AI Insights
The case involves Shri Parnami Panchayat, a trust running a temple, which appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, for the assessment year 2010-11. The primary contention was the denial of benefits under Section 11 and Section 12 of the Income Tax Act due to the non-traceability of the Section 12AA registration certificate during reassessment proceedings. The trust argued that despite the registration certificate not being available at the time of the original assessment, it was granted before the first appellate order, and thus, the benefits should be applied retrospectively. The Tribunal's decision favored the trust, allowing the benefits for the assessment year in question.
Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 132500 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-08-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
23-05-2023
Assessment Year
2010-2011
Appeal Filed On
12-01-2023
Judgement Text
vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh]U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA No. 14/JPR/2023 fu/kZkj.ko"kZ@AssessmentYear : 2010-11 Shri Parnami Panchayat 1, Parnami Mandir, Adarsh Nagar, Jaipur. cuke Vs. ITO, (Exemptions), Ward-1, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABTS 3918 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Rajeev sogani (C.A) & Ms. Ruchika Sogani (Adv.) jktLo dh vksjls@Revenue by: Ms. Monisha Choudhary (Addl.CIT) lquokbZ dh rkjh[k@Date of Hearing :24/05/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement 18 /08/2023 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the assessee against the order of the ld. CIT(A),National Faceless Appeal Centre, Delhi [hereinafter referred to as “NFAC’’] dated 18.11.2022 for the assessment year 2010-11wherein the assessee has raised following grounds of appeal. “1. That the learned CIT-‘A' has erred in holding that the application seeking registration was moved on 19.01.2016 & registration under Section 12AA was granted on 08.07.2016 by CIT Exemption & as the assessment was completed before date of Registration the assessee was not entitled to 2 ITA No. 14/JPR/2023 Shri Parnami Panchayat benefit of proviso to Section 12AA The said finding is illegal & unjustified. The assessee was entitled to the benefit to Section 11 & Section 12AA in view of the facts & position of Law. 2. That the learned CIT-‘A' has erred in holding that Assessing Officer was justified in making addition of surplus of Rs. 22,97,578/- to the income of assessee in status of A. O. P. and charging tax at Maximum Marginal Rate. The said finding is illegal & unjustified. The assessee was not liable for payment of any tax on surplus as he was entitled to benefit of Section 11 read with Section 12AA of the Income Tax Act. 3. That the learned CIT-'A' was not justified in ignoring the binding judgement of the Jurisdictional Rajasthan High Court in Case of CIT(Exemption) v. Shree Shyam Mandir Committee 400 ITR 466(Raj.) where it was held that appeal is a continuation of original proceedings & assessment proceedings pending before appellate authority should be deemed to be assessment proceedings pending before Assessing Officer within meaning of Section 12A. The said action is illegal & unjustified. 3. That action of lower authorities in treating surplus of Rs. 22,97,578/- as income & charging tax at Maximum Marginal Rate is illegal & unjustified. 4. That charging of interest Under Section 234B is illegal.” 2.1. Apropos Ground Nos. 1 to 3 of the assessee, brief facts of the case are that the assessee trust is engaged in running of the temple of Bhagawan Krishana in the name of Krishna Parnami Mandir. The assessee trust, during the year under consideration, earned income from let out of immovable property and interest income. The assessee trust, had gross receipt of Rs. 50,36,914/- out of which Rs. 46,26,505/- were applied by against its objects. The AO during the reassessment proceedings, treated 3 ITA No. 14/JPR/2023 Shri Parnami Panchayat Rs. 22,97,578/- as income of the assessee trust and denied the benefit of Section 11 of the Act. Although the assessee trust, since past many years was registered under Section 12AA of the Act, however, such certificate during the