SHREE AMAR KSHATRIYA SABHA CHARITABLE TRUST, JAMMU V. INCOME TAX OFFICER WARD- 2 (3), JAMMU

ITA 203/ASR/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5611 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2024
• Assessment Year: 2021-2022
• Appeal Filed On: 02-07-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Benefit of exemption; Revenue expenditure; Capital expenditure
• Section: 80G; 12A; 12AA; 10B; 143(1); 13; 119; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER I.T.A. No. 203/Asr/2023 Assessment Year: 2021-22 Shree Amar Kshatriya Sabha Charitable Trust, Raj Tilak Bhawan, Purani Mandi, Jammu [PAN: AAHTS6094D] (Appellant) Vs. Income Tax Officer, Ward-2(3), Jammu (Respondent) Appellant by Respondent by : Sh. P. N. Arora, Adv. : Sh. B. Srinivas Kumar, CIT-DR Date of Hearing Date of Pronouncement : 10.07.2024 : 26.07.2024 ORDER Per Dr. M. L. Meena, AM: The captioned appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre [NFAC/CIT(A)], Delhi dated 08.06.2023 in respect of Assessment Year: 2021-22. 2. The assessee has raised the following grounds of appeal: 2 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO “1. That the Intimation Order passed u/s 143(1) by CPC, Bengaluru and the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi thereby confirming the Intimation Order passed by CPC are both against the facts of this case and are untenable under the law. 2. That no reasonable and proper opportunity of being heard was allowed by CPC while passing the Intimation u/s 143(1). As such the same is liable to be cancelled. Similarly, the order of the Ld. CIT(A) thereby confirming the same is also bad in the eyes of law and the same is also liable to be cancelled. 3. That the Ld. CIT(A) should have accepted the appeal of the assessee. The CIT(A) has mainly relied upon Circular No.6 of 2023 dated 24/05/2023 and has reproduced the same in his whole order and directed the assessee to apply for provisional registration but the CIT(A) has not appreciated the facts of the case as the assessee has already granted provisional registration in this case. The CIT(A) did not appreciate that Circular No.6 is not applicable to present facts and circumstances of this case as the assessment year involved is 2021-22 and the registration is already granted by Principal CIT on 31/10/2008. The Circular No.6 on which the CIT(A) has relied upon, is applicable from AY 2022-23 for granting provisional registration whereas the year under consideration is 2021-22. 4. That the CPC was not justified in making the addition of Rs.43,49,248/- and the addition made is unjustified, uncalled for and the same cannot be made during the year under consideration. 5. That any other ground of appeal which may be argued at the time of hearing of the appeal.” 3. The sole issue challenged in the multiple inter-related grounds of appeal pertains to the addition of Rs.43,49,248/- made by AO/CPC as the appellant was not granted registration u/s 12AB of the act for the year under consideration. 3 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO 4. At the outset, the Ld. AR submitted that the Ld. CIT(A) ought to have accepted the appeal of the assessee as the CIT(A) has mainly relied upon Circular No.6 of 2023 dated 24/05/2023 and has reproduced the same in his whole order and directed the assessee to apply for provisional registration. The AR contended that the CIT(A) has not appreciated the facts of the case as the assessee has already been granted provisional registration in this case. The CIT(A) did not appreciate that Circular No.6 is not applicable to present facts and circumstances of this case as the assessment year involved is 2021-22 and the registration is already granted by Principal CIT on 31/10/2008. The Circular No.6 on which the CIT(A) has relied upon, is applicable from AY 2022-23 for granting provisional registration whereas the year under consideration is 2021-22. He further submitted that the Assistant Director of Income Tax, CPC did not appreciate that this was genuine trust. The Audit was done within the extended period and there was no reason and occasion for making the disallowance/ addition. The copy of computation of income is made part & parcel of grounds of appeal in order to prove that the assessee was clearly entitled for deduction claimed. As such the returned income should have been accepted. 4 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO Submission of the Appellant filed during the appellate proceedings as under: This is an appeal preferred by the assessee against the Intimation passed by the Assistant Director of Income Tax, CPC u/s 143(1) dated 20/09/2022. In this connection, it is relevant to point out that intimation u/s 143(1) is illegal and invalid in the eyes of law, inasmuch as, the additions which have been made by CPC are not covered within the meaning of section 143(1). It is further submitting that only glaring and arithmetical mistakes can be rectified while passing intimation u/s 143(1). The scope of addition is very limited u/s 143(1) because section 143(1) gives very limited powers to AO while making the addition. It may be further submitted that the power prescribed u/s 143 are very limited powers and the Assistant Director of Income Tax CPC has exceeded his jurisdiction while making the addition. This view