PUJYA SINDHI PANCHAT,PANVEL vs. INCOME TAX OFFICER, EXEMPTIONS WARD, THANE, THANE

Briefly, the facts of the case are that the assessee is a Trust registered under Bombay Charitable Trust Act. The Return of Income for the A.Y. 2018-19 was filed on 31.03.2019 declaring total income of Rs.10,57,163/- claiming exemption u/s.11 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’). The said return of income was processed u/s.143(1) vide intimation dated 18.03.2020 at a total income of Rs.67,25,136/- after making adjustment of Rs.56,67,973/- by disallowing exemption us/.11 as the assessee trust was not registered

Being aggrieved, an appeal was filed by the assessee trust before the CIT(Appeals) contending that application for registration u/s.12AA of the Act was filed before the CIT(Exemptions) and the CIT(Exemptions) rejected the said application. After rejection of the said application, matter was agitated before the Tribunal, which inturn directed the CIT(Exemptions) to revisit the matter. Consequent to the Tribunal order, CIT(Exemptions) passed the order dated 07.06.2023 granting registration u/s.12AA to the assessee trust w.e.f. 30.09.2020 and made it clear that the provisions of section 11 and 12 shall apply from the A.Y. 2020-21 onwards only. Thereafter, the assessee trust sought exemption u/s.11 even for the preceding year based on the registration granted to it u/s.12AA of the Act. However, the CIT denied the benefit of section 11 in the absence of any registration u/s.12AA of the Act for the year under consideration.

Being aggrieved, the assessee trust is in appeal before the Tribunal in the present appeal.

The ld. Authorised Representative placing reliance on the proviso to section 12A(2) of the Act submits that the assessee trust be given the benefit of exemption u/s.11. The assessee trust also raised an additional ground which reads as under :

On the other hand, the ld. DR submits that the assessee trust is not entitled to benefit of section 11 or 12 in the absence of any registration u/s.12AA of the Act for the relevant period. Therefore, he submits that the additional ground of appeal filed by the assessee trust cannot be admitted as it involves investigation of facts.

We heard the rival submissions and perused the relevant material on record. The short issue that arises for our consideration is with regard to availability of exemption u/s.11 of the Act in terms of provisions of section 12A(2) of the Act. Undisputedly, the registration was granted to the assessee trust u/s.12AA of the Act w.e.f. 30-09-2020 whereas the return of income for the A.Y. 2018-19 was processed u/s.143(1) vide intimation dated 18.03.2020 denying the exemption u/s.11 of the Act. Thus, it is apparent that the intimation was issued much prior to the grant of registration u/s.12AA of the Act. Even the assessment proceedings for the A.Y.2018-19 was completed vide order dated 09.03.2021, whereas the assessee trust was granted u/s.12AA of the Act only on 07.06.2023, which was not available even during the course of pending of the assessment proceedings for the year under consideration. The benefit of proviso to section 12A(2) is available till the stage of assessment proceedings as held by the Hon’ble Allahabad High Court in the case of CIT(Exemptions) Vs. Shiv Kumar Sumitra Devi Smarak Shiikshan Sansthan (2020) 422 ITR 468 (All). The relevant paragraphs of the judgment reads as under :

There is yet another reason as to why the appeal of the assessee trust requires to be dismissed, the exemption u/s.11 was denied in the intimation u/s.143(1) as adjustment to the returned income in the absence of the registration u/s.12AA of the Act. The present appeal is not against the intimation u/s.143(1) but against the assessment made u/s.143(3) of the Act. There was no cause of action in the assessment order passed u/s.143(3) of the act as the adjustment was made in the intimation u/s.143(1) of the Act. Thus, denial of exemption u/s.11 does not emanate from the assessment order made u/s.143(3) of the Act. Therefore, the grounds of appeal raised by the assessee stands dismissed.

As regards the additional ground of appeal, we find that the assessee trust disputes the quantum addition made in the assessment. We are not inclined to admit the additional ground as it requires verification of facts and also this addition does not emanate from the assessment order made u/s.143(3) of the Act.

In the result, the appeal filed by the assessee is dismissed.