course of reassessment proceedings was not traceable. Accordingly, benefit of Section 11 was denied by the AO, vide order dated 30.09.2017. Against the order of the AO, assessee trust preferred an appeal before the CIT(A). The said appeal was filed within stipulated time period i.e. on 16.11.2017. In the interregnum, the assessee trust again applied for registration u/s 12AA of the Act, which was granted by ld. CIT(E) on 27.10.2018, with effect from AY 2019-20. Before the ld. NFAC, it was submitted that since the assessee trust, before the order being passed by Ld. CIT(A), in the first appellate proceedings, for caption assessment year, had been granted fresh registration u/s 12AA of the Act, benefit of such exemption should be given even for the caption assessment year. 2.2. Aggrieved, from the said order of assessment ,the assessee has filed the appeal before the ld. CIT(A) who after hearing the contention of the assessee dismissed the appeal of the assessee vide his order dated 18-11- 2022 by giving following findings on the issue:- “5.0 Decision on Grounds of appeal and Reasons thereof: In this appeal, as many as 6 Grounds were raised. Ground no. 1 has not 4 ITA No. 14/JPR/2023 Shri Parnami Panchayat been pressed in the written submission as reproduced in Para no. 4 above and is, therefore, dismissed. Ground no. 5 challenges in non granting of TDS credit. Since this is a matter of verification the Ld. AO is directed to do the same and allow further credit for TDS, if admissible, as per provisions of Income Tax Law and related Rules while giving effect to this Appeal Order. Thus, Ground no. 5, is partly allowed. Ground no.2,3& 4 challenge the action of Ld. A.O., in and non giving the benefit of Section 11 and 12 as the appellant failed to produce copy of Registration 12AA of the Act, taxing the surplus and assessing it as AOP respectively. Ground no. 6 challenges the levy of interest u/s 234 of the Act. This being consequential in nature, Ground no. 6 is worth dismissal, and is dismissed. 5.1. to 5.1.9............. 5.1.10 However, it is found that in the present case the important facts are that the assessment year for the year under consideration i.e. A.Y. 2010-11 was complete on 2-03-2016 when the registration u/s 12AA was not granted to the appellant trust. The application seeking registration was moved on 19-01-2016 and the registration was granted on 08-07-2016 by the CIT(Exemptions). Thus in the light of above referred CBDT Circular No. 1/2015 dated 21-01-2015 and on which reliance was placed upon by the appellant, particularly the following para 8.3 reproduced for ready reference, as below ‘’8.3 In order to provide relief of such trusts and remove hardship in genuine cases, section 12A of the Income Tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the Income Tax Act, the benefit of Sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceedings for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant 5 ITA No. 14/JPR/2023 Shri Parnami Panchayat earlier assessment year are the same as those on the basis of which such registration has been granted.’’ 5.1.11 In light of the above discussion, it is found that the action of ld. AO in not granting the benefit u/s 11 to the appellant trust for A.Y. 2010-11 and making the impugned addition of entire surplus of Rs. 22,97,578/- and that too in status of AOP at maximum marginal rate is sustainable in the facts of the case and in law. The action of ld. AO is, therefore, confirmed and ground No. 2,3 & 4 is, thus dismissed.” 2.3. Being aggrieved by the order of the ld. CIT(A), the assessee has filed an appeal before the Tribunal with the prayer that the assessee trust should be allowed the benefit of Section 11 as having already been granted registration u/s 12AA of the Act for which the ld. AR of the assessee filed the following submissions to contest the case “1. Assessee, a trust, is engaged in running of temple of Bhagawan Krishna in the name of "KRISHNA PARNAMI MANDIR". Assessee trust, during the year under consideration, earned income from let out of immovable property and interest income. Assessee trust, had Gross Receipt of Rs. 50,36,914 out of which Rs. 46,26,505 were applied by it, against its objects. 