SHREE RANDER ROAD JAIN SANGH,SURAT vs. ITO, EXEMPTION WARD, SURAT

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ITA 312/SRT/2025Status: DisposedITAT Surat28 November 2025AY 2023-246 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee claimed to have filed Form-10 on 16.09.2017 for AY 2016-17 for accumulating Rs. 43,60,000/-. However, upon perusal of the Forms filed, it was observed that the Form-10 filed for AY 2016-17 showed an amount set apart of only Rs. 19,60,000/- with the accumulation period ending on 31.03.2021. The Tribunal found merit in the assessee's contention that for accumulations relating to the financial year 2016-17, the assessee had a time window till 31.03.2023 to utilize the income. The Tribunal held that the amendment brought by the Finance Act, 2022, is prospective in nature and would be applicable only to fresh accumulations from assessment year 2023-24 onwards. Therefore, the amendment did not debar the assessee from availing the time window for existing accumulations. The Tribunal also noted that for the impugned assessment year, no addition could be made for accumulation of income pertaining to financial year 2017-18, as the assessee continued to be guided by the provisions existing at the relevant time, including the six-year time window. Consequently, the Tribunal set aside the order of the CIT(A) and remanded the matter back to the file of the AO for fresh adjudication after providing an opportunity of hearing to the assessee.

What were the facts?

The assessee, Shree Rander Road Jain Sangh, a charitable trust, filed its return of income for AY 2023-24 declaring nil income. The assessee had previously filed Form-10 on 16.09.2017 for AY 2016-17, seeking to accumulate Rs. 43,60,000/-. By the end of the previous year relevant to AY 2022-23, Rs. 28,51,000/- was applied, leaving Rs. 15,09,000/-. This remaining amount was applied in the succeeding year ending 31.03.2023. The Assessing Officer (AO), processing the return under section 143(1), made an adjustment of Rs. 15,09,000/- treating it as income chargeable under section 115BBI. The assessee's appeal to the CIT(A) was dismissed, confirming the AO's action. The assessee then appealed to the ITAT.

What were the issues?

1. Whether the learned CIT(A) erred in passing an ex-parte order without providing a reasonable and sufficient opportunity of being heard to the assessee, a question of fact and law. 2. Whether the learned CIT(A) erred in confirming the action of the Assessing Officer in making an addition of Rs. 15,09,000/- under section 115BBI by way of adjustment under section 143(1)(a), a question of mixed law and fact, turning on the interpretation of Section 11(3) of the Income Tax Act, 1961. Assessee's Contentions: - The assessee argued that the law regarding the utilization of accumulated income was amended by the Finance Act, 2022, and that these amendments should be read prospectively. They relied on case laws such as Meshri Mahajan Vanda vs. ITO, Dadar Digamber Jain Mmkshu Manda vs. CIT(E), and Yashwantrao Chavan Maharashtra Open University vs. CIT(E). - The assessee also contended that the time window for utilizing the accumulated income was till 31.03.2023, and the amendment brought by the Finance Act, 2022, did not debar them from availing this window for existing accumulations. Revenue's Contentions: - The Revenue relied on the order of the learned CIT(A) and did not object to the prayer of the assessee for restoration of the matter to the AO.

Which sections of the Income-tax Act were involved?

Section 11(3),Section 115BBI,Section 143(1)(a)

AI-generated summary — verify with the full judgment below

orarnr attetta aftreaxn, axa ~aais, Pa IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER SIX stict H./ITA No. 312/SRT/2025 (AY 2023-24)

(Physical hearing) Shree Rander Road Jain Sangh CPC, Bangaluru Near Rushabh Tower, Rander aarmq_ (| Current juri iction Income Tax Road, Surat-395 009 Vs Officer, Exemption Ward, Surat, [PAN : AAATR 2335 M] Aaykar Bhawan, Anvil Business. Center, Adajan, Surat-395 007 ardent Appellant weet Respondent Fiuittdt ot siz a /Assessee by Shri Rasesh Shah, Advocate oR HI SX A /Revenue by Shri Ajay Uke- Sr-DR ol ANT@/Date of hearing 15.09.2025

