BHARTIYA AADARSH SHIKSHAN SAMITI,MANDSAUR vs. DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL, BHOPAL
Facts
The assessee, a charitable society engaged in education, filed an appeal after a delay of 43 days. The delay was attributed to the busy examination schedule of its staff. The Assessing Officer (AO) assessed the total income at Rs. 69,37,663/- without granting exemption under sections 11/12, citing reasons like delayed return filing and registration under section 12A being effective from AY 2019-20.
Held
The Tribunal noted that the assessee had a meritorious case and that substantial justice should be preferred over technical considerations. It observed that the assessee was entitled to exemption under Section 11/12 based on the proviso to Section 12A(2), as assessment proceedings were pending when registration was granted. The delay was condoned subject to payment of costs.
Key Issues
1. Whether the delay in filing the appeal should be condoned. 2. Whether the assessee is eligible for exemption under sections 11 and 12 of the Income Tax Act, 1961, given the timing of its registration and the pending assessment proceedings.
Sections Cited
11, 12, 12A, 12A(2), 144, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI TR SENTHIL KUMAR & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 29.12.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 28.12.2019 passed by learned ITO, Exemption, Ujjain [“AO”] u/s 144 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on following grounds:
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Bhartiya Adarsh Shikshan Samiti, Mandsaur ITA No. 319/Ind/2024 – AY 2017-18 “1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals), NFAC, (‘the Ld. CIT(A), NFAC’) has erred in not providing proper opportunity of being heard and had erred in ex-parte order dated 29.12.2023, which is wrong and contrary to the facts of the case and provisions of the Act and is against the principle of natural justice. Thus, the order passed by the Ld. CIT(A), NFAC is liable to be quashed. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), NFAC, and the Ld. AO have erred in not allowing exemption u/s 11 of the Act without appreciating that the assessee society in running schools and is engaged in providing education to students and is registered u/s 12AA of the Act and not doing so is against the provisions of the Act. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) as well as the Ld. AO have erred in not appreciating that registration granted u/s 12AA of the Act is applicable in respect of pending assessment proceedings and, thus, the assessee society was eligible for exemption u/s 11 of the Act in view of the 12AA Registration Certificate dated 29.07.2019” 2. The registry has informed that the present appeal is delayed by 43
days and therefore time-barred. Ld. AR for assessee submitted that the
assessee is a charitable society engaged in advancement of education. He
drew us to Para 5 & 6 of impugned order and submitted that the CIT(A)
issued first notice of hearing dated 28.01.2021 for which the assessee
sought adjournment vide letter dated 19.02.2021 and the same was
granted. Subsequently, after a gap of more than 2 years, the CIT(A) issued
only two notices of hearing dated 11.10.2023 & 21.11.2023, noted non-
compliances thereof by assessee and passed impugned order as ex-parte on
29.12.2023. Ld. AR next submitted that the assessee has filed an
application for condonation of delay supported by an affidavit on stamp.
Referring to contents of affidavit, Ld. AR submitted that the prescribed
period of 60 days for filing of present appeal expired on 27.02.2024 but in
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Bhartiya Adarsh Shikshan Samiti, Mandsaur ITA No. 319/Ind/2024 – AY 2017-18 the month of February and March, 2024, the final examinations of students
were conducted in schools run by assessee by CBSE, MP Board and at local
level. Therefore, due to workload of examinations, staff of school was busy
and it is only when new session of school started in the first week of April,
2024 that the assessee could file appeal on 10.04.2024. Therefore, the delay
of 43 days occurred. Ld. AR very humbly submitted that there is no
deliberate lethargy, negligence, mala fide intention or ulterior motive of
assessee in making delay and the assessee does not stand to derive any
benefit because of delay. He went ahead on submitting that the assessee is a
charitable institution and the AO has assessed total income as high as Rs.
69,37,663/- whereas the assessee’s income was fully exempt u/s 11/12.
Therefore, Ld. AR prayed, the delay in filing present appeal must be
condoned otherwise the assessee shall be saddled with huge tax liability
against the provisions of Act.
Replying to this, Ld. DR for Revenue strongly objected to the prayer of
assessee and submitted that the assessee has been non-compliant before
CIT(A) and also made a delay of 43 days in filing present appeal. He
submitted that the assessee has not given importance to statutory work of
filing appeal in time, therefore does not deserve any sympathy.
Having heard learned Representatives of both sides and after a careful
consideration, we find that the assessee is a charitable institution and also
eligible for exemption u/s 11/12 as would be discussed in later part of this
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Bhartiya Adarsh Shikshan Samiti, Mandsaur ITA No. 319/Ind/2024 – AY 2017-18 order. Further, the assessee is advancing explanation that its staff had to be
busy in conducting examinations during the month of February & March,
2024 and therefore the appeal could not be filed in time, which was
ultimately filed in April, 2024 when the new session started. This
explanation advanced by assessee deserves a liberal consideration. At the
same time, we also find that the assessee has a meritorious case because
the AO has assessed total income at Rs. 69,37,663/- without giving
exemption u/s 11/12 but the assessee is entitled to exemption u/s 11/12
as would be seen in later part of this order. The Hon’ble Supreme Court has
observed in Collector, Land Acquisition Vs Mst. Katiji and others 1987
AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical
considerations are opposed to each other, the cause of substantial justice
must be preferred by adopting a justice-oriented approach. Therefore, taking
into account the guidance given by Hon’ble Supreme Court, we take a liberal
view and condone delay subject to payment of cost by assessee as
mentioned in last para of this order.