2. Ld. AO, during the reassessment proceeding, treated Rs. 22,97,578 as income of assessee trust and denied the benefit of Section 11 of Income Tax Act, 1961("ITA"). 3. Although the assessee trust, since past many years was registered under Section 12AA, however, such certificate during the course of reassessment proceeding was not traceable. Accordingly benefit of Section 11 was denied by Id. AO, vide order dated 30.09.2017. 4. Against the order of Id. AO, assessee trust preferred appeal before National Faceless Appeal Center ("NFAC"). The said appeal was filed, within stipulated time period i.e. on 16.11.2017. 6 ITA No. 14/JPR/2023 Shri Parnami Panchayat 5. In the interregnum, assessee trust again applied for registration under Section 12AA, which was granted by Id. CIT(E), on 27.10.2018, with effect from AY 19- 20. 6. Before NFAC, it was submitted that since the assessee trust, before the order being passed by NFAC, in the first appellate proceeding, for caption assessment year, had been granted fresh registration under Section 12AA, benefit of such exemption should be given even for the captioned assessment year. 7. However, such appeal of assessee trust was dismissed by NFAC, vide order dated 18.11.2022, denying the benefit of Section 11 to the assessee trust. 8. Chronological of event are tabulated below:- Particular Date CIT(A) order Page Date of order of ld. AO, in reassessment proceedings. 30.09.2017 Page 1 Date of filing of appeal by assessee trust before NFAC 16.11.2017 Page 1 Date of grant of registration by ld. CIT(E) to the assessee trust under section 12AA 27.10.2018 Page 1 Date of order passed by NFAC in case of assessee trust in appellate proceeding 18.11.2022 Page 1 9. At time of passing of the order by ld. AO on 30.09.2017, assessee trust had not been granted fresh registration under Section 12AA. However, the same was granted on 27.10.2018, i.e. before order was passed by NFAC, in the first appellate proceedings. 10. Attention is drawn toward Section 12A(2) of the ITA. Relevant extract of such Sub-Section is set out are under:- "....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: 7 ITA No. 14/JPR/2023 Shri Parnami Panchayat Provided that the provisions of sections 11 and 12 shall apply to a trust or institution, where the application is made under- (a) sub-clause (i) of clause (ac) of sub-section (1), from the assessment year from which such trust or institution was earlier granted registration; (b) sub-clause (iii) of clause (ac) of sub-section (1), from the first of the assessment year for which it was provisionally registered: Provided further that where registration has been granted to the trust or institution under section 12AA or section 12AB], 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 objects and activities of such trust or institution remain the same for such preceding assessment year...." [Emphasis Supplied] 11. Proviso to Section 12A(2) states that whenever any trust is grant registration under Section 12AA, for any assessment year, then effect of such registration shall also be given to proceeding assessment years, which are pending before the Assessing Officer as on the date of such registration. 12. In the present case, registration, under Section 12AA, was granted on 27.10.2018 to the assessee trust. At such time the appeal of assessee trust for the relevant previous year was pending before NFAC. 13. It is settled proposition that first appellate proceeding are an extension of the assessment proceeding. This is for the reason that first appellate authority, being NFAC, in the present case, has co-terminus powers with that of the Assessing Officer. What AO can do, Id. CIT(A) can definitely do. 14. Accordingly, even though the registration had not being granted till the time of passing of the order by Id. AO, but the same was granted before passing the order by NFAC, in the first appellate proceedings. Resultingly, NFAC should have given the benefit of Section 11 to the assessee trust by considering it to be registered under Section 12AA. 15. The aforementioned legal position was submitted before the NFAC during the first appellate proceedings; however, those were simply rejected by NFAC by stating as under at Page 17 of its order: 8 ITA No. 14/JPR/2023 Shri Parnami