SUNT HT ARRE/Date of pronouncement | 28.11.2025

Order under section 254(1) of Income Tax Act

PER DINESH MOHAN SINHA, JUDICIAL MEMBER:

This appeal by assessee is directed against the order of Ld. Commissioner of Income-tax, Appeal,Addl/JCIT(A)-2, Mumbai [for short, “Ld. CIT(A)”] dated 18.02.2025 for the assessment year 2023-24, which in turn arises out of an assessment order passed by the Centralized Processing Center/Assessing Officer (in short, “AO”) under section 143(1) of Income-tax Act, 1961 (‘the Act’) on 30.11.2023. The assessee has raised the following grounds of appeal:-

"I. On the facts and the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in passing ex-parte order without giving reasonable and sufficient opportunity of being heard.

2.

On the facts and the circumstances of the case as well on the law of the subject, the Id. CIT(A) has erred in confirming the action of Assessing Officer in making addition of Rs. 15,09, 000/- u/s 115BBI by way of adjustment u/s 143(1)(a).

3.

It is therefore prayed that above additions/disallowances made by the Assessing Officer and confirmed by learned CIT(a) may please be deleted or the matter may please be set aside to the file of CIT(A) for fresh adjudication.

4, Appellant craves leave to add alter or delete any ground(s) either before or in the course of hearing of the appeal."

2.

Brief facts of the case that assessee is a charitable trust and filed its return of income on 12.10.2023 declaring Rs.nil income. The assessee-trust field Form-10 on 16.09.2017 for AY 2016-17 accumulation of income of Rs.43,60,000/- to be applied in future. Out of Rs.43,60,000/- assessee applied Rs.28,51,000/- upto end of previous year relevant to AY 2022-23 and remaining amount of Rs.15,09,000/- could not be applied till 31.03.2022 and same was applied in succeeding year ending on 31.03.2023. The AO processed the return and made adjustment of Rs.15,09,000/- as income chargeable u/s 115BBI vide intimation dated 23.12.2023. Further AO issued intimation for proposed adjustment on 29.11.2024 and assessee filed reply on 26.12.2024 but was not considered by the AO.

3.

Aggrieved by the order of the AO, the assessee filed an appeal before the Ld.CIT(A). The Ld. CIT(A) confirmed the action of CPC that more than 5 years has lapsed after the amount was set apart in AY 2016-17 and as per the provisions of 11(3)(c), such amount shall be deemed to be the income of such person of the previous year in which it ceases and CPC has rightly taxed it u/s.115BBI as deemed income referred to Sec.11(3) of the Act, who dismissed the case vide order dated 18.02.2025. That the assessee filed an appeal against the impugned order of the Ld. CIT(A) dated 18.02.2025 before us.

4.

During the course of argument, the Ld. AR of the assessee submitted case law, Form-10 for AYs 2017-18, 2022-23 and 2023-24 pages 10 to 15 of the paper book,

provisions of S.11(3) as amended by Finance Act 2021 and 2022 pages 16 and 17 of the paper book. The Ld. AR contended that law is changed by Finance Act, 2022 and same is reproduced:

"Section-11(3) of The Income Tax Act amended by Finance Act, 2022 (3) Any income referred to in sub-section(2) which-

(a) is applied to purposes other than charitable or religious purposes as aforesaid or ceases to be accumulated or set apart for application thereto, or (b) ceases to remain invested or deposited in any of the forms or modes specified in sub-section (5), or (©) is not utilized for the purpose for which it is so accumulated or set apart during the period referred to in clause (a) of that sub-section [or in the year immediately following the expiry thereof]* (d) is credited or paid to any trust or institution registered under section 124A for section 12AB] or to any found or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (Via) of Clause (23C) of section 10. Shall be deemed to be the income of such person of the previ8ousyear in which it is so applied or ceases to be so accumulated or set apart or ceases to remain so invested or deposited or credited or paid or, as the case may be, of the previous year immediately following the expiry of the period aforesaid]

*words “or in the year immediately following the expiry thereof” shall be omitted by the Act No.6 of 2022 w.e.f. 1-4-2023.”