The background facts leading to present appeal are such that the
assessee is a society engaged in charitable purpose of advancing education.
The AO, based on an information from AIMS Module of ITBA regarding cash
deposited by assessee in bank a/c during demonetization period, issued
notice dated 28.11.2017 u/s 142(1) calling the assessee to file return of AY
2017-18 by 28.12.2017. The assessee failed to comply with such notice.
Subsequently, the AO issued query notices u/s 142(1) in response to which
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Bhartiya Adarsh Shikshan Samiti, Mandsaur ITA No. 319/Ind/2024 – AY 2017-18 the assessee made submissions. It was a submission of assessee that it is
engaged in educational activities through schools; that there were cash-
receipts by way of fee from students which were deposited in bank a/c; and
that the assessee is registered u/s 12A vide order dated 29.07.2019 by CIT
(Exemption), Bhopal w.e.f. AY 2019-20. During proceeding before AO, the
assessee also filed Return of Income of AY 2017-18 under consideration on
10.06.2019 alongwith Computation of Total Income, Audit Report and
Audited Financial Statements. Ultimately, based on documents of assessee,
the AO assessed total income at Rs. 69,37,663/- but without giving
exemption u/s 11/12. The AO denied exemption u/s 11/12 for two-fold
reasons, viz. (i) the assessee had not filed return within the time permitted
in the notice u/s 142(1), and (ii) the assessee got registration u/s 12A from
AY 2019-20 which is not for AY 2017-18 under consideration. Aggrieved by
order of AO, the assessee carried matter in first-appeal before CIT(A). The
CIT(A), however, agreed with AO’s conclusions and upheld assessment-
order. Now, the assessee has come in next appeal before us assailing the
orders of lower-authorities.
Ld. AR for assessee initially submitted that the assessee has, although
after expiry of time allowed in notice u/s 142(1) but still before passing of
assessment-order dated 28.12.2019, filed Return of Income, Audit Report
and Audited Financial Statements for AY 2017-18 under consideration to
the AO. Further, the department has granted registration u/s 12A to
assessee vide order dated 29.07.2019 from AY 2019-20, but as on
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Bhartiya Adarsh Shikshan Samiti, Mandsaur ITA No. 319/Ind/2024 – AY 2017-18 29.07.2019, the assessment of AY 2017-18 with which we are concerned
was pending before AO. Therefore, the assessee is entitled to the benefit of
proviso to section 12A(2) reading as under:
“12A(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment-year immediately following the financial year in which such application is made.
Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the object and activities of the trust or institution remain the same for such preceding assessment year:” Therefore, Ld. AR submitted, both of the lower authorities are wrong in
denying exemption u/s 11/12 to assessee against the clear cut mandate of
Proviso to section 12A(2). Ld. AR requested to direct the AO to allow
exemption as claimed by assessee.
Per contra, Ld. DR for revenue supported the orders of lower-
authorities and submitted that the assessee has failed to file return within
the time allowed by AO in the notice u/s 142(1). Therefore, the AO has
passed assessment-order u/s 144 without giving exemption u/s 11/12 to
assessee. Ld. DR very strongly contended that the assessee has made a non-
compliance of statutory obligations, therefore disentitled to exemption. He
requested to dismiss the present appeal.
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Bhartiya Adarsh Shikshan Samiti, Mandsaur ITA No. 319/Ind/2024 – AY 2017-18 8. We have considered rival submissions of both sides and also perused
the orders of lower authorities as well as the documents filed in Paper-Book
of assessee to which our attention has been drawn during hearing. After a
careful consideration, we find that the assessee has not submitted the
return of income uptill 28.12.2017 as required by AO in the notice dated
28.11.2017 u/s 142(1). Thus, the assessee is negligent in filing return
within the time fixed by AO. However, so far computation of total income is
concerned, the assessee is entitled to exemption u/s 11/12 in terms of
proviso to section 12A(2) noted above. What needs to be verified by AO is
only the fact that the object and activities of assessee remained same for AY
2018-19 as were there at the time when registration u/s 12A was granted.
That apart, the claim of exemption u/s 11/12 involves a different type of
working based on application and accumulation of income which needs to
be verified by AO. Therefore, we feel that it would be more appropriate to
refer this matter back to the AO who shall give an opportunity to the
assessee to provide necessary information for the aforesaid verifications by
AO and based on such information allow exemption as admissible u/s
11/12 to assessee.
Since the assessee has not filed return of income within the time
allowed by AO in statutory notice u/s 142(1) and also not filed present
appeal in time, we apprised the Ld. AR of assessee during hearing that the
assessee shall be directed to pay a cost of Rs. 10,000/- to Prime Minister
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Bhartiya Adarsh Shikshan Samiti, Mandsaur ITA No. 319/Ind/2024 – AY 2017-18 National Relief Fund and submit receipt of same to the AO during
proceeding before AO. The assessee is accordingly directed.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced by putting on notice board in terms of Rule 34 of ITAT, Rules, 1963, on 27/12/2024 Sd/- Sd/-
(TR SENTHIL KUMAR) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore िदनांक /Dated : 27/12/2024 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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