Panchayat "....5.1.10 However, it is found that in the present case the important facts are that the Assessment for the year under consideration I.e., A.Y. 2010-11 was complete on 22.03.2016 when the registration u/s 12AA was not granted to the appellant trust. The application seeking registration was moved on 19.01.2016 and the registration was granted on 08.07.2016 by the CIT(Exemptions). Thus, in light of the above-referred CBDT Circular no, 1/2015 dated 21.01.2015 and on which reliance was placed upon by the appellant, particularly the following para 8.3, reproduced for ready reference, as below:- "8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the Income Tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted." 5.1.11 In light of the above discussion, it is found that the action of Ld. AO in not granting the benefit u/s 11 to the appellant trust for AY. 2010-11 and making the impugned addition of entire surplus of Rs. 22,97,578 and that too in status of AOP at Maximum Marginal Rate is sustainable in the facts of the case and in law. The action of Ld. AO is, therefore, confirmed and Ground no. 2, 3, & 4 is, thus, dismissed...." Dates as referred by the NFAC, the aforementioned para are incorrect. For the correct dates, the table at Para 8 above, may please be considered. 16. In the below mentioned decisions, it was held that even if exemption under Section 12AA has been granted for particular assessment year, the benefit of Section 12A(2) as regards the preceding years, should be given to assessee even if it case is pending in appellate proceedings. 16.1. Akhil Bhartiya Shree Khandal Vipra Mahasabha, I.T.A. No. 345/JP/2018, ITAT Jaipur Bench 16.2. SNDP Yogam [2016]161 ITD 1 (ITAT Cochin Bench) 9 ITA No. 14/JPR/2023 Shri Parnami Panchayat 16.3. Centre for Cellular and Molecular Platforms, ITA No. 271/Bang/2018, ITAT, Bangalore Bench 16.4. Shree Khathu Shyam Jangid Brahman Dharamshala, ITA No. 1845/Del/2020, ITAT Delhi Bench 17. The aforementioned ratio has also been upheld by Hon'ble Rajasthan High Court in the case of Shree Shyam Mandir Committee [2018] 400 ITR 466 (Raj In view of the above, the assessee trust should be allowed the benefit of Section 11, as having already been grated registration under Section 12AA.” 2.4 The ld. AR of the assessee further relied upon the following case laws. CIT vs. Shree Shyam Mandir Committee ITA No. 234 of 2016 dated 23.10.2017 (Raj. H.C.) Akhil Bhartiya Shree Khandal Vipra Mahasabha vs. ITO ITA No. 345/JP/2018 dated 07.01.2019. SNDP Yogam vs. Asst. Director of Income Tax in ITA No. 503 to 506 and 569/Coch/2014 dated 01.03.2016. Shree Khathu Shyam Jangid Brahman Dharamshala vs. ITO ITA No. 1845/Del/2020 dated 08.07.2022. 2.5. Per contra, the ld. DR supported the orders of the lower authorities and relied upon following the case laws:- Bharatpur Royal Family Religious & Ceremonial Trust Moti Mahal vs. CIT (2021) 130 taxmann.com 406 (Jaipur Trib.) 10 ITA No. 14/JPR/2023 Shri Parnami Panchayat Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan vs. CIT(E) (2022) 138 taxmann.com 197 (SC) CIT(E) vs. Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan (2020) 113 taxmann.com 334 (Allhabad H.C.) U.P. Forest Corporation vs. DCIT (2007) 165 Taxman 533 (SC) Bhagawan Sree Mahayogi Lakshmamma Educational Society, Adoni vs. ITO (2022) 135 taxmann.com 310 (Hyderabad-Trib.). 2.6 In the case of the assessee, the ld. AR distinguished the case laws relied upon the ld. DR which are mentioned as under:- ‘’1. Effect of dismissal of SLP against the order of Hon'ble Allahabad High Court 1.1. Ld. DR has placed heavy reliance on the judgment of the Hon'ble Allahabad High Court in the case of CIT (E) v. Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan [2020] 422 ITR 468 (Allahabad) wherein the Hon'ble High Court had held that benefit under sections 11 and 12 would be available to assessee from assessment year following financial year in which application for registration under section 12A was given and not from any previous year. 1.2. Ld. DR has argued that on account of assessee's Special Leave Petition (SLP) being dismissed in that case by the Hon'ble Supreme Court the order of Hon'ble Allahabad High Court stands accepted/ upheld by the Hon'ble Supreme Court. 