finds support from the decision of ITAT, Delhi Bench "SMC-2", New Delhi in the case of Shri Pradeep Kumar Batra vs. DCIT, CPC, New Delhi in ITA No: 6384/Del/2019, order dated 23/10/2020 relating to AY 2017-18. A copy of the judgment is available atPage No.76 to 81 of the paper-book. In view of these circumstances, the provisions of section 143(1) are not at all applicable to the present facts and circumstances of this case. As such no addition, whatsoever, is called for and the same may be deleted. It is further relevant to point out that even otherwise no proper and reasonable opportunity of being heard was allowed while passing intimation and thereby making addition to the returned income. In this case, the return was filed on 28/03/2022. The Assistant Director of Income Tax was not aware of the fact that this was a genuine trust and was carrying on charitable activities. In this case, the Assistant Director of Income Tax did not appreciate that the trust was granted registration by CIT on 31/10/2008. A copy of the registration certificate is also enclosed herewith which will speak for itself [Refer Page No.14 of the paper-book]. It may be further submitted that even the provisional registration 5 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO u/s 12A(1)(iac) was also granted by the Principal CIT on 05/04/2022 in Form No.10AC for the Assessment Year 2022-23 to 2026-27 (Refer Page No.15 to 17 of the paper-book]. In this connection the complete copy of Income Tax Return filed by the applicant relating to AY 2021-22 is enclosed herewith (Refer Page No.29 to 75 of the paper-book]. As such there was no reason and occasion for making further addition. It may be further submitted that from the perusal of Income& Expenditure statement, it is clear that a sum of Rs. 17,50,472/- [Refer Page N0.6 of the paper-book] was applied for charitable purposes and these expenses were of revenue nature. In this connection, your kind attention is invited to Income & Expenditure A/c, Balance Sheet and ITR for the AY 2020-21 [Refer Page No.3 to 9 of the paper-book]. It may be further submitted that evencapital expenditure was incurred to the tune of Rs. 16,71,229/-.This fact is duly supported by the Schedule of Fixed Assets as on 31/03/2021. From the perusal of the same, your honour will find that a sum of Rs.3,65,971/- was incurred before 30/09/2020 and Rs.13,05,258;- was incurred after 30/09/2020 [Refer Page No.8 of the paper-book]. Thus the total amount spent for charitable purposes comes to Rs.34,21,701/-. Thus, the same should have been considered as funds applied for charitable purposes. Again 15% of the income accumulated set apart for charitable purposes at Rs.8,27,547/- should have also been considered which is evident from the copy of report u/s 12A(b) in Form No. 10B [Refer Page No. 10 to 13 of the paper- book]. The total details of the addition are as under: (i) Revenue Expenditure Rs.17,50,472/-[Refer Page No.6] (ii) Capital Expenditure Rs. 16,71,229/-[Refer Page No.8] (iii) 15% of the expenses as above Rs.8,27,547/- [Refer Page No. 10] Rs.42,49,248/- 6 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO Thus, the assessee was clearly entitled for all these said deductions for the simple reason that the trust was granted-registration by CIT on 31/10/2008. In this connection, we are enclosing herewith the ITR and computation of income. In view of these circumstances, it is prayed that the appeal of the assessee may kindly be allowed. It may be further submitted that in this case the total addition has been made to the tune of Rs.84,98,496/-. According to the order/intimation u/s 143(1), the addition works out to Rs.42,49,248/- whereas the double addition has been made at Rs.84,98,456/- for the reason best known to the department. This double addition made is against the principle of natural justice and belief. Thus, even otherwise, no addition whatsoever is called for and the same may be deleted. Alternatively, without prejudice to the above, the addition made is very high & excessive looking to the facts and circumstances of the case. 5. The Ld. DR relies on the impugned order. 6. We have heard both the sides, perused the record, impugned order and written submission filed before us. Admittedly, the appellant is a Public Charitable Trust which was earlier registered under section 12AA of the Act on 31.10.2008. While processing the return, CPC has not allowed benefit of exemption and has taxed its income. From the intimation u/s 143(1) of the Act issued by CPC, it is seen that the appellant trust has not been registered under the new scheme of registration u/s 12AB of the Act, which came into effect from A.Y. 2021-22. Accordingly, CPC has denied the 7 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO benefit of exemption. The Ld. CIT(A) has confirmed the action of the CPC by observing as under: 5.3However, it is pertinent to mention that considering the genuine hardship of trusts, CPC has extended the timeline for applying for registration u/s 12AB of the Act till 30.09.2023. For clarity, CBDT Circular No. 6 of 2023 dated 24.05.2023 circulated vide F. No.370133/06/2023-TPL is reproduced as under: - Quote “1. Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 of the Income-tax Act, 1961 ( "the Act") or any trust or institution registered under section 12AA or section 12AB of the Act (hereinafter referred to as "the trust") is exempt subject to the fulfilment of the conditions provided under relevant sections of the Act. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 amended the provisions related to application by a trust for registration or approval by amending the first and second proviso to clause (23C) of section 10, clause (ac) of sub-section (1) of section 12A of the Act, inserting section 12AB of the Act and amending the first and second proviso to sub-section (5) of section 80G of the Act. The amended provisions provide for the following: (a) AII the existing trusts were required to apply for registration/approval on or before 30.06.2021. However, on consideration of difficulties in the electronic filing of Form No. 10A, the Central Board of Direct Taxes (the Board) in exercise of the powers conferred upon it under Section 119 of the Act extended the due date for filing Form No. 10A in such cases to 31.08.2021vide Circular No. 12 of 2021 dated 25.06.2021, to 31.03.2022 vide Circular No. 16 of 2021 dated 29.08.2021 and further till 25.11.22 vide Circular No. 22 of 2022 dated 01.11.2022. Such registration/approval shall be valid for a period of 5 years. Thus, existing trusts are required to apply for fresh registration/approval and once the registration/approval is granted it is valid for five years. 8 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO (b) New trusts are required to apply for provisional registration/approval at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration/approval is sought. Such provisional registration/approval is valid for a maximum period of three years. (c) Provisionally registered/approved trusts will again need to apply for regular registration/approval in Form No. 10AB at least six months prior to the expiry of the period of provisional registration/approval or within six months of the commencement of activities, whichever is earlier. This registration/approval is valid for a period of five years. On consideration of difficulties in electronic filing of Form No. 10AB, the Board in exercise of its powers under section 119 of Act extended the due date for electronic filing of Form No. 10AB to 30.09.2022 vide Circular No 8 of 2022 dated 31.03.2022. (d) The trusts once approved/registered for five years are required to apply at least six months prior to the expiry of the period of five years. (e) The deduction under section 80G of the Act in respect of a donation made by a donor to a fund or institution referred to in sub-clause (iv) of clause (a) of sub-section (2) of section 80G, shall be allowed to the donor only if a statement of such donations is furnished by the donee in Form 10BD. The certificate of such donation is required to be provided in Form No. 10BE. Further, Form No. 10BD and Form No. 10BE are required to be furnished on or before the 31st May, immediately following the financial year in which the donation is received. . . . . . . 20. It is hereby clarified that for the purposes of Form No.10B and Form No 10 BB electronic modes referred to in para 18 are in addition to the account payee checks drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account. 9 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO 21. Hindi version to follow.” Unquote 5.4 The appellant may take benefit of the extended timelines and seek fresh registration. Thereafter, it may apply before the Assessing Officer/CPC for rectification of the intimation of CPC under section 143(1) of the Act. 7. In the present case, the Ld. CIT(A) has rejected the appeal of the assessee being not registered u/s 12AB as per amended law, and advised to apply for fresh registration u/s 12 AB as the date extended vide CBDT Circular No. 6 of 2023 dated 24.05.2023 circulated vide F. No.370133/06/2023-TPL.Further, the Central Board of Direct Taxes (CBDT) has issued Circular No. 07/2024 dated 25.04.2024, extending the deadline for filing Form 10A/Form 10AB under the Income-tax Act, 1961 until 30th June, 2024.The appellant’s contention that it had old registration in the year 2008 and amended law does not apply to its case is not found convincing. However, in view of natural justice, one more opportunity may be granted to the appellant to establish its claim before the Ld. CIT(A) on merits. 8. Considering the peculiar facts of the case, we consider it deem fit to restore back the matter to the file of the Ld. CIT(A) to pass de novo order after considering the written submission and evidences filed on record and may be filed before him during the fresh appellate Proceedings after 10 ITA No. 203/Asr/2023 Shree Amar Kshatriya Charitable Trust v. ITO granting sufficient opportunity of being heard to the assessee with a direction that the Ld. CIT(A) shall issue a Show Cause Notice and thereafter pass a reasoned order in accordance with law. At the same time, the appellant assessee shall cooperate in the de novo appellate proceedings before the CIT(A). 9. Accordingly, we set aside the impugned order and restored the matter to the file of the learned CIT appeal for de novo adjudication on merits of the case. 10. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 26.07.2024 Sd/- Sd/- (Udayan Dasgupta) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T. True Copy By Order