act, 1961 (the Act). No regular return of income & SA No. 61/C/2025 Sacred Heart Public School was filed under the provisions of section 139(1) of the Act. The ITO (Exemption), Kottayam (hereinafter called "the AO"), based on the information that the appellant trust made cash deposits during demonetisation period formed an opinion that income escaped assessment to tax. Accordingly, called upon the assessee to prepare a true and collect return of income for AY 2017-18 by issuing notice u/s. 142(1) of the Act. In response to the notice u/s. 142(1) the appellant filed return of income on 04.09.2019. Against the said return of income, the assessment was completed by the AO vide order dated 28.12.2019 passed u/s. 144 of the Act at a total income of Rs. 83.15,739/-. While doing so, the AO denied exemption u/s. 11 of the Act on the ground that the appellant had not filed return of income u/s. 139(1) of the Act and also the AO brought to tax u/s. 115BEE of the Act the cash deposits made in specified bank notes of Rs.22,17,557/- as unexplained money of the assessee.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order held that the circumstances of the case does not warrant addition of cash deposit as unexplained money. Accordingly, deleted the addition. However, confirmed denial of exemption u/s. 11 of the Act on the ground that no return of income was filed u/s. 139(1) of the Act. The CIT(A) was of the opinion that the appellant had filed return of income in response to notice u/s. 142(1) issued on 21.12.2017. However, the return was filed on 04.09.2019, which is beyond the time allowed u/s. 139(1) of the Act.
At the outset we find that there is a delay of 248 days in filing the appeal. The appellant had filed a petition seeking condonation of delay on the ground that the delay had occurred as initially it was decided not to file appeal but later on realizing that filing of appeal is mandatory only from AY 2018-19 steps were taken for filing of appeal. Hence, the delay is not willful or deliberate. Therefore, it is prayed that the delay in filing the appeal may be condoned and the appeal may be admitted for adjudication. Having regard to the averments made in the affidavit seeking condonation of delay, in the absence of any evidence contrary, we are of the considered opinion that the appellant society is prevented by sufficient reasonable cause in filing the appeal within the prescribed limit. Accordingly, we condone the delay and admit the appeal for adjudication
We have heard the rival contentions and perused the material available on record. The issue in the present appeal relates the eligibility of the appellant trust for exemption u/s. 11 of the Act. Admittedly, the appellant had not filed return of income under the provisions of section 139(1) of the Act. The AO issued notice u/s. 142(1) of the Act on 21.12.2017 calling upon the appellant to file return of income. However, the appellant filed return of income only on 04.09.2019. The return of income filed beyond the due date is non est in the eyes of law. Filing of return of income is a condition & SA No. 61/C/2025 Sacred Heart Public School precedent for claiming exemption u/s. 11 in terms of provisions of clause (ba) of section 12A of the Act at the relevant point of time reads as under: - “Conditions for applicability of section 11 and 12. 12A. (1) The provisions of section 11 and section 12 ………….. ……………………………. Following clause (ba) shall be inserted after clause (b) of sub-section (1) of section 12A by the Finance Act, 2017, w.e.f. 1-4-2018 : (ba) the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under that section.”
As the appellant had failed to satisfy the conditions mandatory for claiming exemption, the appellant is not entitled for exemption u/s. 11 of the Act.
Since the quantum appeal is dismissed, the stay application becomes infructuous.
In the result, the appeal and the stay application filed by the assessee stand dismissed.
Order pronounced in the open court on 31st July, 2025.
Sd/- Sd/- (SONJOY SARMA) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Cochin, Dated: 31st July, 2025 n.p.