SRI SAHASRALINGESWARA SWAMY,PONNUR vs. INCOME TAX OFFICER, EXEMPTIONS WARD, GUNTUR

Facts

The assessee, a Religious Trust, did not have Section 12A registration for assessment years 2014-15 to 2016-17 but obtained it from AY 2017-18. The Assessing Officer initiated reassessment proceedings under Section 147 for these prior years, taxing the surplus income due to the absence of Section 12A registration, a decision partially upheld by the Ld. CIT(A). The assessee challenged the validity of these reassessment proceedings.

Held

The Tribunal held that reassessment proceedings initiated under Section 147 solely based on non-registration under Section 12A for assessment years preceding the year of registration are invalid. Relying on the third proviso to Section 12A(2) and a Supreme Court upheld High Court decision, the Tribunal quashed the assessment orders for the impugned assessment years. The appeals for all assessment years (2013-14 to 2016-17) were allowed.

Key Issues

Whether reassessment proceedings initiated under Section 147 for assessment years prior to the date of registration under Section 12A/12AA are valid when the sole reason for reassessment is non-registration under Section 12A, in light of the third proviso to Section 12A(2).