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Facts
The assessee, a charitable trust, was granted provisional registration under Section 12A. However, its application for regular registration under Section 12AB was initially rejected by the CIT(E). Subsequently, the CIT(E) granted regular registration, effective from assessment year 2022-23 to 2026-27. The Assessing Officer had denied exemption under Section 11 based on the rejection of the regular registration.
Held
The Tribunal noted that the CIT(E) subsequently granted regular registration to the assessee, which was also applicable for the assessment year in question. Therefore, the issue of allowability of exemption under Section 11 needed reconsideration in light of this subsequent development.
Key Issues
Whether the denial of exemption under Section 11 by the Assessing Officer was justified when the assessee was subsequently granted regular registration under Section 12AB?
Sections Cited
Section 12A, Section 12AB, Section 11, Section 115TD, Section 143(3), Section 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH : VISAKHAPATNAM
Before: SHRI VIJAY PAL RAO & SHRI OMKARESHWAR CHIDARA
PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the Assessee is directed against the Order dated 15.10.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2023-2024.
2 ITA.No.751/Viz./2025 2. The assessee has raised the following grounds: i. “The order of Learned AO/CIT(A) is bad in law, void and ought to be quashed. ii. The Appellant had applied for condonation of delay petition which was granted by the Hon'ble CIT(E) vide order dated 16.09.2025. iii. The Learned AO/CIT(A) ought to have noted that the original assessment has no legs to stand on and is liable to be quashed. iv. The Learned AO/CIT(A) ought to have noted the condonation has been granted on retrospective basis from AY 2022-23 to AY 2026- 27. v. Any other grounds that may be raised during the course of the appeal.”
3. The assessee is a charitable institution and was granted provisional registration u/sec.12A of the Income Tax Act [in short "the Act"], 1961 vide order dated 04.04.2022 valid up to assessment year 2024-2025. The assessee filed its return of income for the assessment year under consideration on 31.10.2023 by claiming exemption u/ses.11 and 12 of the Act. In the meantime, the assessee also filed an application in Form-10AB before the learned CIT(E) for grant of regular registration u/sec.12A of the Act. The learned CIT(E) vide order dated 13.03.2024 rejected the application on the 3 ITA.No.751/Viz./2025 ground that the assessee has not filed the relevant information or documentary evidence. The return of income was selected for scrutiny on the issue that the registration u/secs.12A/12AB of the Act has been cancelled/withdrawn by the Competent Authority. The Assessing Officer passed the order u/sec.143(3) r.w.s.144B of the Act on 22.03.2025 whereby the claim of exemption u/sec.11 of the Act was denied and addition of Rs.8,00,559/- was made and brought to tax u/sec.115TD of the Act. The assessee challenged the action of the Assessing Officer before the learned CIT(A) but could not succeed.
4. Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that the Assessing Officer has rejected the claim of exemption u/sec.11 on the ground that the registration of the assessee earlier granted on provisional basis was cancelled/withdrawn by the learned CIT(E) vide order dated 13.03.2024. However, subsequently the learned CIT(E) granted regular registration u/sec.12AB(1)(b) vide order dated 16.09.2025 which is applicable from assessment years 2022-2023 to 2026-2027
4 ITA.No.751/Viz./2025 covering the assessment year under consideration. Thus, the learned Authorised Representative of the Assessee has submitted that in view of subsequent registration granted by the learned CIT(E), the disallowance of claim of exemption by the Assessing Officer is not justified.
On the other hand, the learned DR has submitted that the order dated 16.09.2025 of the learned CIT(E) was not brought to the notice of the learned CIT(A) before passing the impugned order. Thus, the learned DR has submitted that in view of subsequent development, the matter may be remanded to the record of the Assessing Officer for deciding the same after considering the registration granted by the learned CIT(E).
We have considered the rival submissions as well as the relevant material on record. The Assessing Officer has disallowed the claim of exemption u/sec.11 of the Act in Para- 4.5 as under:
“4.5. Point-wise rebuttal of reply of the assessee including analysis of any case law relied upon: (i) Disallowance of exemption u/s 11 of the Act:
5 ITA.No.751/Viz./2025 The assessee has claimed exemption of Rs.8,00,685/- under Section 11 and 12 of the Act in its ITR in respect of A.Y 2023- 24 but the application of the assessee seeking registration under Section 12AB of the Act has been rejected by the Ld. Commissioner of Income Tax (Exemption), Hyderabad, vide Order dated 13/03/2024, Hence, the current status of the Trust is that it is not registered u/s 12A of the Act and is hence, not eligible to avail exemption u/s 11 and 12 of the Act. Therefore, the exemption of Rs. 8,00,685/- claimed by the assessee u/s 11 and 12 of the Act is proposed to be added to the income of the assessee.
In light of the above discussion, assessee was show caused as to why the amount equal to the Rs.8,00,685/- should not be added in its declared income and be taxed at the hands of the assessee in the relevant Assessment Year and appropriate penalty proceedings be initiated.
In response to Show Cause Notice dated 15/03/2025 the assessee has filed neither any submission nor any application for adjournment, till date.
The assessee has provided copy of Order for provisional registration u/s 12A in form 10AC for AY 2022-23 to 2024-25 dated 04/04/2022. Further, the assessee has filed an e- application in Form No.10AB seeking registration u/sec.12AB of the Income-Tax act, 1961 which, was rejected by the Ld. CIT(E), Hyderabad vide its order dated 13/03/2024. The relevant portion of the said order is reproduced here under:
6 ITA.No.751/Viz./2025 3. However, there is no compliance from the assessee so far, and has not filed any information or documentary evidence. In light of the above facts, the application for registration in Form No.10AB is considered carefully. As the case is to be decided in time bound manner, after considering the facts and non- submission of mandatory Information, the application filed by the assessee in Form No.10AB seeking registration u/s 12AB, is herewith rejected. In view of the above it is clear that the assessee is not liable to avail exemption u/s 11 of the Act as the application for seeking regularization of registration u/s 12A in form 10AC is rejected by the Ld. CIT(E), Hyderabad vide its order dated 13/03/2024. In absence of any valid registration order or provisional registration order u/s 12A of the Act, the assessee is not liable to avail exemption u/s 11 of the Act. Therefore, the entire amount u/s 11 of the Act i.e. Rs.8,00,685/- is hereby disallowed and added back to the total income of the assessee. (Addition Rs.8,00,685/-)”
6.1. Thus, the Assessing Officer has proceeded on the basis of the order passed by the learned CIT(E) dated 13.03.2024 to disallow the claim of exemption u/sec.11. Further, thereafter the learned CIT(E) granted registration
7 ITA.No.751/Viz./2025 u/sec.12AB(1)(b) of the Act vide order dated 16.09.2025 which reads as under:
8 ITA.No.751/Viz./2025 6.2. Thus, the registration granted u/sec.12AB(1)(b) of the Act was for the period w.e.f. assessment year 2022-2023 to 2026-2027 which covers the assessment year under consideration. Accordingly, in view of the fact that the assessee was granted registration u/sec.12AB(1)(b) of the Act by the learned CIT(E), the issue of allowability of exemption u/sec.11 needs to be reconsidered. Hence, in the facts and circumstances of the case, we set aside the order of the learned CIT(A) and remit the matter to the record of the Assessing Officer to reconsider the claim of the assessee in light of the registration u/sec.12AB(1)(b) of the Act granted
9 ITA.No.751/Viz./2025 by the learned CIT(E) vide order dated 16.09.2025. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order.
In the result, appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open Court on 30.01.2026.