The Ld. AR prayed before the Bench that matter may be restored back to the file of AO for fresh adjudication.

5.

On the other hand, Ld. Sr-DR for the revenue, relied upon the order of the Ld. CIT(A) and not objected to the prayer of the Ld. AR.

6.

We have heard both the parties and perused the material available on record and also perused the order of Ld. CIT(A). We find that Ld. AR relied on the judgment of (i) Meshri Mahajan Vanda vs. ITO [2025] 178 taxmann.com 93 (Ahmedabad- Trib.)(02-09-2025), (ii) Dadar Digamber Jain Mmkshu Manda vs. CIT(E) (2025) 176

taxmann.com 661 (Mumbai-Trib.) and (iii) Yashwantrao Chavan Maharashtra Open University vs. CIT(E) (2025) 175 taxmann.com 988 (Pune-Trib.). We note that the appellant has contended that the assessee filed Form-10 for AY 2016-17 on 16.09.2017 for accumulation of income of Rs.43,60,000/- to be applied in future. Out of this amount of Rs.43,60,000/-, assessee applied Rs.28,51,000/- upto end of previous year relevant to AY 2022-23 remaining amount of Rs.15,09,000/- could not be applied till 31.03.2022 and the same was applied in succeeding year ending on 31.03.2023. these particulars were projected in Form-10 for AY 2022-23 and AY 2023-

24.

On perusal of the Forms filed by the appellant, it is seen that the appellant has filed a Form-10 on 07.09.2016. There is noForm-10 available on system as claimed by the appellant to have been filed for AY 2016-17 on 16.09.2017 for accu8mlatin of income of Rs.43,60,000/- to be applied in future. When the Form-10 filed for AY 2016- 17, it is seen that the amOunt set apart is only Rs.19,60,000/- with period for accumulation ending on 31.03.2021 as seen below. Where assessee-trust accumulated income pertaining to financial years 2016-17, assessee had time window till 31.03.2023 by which it could utilize accumulated income; amendment brought in by Finance Act, 2022, did not debar assessee from availing said time window in respect of existing accumulations and amendment had to be read prospectively in respect of fresh accumulations for period pertaining to previous year starting from 1- 4-2022 onwards.

6.

1 In the light of the aforesaid discussion, it is viewed that there is merit in the contentions advanced by the assessee that as far as the accumulation relating to the period of financial year 2016-17 is concerned, the assessee had the time window till 31.03.2023 by which it could utilize accumu9lated income and in view of the matter,

the amendment brought in by the Finance Act, 2022 does not debar the assessee from availing the said time window in respect of existing accumulations and the amendment would have to be read prospectively in respect of fresh accumulations for the period pertaining to previous year starting from 1-4-2022 onwards. Further, as far as the impugned assessment year is concerned, no addition can be made for accumulation of income pertaining to financial year 2017-18 as the assessee continues to be guided by the provisions as existed at the relevant point in time and the time window of six years as provide. The amendment made by the Finance Act, 2022 cannot curtail the said time window and has to be applied prospectively in respect of fresh accumulations. We note that amendment to section 1(3(c) by Finance Act, 2022 with effect from 1-4-2023 which omitted extra period of one year following expiry of initial period of accumulation of five years is prospective in nature and, thus, same would be applicable only to fresh accumulations from assessment year 2023- 24 onwards. After considering the facts and circumstances of the case we are inclined to set aside the order of Ld.CIT(A) and remand this matter back to the file of AO for a fresh adjudication after giving opportunity of hearing to the assessee. The assessee is also directed to ensure participation in the hearings as may be fixed by AO and do not seek unnecessary adjournments failing which the AO shall be at liberty to pass appropriate order in accordance with law.

7.

In the result, the appeal of the is allowed for statistical purposes.

Order pronounced in the open court on 28/11/2025. (BIJAYANANDA PRUSETH) (DINESH MOHAN SINHA) chal WaR/Accountant Member zat WaeA/Judicial Member

Wd / Surat Dated: 28/11/2025

Dkp Outsourcing Sr.P.S* aregi wt Ufafeft sm@fia/ Copy of the order forwarded to :

ordtareif/ The Appellant

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