1.3. It is submitted that SLP before the Hon'ble Supreme Court was withdrawn by the Petitioner and therefor the SLP was dismissed as withdrawn. The relevant portion of the order of Hon'ble Supreme Court is reproduced below. 11 ITA No. 14/JPR/2023 Shri Parnami Panchayat "1. Learned counsel for the petitioner submits that he has instructions to withdraw the instant petition and I.A. No. 57475/2021 has accordingly been filed. 2. The instant Special Leave Petition is dismissed as withdrawn." 1.4. Mere dismissal of SLP without commenting on the correctness or otherwise of the order from which leave to appeal is sought what the court means is that it does not consider it to be a fit case for exercise of its jurisdiction under article 136 of the Constitution. Therefore, the ld. DR is wrong in arguing that the order of the Hon'ble Allahabad High Court has been upheld by the Hon'ble Supreme Court. 1.5. Even otherwise, the decision of Hon'ble Allahabad High Court was on a different content. In the said case, the matter was before ITAT and not before CIT(A). Whereas, in the present case, the matter was before CIT(A) Further, it is a settled proposition, also upheld by Hon'ble Rajasthan High Court in the case of Shree Shyam Mandir Committee [2018] 400 ITR 466 (Raj) that first appellate proceedings are an extension of the proceedings before Assessing Officer. Accordingly, the order of Hon'ble Allahabad High Court is distinguishable on this account. 1.6. Reliance is placed on the following judicial pronouncements: 1.5.1. V.M. Salgaocar & Bros. (P) Ltd. and ors. v. CIT [2000] 160 CTR (SC) 225. "10. Different considerations apply when a special leave petition under article 136 of the Constitution is simply dismissed by saying 'dismissed' and an appeal provided under article 133 is dismissed also with the words 'the appeal is dismissed". In the former case it has been laid by this court that when special leave petition is dismissed this court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. But what the court means is that it does not consider it to be a fit case for exercise of its jurisdiction under article 136 of the Constitution. That certainly could not be so when appeal is dismissed though by a non-speaking order. Here the doctrine of merger applies. In that case, the Supreme Court upholds the decision of the High Court or of the Tribunal from which the appeal is provided under clause (3) of article 133, This doctrine of merger does not apply in the case of dismissal of special leave petition under article 136. When appeal is dismissed order of the High Court is merged with that 12 ITA No. 14/JPR/2023 Shri Parnami Panchayat of the Supreme Court. We quote the following paragraph from the judgment of this court in the case of Supreme Court Employees' Welfare Association v. Union of India & Anr. MANU/SC/0582/1989." 1.5.ii. State of Punjab v. Davinder Pal Singh Bhullar and Ors. AIR 2012 SC 364 "A large number of judicial pronouncements made by this Court leave no manner of doubt that the dismissal of the Special Leave Petition in limine does not mean that the reasoning of the judgment of the High Court against which the Special Leave Petition had been filed before this Court stands affirmed or the judgment and order impugned merges with such order of this Court on dismissal of the petition. It simply means that this Court did not consider the case worth examining for a reason, which may be other than merit of the case. An order rejecting the Special Leave Petition at the threshold without detailed reasons, therefore, does not constitute any declaration of law or a binding precedent." 