SRI VENKATESWARA ORPHANAGE KADUVELI,THANJAVUR vs. ITO, EXEMPTION WARD,, TRICHY

Before the ld.CIT(A), the assessee explained that it is a public charitable trust established in the year 1975. The assessee has also received government

Before the ld.CIT(A), the assessee submitted that in compliance to the Finance Act, 2020 which inserted sub-section (ac) in Section 12 of the Act and was to come into effect from 01.06.2020, the assessee filed an application Form 10A on 16.04.2020 which was subsequently rejected by the ld.CIT(E) vide order dated 06.11.2020 stating that the assessee failed to respond to the notices served. However, subsequent application dated 27.02.2022 was allowed and registration was granted for Assessment Year 2022-23 to 2026-27. The assessee further contended that the provision inserting Section 12(ac) of the Finance Act, 2020 which came into effect from 01.06.2020. Before making the application u/s.10A of the Act on 16.04.2020, the assessee had valid certificate of registration dated 27.02.2017, which is valid for the financial year relevant to the impugned assessment year. Therefore, the Assessing Officer’s denial of valid registration based on the order of ld.CIT(E) dated 06.11.2020 is incorrect and consequent disallowance u/s.11 of the Act is also incorrect. The assessee also contended that order passed by the ld.CIT(E) dated 06.11.2020 is invalid since the provisions of section 12A(1)(ac) inserted by Finance Act, 2020

For the disallowance, the assessee submitted that they were unable to file the documentary evidence before the AO due to the voluminous nature of the file and the technical difficulties it posed on the assessee. But they have filed the said documents before the ld.CIT(A) by way of a petition under Rule 46A of the Income Tax Rules.

The ld.CIT(A), rejected the ground raised with regard to the order passed by the ld.CIT(E) stating that the assessee should have filed an appeal before the Income Tax Appellate Tribunal and not before the ld.CIT(A). The ld.CIT(A) perused the documents that was submitted by the assessee during the course of remand proceedings and allowed only a sum of Rs.25,38,000/- out of the sum of Rs.1,21,56,000/- claimed as salary expenses while stating that the evidence provided are afterthought to conjure up justification. The expenses claimed as rent Rs.27,96,000/-, old age donation expenses Rs.14,00,000/-, loan returned through management Rs.10,51,600/- were also disallowed with reasoning that the assessee was unable to prove the genuineness of the expenses. The building upgradation expenses Rs.60,38,825/- were disallowed

Aggrieved by the order of ld.CIT(A), the assessee is in appeal before us.

Before us, the ld.AR for the assessee submitted a detailed paperbook and reiterated the contentions taken before the ld.CIT(A). Reliance was also placed on the judgment rendered by the Chandigarh Bench of the Tribunal in Lala Gauri Mal Butail Trust V. ACIT [ITA No.722/Chd/2022] for the application of TOLA for the omission of Section 12A(1)(ac) which was inserted by way of Finance Act, 2020 as well as for validity of registration holding good until the end of the impugned Assessment Year 2020-21. It was further submitted that the assessee had no break in the registration since for the subsequent periods also, a valid registration u/s.12A of the Act exists. The ld.AR also contended that the ld.CIT(A) had not provided opportunity of hearing to the assessee upon receipt remand report from the Assessing Officer which is in violation of natural justice.

Per contra, the ld.DR reiterated the findings of the first appellate authority. Apart from it, the ld.DR also argued that order of the Assessing Officer rejecting the assessee’s claim of valid registration u/s.12AA based on the order of the ld.CIT(E) is correct and that the disallowance of the exemption claimed as well as assessing the assessee in the status of AOP is correct since the assessee had no valid registration for the impugned Assessment Year. The ld.DR also argued that the assessee failed to prove the genuineness of the expenditure claimed for allowance.

We have heard the rival submissions, perused the material on record and gone through the orders of the authorities below along with the paper book filed

With regard to the validity of registration for the year under consideration, we are of the considered view that the assessee has valid registration u/s.12AA which was obtained on 27.02.2017 but w.e.f. 01.04.2016 and was valid even as on 31.03.2020. Merely because the ld.CIT(E) rejected the application for registration u/s.12A of the Act subsequently on 06.11.2020, it cannot become a basis for the Assessing Officer to deny the exemption claimed u/s.11 of the Act in the return of income for the financial year 2019-20 relevant to the impugned assessment year 2020-21, since a valid registration was available vide order dated 27.02.2017. Further, registration granted later by the ld.CIT(E) vide order dated 10.03.2022 considering the erstwhile registration dated 27.02.2017, must also be binding on the AO and denying exemption is untenable in law. It is to be noted that the provisions of section 12A(1)(ac) inserted by Finance Act, 2020 w.e.f.01.06.2020 has been omitted by TOLA, with retrospective effect from 01.06.2020 and therefore, it means that the provisions of section 12A(1)(ac) inserted vide Finance Act 2020 did not exist at all. Consequently, any

We refer to the case relied by the assessee (cited supra), wherein the Chandigarh Bench of the Tribunal held as follows:

Therefore, we are of considered view that the assessee held the valid registration for the impugned Assessment Year.

As far as the disallowances are concerned, the assessee has failed to substantiate the expenditure claimed for exemption u/s.11 with proper documentary evidence before the Assessing Officer. However, we have also considered the fact that the ld.CIT(A) has passed the order dated 05.06.2025 without providing the assessee an opportunity to be heard after receiving the remand report from Assessing Officer, on the additional evidence filed by the assessee. Therefore, keeping in view, the principles of natural justice and fair play, the matter regarding the disallowances is remitted back to the Assessing

In the result, the appeal of the assessee is partly allowed.