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

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ITA 735/PUN/2024Status: DisposedITAT Pune24 July 2024AY 2018-19Bench: SHRI INTURI RAMA RAO (Accountant Member), SHRI VINAY BHAMORE (Judicial Member)6 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the benefit of Section 11 exemption is not available for the assessment year 2018-19 as the trust did not have the requisite registration under Section 12AA of the Act during that period. The Tribunal also noted that the denial of exemption originated from the intimation under Section 143(1) and not the assessment order under Section 143(3).

What were the facts?

The assessee trust claimed exemption under Section 11 of the Income-tax Act for AY 2018-19. The exemption was disallowed as the trust was not registered under Section 12AA of the Act at that time. Although registration was later granted retrospectively from AY 2020-21, the authorities denied the exemption for the year under consideration.

What were the issues?

Whether exemption under Section 11 is available for an assessment year prior to the grant of registration under Section 12AA, and whether the appeal against the assessment order under Section 143(3) can address issues arising from the intimation under Section 143(1).

Which sections of the Income-tax Act were involved?

Section 11,Section 12AA,Section 12A(2),Section 143(1),Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI INTURI RAMA RAO & SHRI VINAY BHAMORE

For Appellant: Shri Hari Krishan
For Respondent: Shri Sourabh Nayak
Hearing: 15.07.2024Pronounced: 24.07.2024

आदेश / ORDER

PER INTURI RAMA RAO, AM:

1.

This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi dated 09.02.2024 for the assessment year 2018-19.

2.

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 either u/s.12AA or u/s.10(23C) of the Act. Subsequently, the said return of income was selected for scrutiny assessment and the assessment was completed vide order dated 09.03.2021 passed u/s.143(3) reiterating the prima-facie adjustment made in the intimation u/s.143(1) of the Act.

3.

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.

4.

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

5.

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 :

“The ld. Assessing Officer has erred in adopting/determining the income of the assessee before application of exemption u/s.11 of the Income Tax Act at RS.67,25,136/- as against the said correct income of Rs.33,62,568/- and the Commissioner of Income-tax (Appeals) has failed to adjudicate this issue.”

6.

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.

7.

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 :

“17. Section 12A extends benefit of exemption under Section 11 & 12 of the Act at the first instance to the cases referred under sub- section 1 of Section 12 A. Sub-section 2 of section 12 A extends benefit even when application for registration of Trust or Institution has been made on or after first day of June 2007. It would however be in relation to the income of the Trust or the Institution from the assessment year immediately following the financial year in which application for registration was made. If the simple meaning of the provision of section 12A(2) is to be given, it governs those cases where application was moved for registration after first day of June, 2007. The benefit of Section 11 and 12 would be extended from the assessment year immediately following the financial year in which the application was given. In the instant case the application for registration was given on 15.12.2014 i.e. in the financial year 2014- 15. On registration of the Trust, benefit under Section 11 and 12 would be available to the assessee from the assessment year following the financial year in which application was given and not any previous year. The benefit of registration could not have been extended for the assessment year 2011-12, even if the matter was pending before the Tribunal when application for registration was submitted on 15.12.2014.

18.

The proviso to sub-section 2 applies in a given circumstances, but cannot by making main provision of section 12 A as redundant. In the instant case, the application for registration was then submitted on 15.12.2014. The registration was given on 08.06.2015. Since registration has been given on 08.06.2015, the benefit of Section 11 & 12 would be available for the following financial year in which application was made if the assessment proceedings for the relevant assessment year was pending till the date of registration. It cannot be for the assessment year 2011-12 due to pendency of the appeal before the Tribunal. If the benefit of Section 11 and 12 is extended for the assessment year 2011-12, despite submission of the application for registration on 15.12.2014, it would be in contravention of sub-section 2 of Section 12. By virtue of the interpretation taken by the Tribunal the main provision has been made redundant on the facts of the case, though not permissible. The proviso has to be read along with main proviso and not in isolation and contradiction.

19.

The Tribunal even ignored the fact that proviso not only require registration of the Trust or the Institution while the assessment proceedings are pending, but it refers to assessment proceedings before the assessing authority and not elsewhere. In a common parlance, whenever matter is pending before the Tribunal in appeal, considered to be pendency of the assessment proceedings. The aforesaid principle would be applicable in the instant case is another question because proviso qualifies not only pendency of the assessment proceedings, but should before the Assessing Officer not else where, if in the proviso words "pendency of the assessment proceedings", would have been used then pendency of the appeal against the assessment could have been considered to be pendency of the assessment proceedings, but in the instant case the words used are "pendency of the assessment proceedings before the Assessing Officer". The assessment proceedings of the year 2011-12 was not pending before the Assessing Officer, but before the Tribunal. The observation aforesaid is relevant on the facts of this case. This Court has otherwise given proper interpretation to the substantive provision as well as the proviso.”

8.

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.

9.

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.

10.

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

Order pronounced on this 24th day of July, 2024.

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