1.5.iii. Employees' Welfare Association v. Union of India and Anr AIR 1990 SC 334 "22. It has been already noticed that the Special Leave petitions filed on behalf of the Union of India against the said judgments of the Delhi High Court were summarily dismissed by this Court. It is now a well settled principle of law that when a Special Leave Petition is summarily dismissed under Article 136 of the Constitution, by such dismissal this Court does not lay down any law, as envisaged by Article 141 of the Constitution, as contended by the learned Attorney General. In Indian Oil Corporation Ltd. v. State of Bihar it has been held by this Court that the dismissal of a Special Leave Petition in limine by a non-speaking order does not justify any inference that, by necessary implication, the contentions raised in the Special Leave Petition on the merits of the case have been rejected by the Supreme Court. It has been further held that the effect of a non-speaking order of dismissal of a Special Leave Petition without anything more indicating the grounds or reasons of its dismissal must, by necessary implication, be taken to be that the Supreme Court had decided only that it was not a fit case where Special Leave Petition should be granted. In Union of India v. All India Services Pensioners Association. this Court has given reasons, for dismissing the Special Leave Petition. When such reasons are given, the decision becomes one which attracts 13 ITA No. 14/JPR/2023 Shri Parnami Panchayat Article 141 of the Constitution which provides that the law declared by the Supreme Court shall be binding on all the courts within the territory of India. It, therefore, follows that when no reason is given, but a Special Leave Petition is dismissed simliciter, it cannot be said that there has been a declaration of law by this Court under Article 141 of the Constitution." 2. The judicial position emerges as under: 2.1. Decision of the jurisdictional High Court in favour of the Assessee- CIT v. Shree Shyam Mandir Committee [2018] 400 ITR 466 (Raj) 2.2. Decision of the Hon'ble Allahabad High Court against the Asssessee- CIT (E) v. Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan [2020] 422 ITR 468 (Allahabad) 2.3. In such a scenario the order of the jurisdictional High Court would prevail and would be binding on the Hon'ble ITAT, Jaipur Bench. 2.4. It is also submitted that as per our research the Department has not filed any SLP against the order of the Hon'ble Rajasthan High Court in Shree Shyam Mandir Committee (Supra). Therefore, it amounts to Department having accepted the decision of the Hon'ble Rajasthan High Court. 3. Bharatpur Royal Family Religious & Ceremonial Trust Moti Mahal v. CIT [2021] 92 ITR(T) 690 (Jaipur-Trib.) 3.1. Ld. DR has also placed reliance on the judgment of Bharatpur Royal Family Religious & Ceremonial Trust Moti Mahal v. CIT [2021] 92 ITR(T) 690 (Jaipur- Trib.). The said judgment is clearly distinguishable for the following reasons: a) The benefit of subsequent registration granted under section 12A on 05/09/2016 was not allowed for assessment year 2011-12 because the Trust Deed was amended on 03/08/2016. b) In respect of applicability of the proviso the Hon'ble ITAT, Jaipur Bench, in its order dated 13/07/2021 has simply followed the earlier order in this regard in Assessee's own case delivered by the Hon'ble ITAT on 13/03/2020 (ITA No. 831/JP/2019-A.Y. 2013-14). It is submitted that when the order for A.Y. 2013-14 14 ITA No. 14/JPR/2023 Shri Parnami Panchayat in this case was passed by Hon'ble ITAT, Jaipur Bench, on 13/03/2020 the judgment of the Hon'ble Rajasthan High Court in case of Shreee Shyam Mandir Committee (Supra) was not brought to the notice of Hon'ble ITAT and, therefore, it was not considered by Hon'ble ITAT. c) This ITAT decision can have no binding force against the jurisdictional High Court decision in the case of Shreee Shyam Mandir Committee (Supra). 3.2. It is humbly submitted that the order relied upon by Id. DR cannot be applied, for the above reasons, on the present case of the Assessee. It is also submitted that author of the said order Hon'ble Vikram Singh Yadav (AM) had authored the judgment in the case of Akhil Bhartiya Shree Khandal Vipra Mahasaba v. ITO in ITA No. 345/JP/2018 which was delivered on 07/01/2019 in which the Rajasthan High Court's judgment of Shree Shyam Mandir Committee (Supra) was followed. 4. U.P. Forest Corporation v. DCIT [2008]. 297 ITR 1 (SC) 4.1. Hon'ble Supreme Court in this case have not considered the effect of PROVISO to section 12A (2). The decision simply says that registration under section 12A is a condition precedent for availing benefit under sections 11 and 12. 4.2. This decision, by Hon'ble Supreme Court, was delivered on 27/11/2007 whereas PROVISO was added by Finance Act, 2014 w.e.f. 01/10/2014. 