Loading judgment…
Facts
The assessee, Shree Tarak Guru Jain Granthalya, filed belated income tax returns for AY 2017-18 and 2019-20, claiming exemption under Section 11(2) of the Income Tax Act. The CPC and NFAC denied this claim, citing Section 13(9) which disallows such claims for belated returns from AY 2016-17 onwards.
Held
The Tribunal held that the CPC's denial of exemption under Section 143(1)(a) without issuing prior intimation to the assessee was not in accordance with the law. It also noted that the return was processed as valid despite being belated. Therefore, the matter was remanded to the Assessing Officer for a fresh examination of the exemption claim.
Key Issues
The key legal issues were whether the CPC had the power to deny exemption under Section 11(2) for belated returns under Section 143(1)(a) without prior intimation, and the interpretation of Section 13(9) regarding belated returns for charitable trusts.
Sections Cited
Section 11(1), Section 11(2), Section 12A(1)(ba), Section 13(9), Section 139(5), Section 139(9), Section 143(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. MITHA LAL MEENA, HON’BLE & SHRI SUDHIR PAREEK, HON’BLE
ORDER PER BENCH: Both these appeals are filed by the assessee against the separate order of Ld. National Faceless Appeal Centre, NFAC [hereinafter referred to as NFAC/CIT(A)] dated 06.01.2023 with respect to assessment years 2017-18 and 2019-20 challenging therein denial of claim u/s 11(2) of the Income Tax Act.
Having heard both the sides and perusal of the record, we find that the Ld. CIT(A) has rejected claim of the assessee by observing that claim of exemption u/s 11(2) has been made by the assessee even though Section 13(9) expressly does not allow such a claim from assessment year 2016 onwards for belated returns. The other condition of this being apprehended from the information as per the return is also satisfied based on date of filing the return.
1. ITA Nos. 21 & 22/Jodh/2023 Asst. Years: 2017-18 & 2019-20 2 3. The Ld. Counsel argued that the CPC has limited power to add, or to deny benefits and exemptions u/s 143(1)(a) and thereafter, referred to Provisions of Section 143(1)(a) from the Act.
He submitted that in view of the limited powers, the AO and the CPC has no right to deny the benefits of set apart or application of income as the same requires interpretation of law with the proceedings as provided u/s 11 of the Income Tax Act. He has objected to Ld. CIT(A) observation that Section 13(9) introduces with effect from Assessment Year 2016-17 that benefit of application of income u/s 11 cannot be allowed where return of income is filed after due date. He submitted by strict interpretation of this Section 139(5) which allows belated filing of return will become redundant, and as such goes against the intention of the legislature.
Considering this genuine hardship faced by large number of assesses, CBDT has issued a circular F. No. 173/193/2019 ITA I dated 23rd April, 2019 with the clarification with regard to time allowed for filing that return of income subsequent to the insertion of Clause (ba) in Sub Section 1 of Section 12A of Income Tax Act, 1961.
The Ld. AR accordingly submitted that Section 13(9) and Section 12A(1)(ba) is covering both the returns filed in which application of return is claimed. He further contended that before making such adjustments u/s 143(1)(a), no intimations have been issued to the assessee which was mandatory requirement of the law. In support he placed reliance on the following judgments as under:
ITA Nos. 21 & 22/Jodh/2023 Asst. Years: 2017-18 & 2019-20 3 “ITAT Indore in the case of National Law University Vs. Deputy Commissioner of Income Tax in Asst. Year 2014-15.” “Kalyan Educational Society Vs. Assistant Commissioner Of Income Tax (2023) 105 ITR (Trib) 0694 (Kokata).” “Shri Rajkot Vishashrimali Vs. Income Tax Officer Exemption (2023) 225 TTJ 0992 (Rajkot).”
In the present case, assessee has filed a belated return which the department has not held to be defect return u/s 139(9) and has processed it by accepting the revenue and capital expenditure though denying the disputed exemption claimed by the assessee.
In our view, once the return has been processed as a valid return, the question arises whether disallowances made is permissible adjustment under Section 143(1)(A) and whether this adjustment, permissible has been made in compliance to the first Provision of Section 143(1)(A) of the Act. Considering the facts of the case in perusal of Provisions of Section 143(1)(A) of the Act and CBDT circular, the contentions of the appellant have been remained un- rebutted by the department. Even if, any response is received from the assessee then the same should be considered before making any adjustment or disallowance u/s 143(1)(A) of the Act.
In our view, since there was no intimation given to the assessee before making any adjustment u/s 143(1)(A) of the act regarding disallowances of the denial of claims of exemption made by assessee u/s 11(1) in the intimation issued u/s 143(1)(A) of the Act and hence the impugned intimation was not in accordance with the law.
1. & 22/Jodh/2023 Asst. Years: 2017-18 & 2019-20 4 10. Without prejudice to above, we are of the considered view that income should be understood in its meaningful sense and while computing the total income of the assessee by considering the total receipt for the year and disallowing any exemption claimed by the assessee u/s 11(1) or other section by the CPC in the processing of the return of income.
Considering the peculiar facts of the case, we deem it appropriate to send back the matter to the file of the AO to examine the claim of exemption of assessee u/s 11(1) of the Act, afresh in accordance with law after considering the written submission of the assessee and the veracity of the evidences filed in support of its claim by granting adequate opportunity of being heard. The assessee shall cooperate in the proceedings in the assessment proceedings before the AO in verification of the claim of said exemption.
Accordingly, both the appeals are restored to the file of the AO to de novo exemption the claim of the assessee in accordance with law. Order pronounced in the open court on 28/01/2026.