5. Bhagawan Shree Mahayogi Lakshmamma Educational Society, Adoni v. ITO [2022] 193 ITD 591 (Hyderabad-Trib.) 5.1. It is submitted that decision of Hon'ble ITAT, Hyderabad Bench-D, was delivered by the Bench consisting of Shree Vijay Pal Rao (JM) and Shree Lakshmi Prasad Sahu (AM). 5.2. Shree Vijay Pal Rao (JM) while sitting at Jaipur Benches, under jurisdiction of Hon'ble Rajasthan High Court, while delivering judgment in the case of Akhil Bhartiya Shree Khandal Vipra Mahasaba v. ITO (Supra) have followed the jurisdictional High Court decision delivered in the case of Shreee Shyam Mandir Committee (Supra).’’ 15 ITA No. 14/JPR/2023 Shri Parnami Panchayat 2.7. We have heard the rival contention and perused material available on record. Brief facts of the case are that the AO during the course of assessment proceedings noticed that the assessee has not filed any return of income for the year under consideration and as per information available with the Department, the society had received interest and rent of Rs.19,27,637/-. It is also noted that return of income was filed by the assessee trust on 17-04-2017 in response to notice issued u/s 148 of the Act. Thereafter notices u/s 143(2) and 142(1) of the Act alongwith query letters were issued. In response thereto, the ld. AR of the assessee attended the proceedings from time to time and furnished the requisite details / submissions. Books of accounts produced during the course of assessment proceedings were examined on test check basis with reference to details filed. It is further noted that the during the year under consideration the assessee the assessee trust is engaged in the running of the temple of Bhagwan Krishan in the name of Krishna Parnami Mandir and earning income from rent of immovable property owned by it. During the year under consideration, the Sansthan has shown surplus of Rs.22,97,578/- and total receipt at Rs.50,36,914/-. The assessee had claimed exemption u/s 12 of the I.T. Act and claimed capital expenditure as an application of 16 ITA No. 14/JPR/2023 Shri Parnami Panchayat income for which the assessee was requested to file copy of registration certificate u/s 12AA as under:- ‘’4. If you have claimed exemption u/s 10, 11 and 12 then please furnish necessary report for the claim alongwith approval letter under the relevant provisions from the competent authority’’ In response to which the ld. AR attended on 28-08-2017 and filed written reply as under:- ‘‘The trust is registered u/s 12AA and its income is exempt u/s 11& 12. Copy of certificate registration u/s 12AA is not traceable at present’’ It is also noted that on the request of the ld. AR of the assessee, more time was provided to file copy of registration certificate u/s 12AA but finally vide order sheet entry dated 28-09-2017, the same was not available. The AO also noted in the assessment order that for claiming benefit of Section 11 of I.T. Act, 1961, registration u/s 12AA of the Act is the precondition and the assessee had failed to file to copy of registration certificate u/s 12AA of the Act. Thus the AO keeping in view of the above facts that the assessee had failed to produce copy of registration certificate u/s 12AA of the Act denied the benefit of Section 11 of the Act and surplus amount of Rs.22,97,578/- treated as income of the assessee and assessed in the status 17 ITA No. 14/JPR/2023 Shri Parnami Panchayat of AOP. In first appeal, the ld. CIT(A)confirmed the action of the AO by observing as under:- ‘’5.1.11 In the light of the above discussion, it is found that the action of Ld. AO in not granting the benefit u/s 11 to the appellant trust and making the impugned addition of entire surplus of Rs.22,97,578/- and that too in status of AOP at maximum marginal rate is sustainable in the facts of the case and in law. The Action of the AO is, therefore, confirmed and Ground No. 2,3 & 4 is thus dismissed.’’ After having meticulously gone through the submissions of both the parties and case laws relied on (supra), it is noted that at the time of passing of the order by AO on 30-0-2017, the assessee trust was not granted fresh registration u/s 12AA of the Act, however, the same was granted on 27-10-2018 i.e. before the order passed by NFAC, Delhi. In the present case, the registration u/s 12AA was granted on 27- 10-2018 to the assessee trust. At such time, the appeal of assessee trust for the relevant previous year was pending before the NFAC. It is also noteworthy to mention that even though the registration was not granted till the time of passing of the order by the AO yet the same was granted before passing the order by NFAC, in the first appellate proceedings. Resultantly, the NFAC should have given the benefit of Section 11 to the assessee trust by considering it to be registered u/s 12AA of the Act but the ld. CIT(A), NFAC dismissed the appeal of the assessee 18 ITA No. 14/JPR/2023 Shri Parnami Panchayat trust by confirming the order of the AO whose relevant para is reproduced as under:- ‘’5.1.11 In light of the above discussion, it is found that the action of ld. AO in not granting the benefit u/s 11 to the appellant trust for A.Y. 2010-11 and making the impugned addition of entire surplus of Rs. 22,97,578/- and that too in status of AOP at maximum marginal rate is sustainable in the facts of the case and in law. The action of ld. AO is, therefore, confirmed and ground No. 2,3 & 4 is, thus dismissed.” Taking into consideration all the facts and circumstances of the case as well as case laws cited by the respective parties, the Bench feels that the ld. CIT(A) should have allowed the benefit of Section 11 of the Act as the assessee trust has already been granted registration u/s 12AA of the Act by the ld. CIT(E) vide order dated 27-10-2018. This view is also taken by the Hon’ble Jurisdictional High Court of Rajasthan in the case of CIT vs Shree Shyam Mandir Committee (DBIT Appeal No. 234 of 2016 dated 23-10-2017 wherein the Hon’ble High Court held that :- ‘’31. In all these cases, the impugned orders were passed after the respective dates of grant of registration. Thus, we hold that subsequent grant of registration in all these cases operates retrospectively for all the relevant years under consideration." 5.The Central Board of Direct Taxes Circular No. 1 of 2015 MANU/DTCR/0002/2015, dated January 21, 2015, reads as under (page 38 of 371 ITR (St.): "8.1 The provisions of section 12A of the Income-tax Act, before amendment by the Act, provided that a trust or an institution can claim exemption under sections 11 and 12 only after registration 19 ITA No. 14/JPR/2023 Shri Parnami Panchayat under section 12AA of the said Act has been granted. In case of trusts or institutions which apply for registration after June 1, 2007, the registration shall be effective only prospectively. 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organisations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available. 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Assessing Officer in the case of such trust or institution for any assessment year preceding the first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained the registration under section 12AA for the said assessment year. 8.5 However, the above benefits would not be available in the case of any trust or institution which at any time had applied for registration and the same was refused under section 12AA of the Income-tax Act or a registration once granted was cancelled." 4. The issue is required to be answered in favour of the assessee. The appeal stands dismissed.’’ 20 ITA No. 14/JPR/2023 Shri Parnami Panchayat On being consistent view, we do not concur with the findings of the ld. CIT(A) denying the benefit of Section 11 to the assessee trust as it has already been granted registration u/s 12AA of the Act and the same should be considered for the year under consideration. Thus the ground of appeal No. 1 to 4 of the assessee are allowed. 3.1 Ground No. 5 of the assessee is regarding charging of interest u/s 234B of the Act which is mandatory and consequential in nature. 4.0 In the result appeal of the assessee is allowed. Order pronounced in the open court on 18/08/2023. Sd/- Sd/- ¼jkBksM deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 18/08/2023 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Parnami Panchayat, Jaipur 2. izR;FkhZ@ The Respondent- ITO (E), Ward-1, Jaipur 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File (ITA No. 14/JPR/2023) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar
