SANT KIRPAL VIDYAK MISSION,LUDHIANA V. ITO (EXEMPTION), CHANDIGARH

ITA 561/CHANDI/2022

AI Insights

The case involves Sant Kirpal Vidyak Mission, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2017-18. The primary contention was the incorrect denial of exemption under sections 11 and 12 of the Income Tax Act, 1961, due to alleged non-submission of a valid registration certificate under section 12A. The Assessing Officer had added income and made other assessments based on this premise. The Tribunal found that both the assessee and the Revenue failed to produce the original certificate of registration during the assessment proceedings, leading to a remand for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312306 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Smt. Charu Aggarwal vs. DCIT ITA No.310/Chd/2021, Sony Pictures Networks India Pvt. Ltd. vs. ITAT, Mumbai [2019] 411 ITR 447 (Bombay HC), Coca cola India P. Ltd. Vs. Assistant Registrar representing ITAT [2014] 52 taxmann.com 399 (Bombay HC), Microsoft India (R & D) Pvt. Ltd. vs. DCIT [2021] 431 ITR 483 (Delhi Hon'ble High Court), Blackstone FP Capital partners Mauritius V Limited [TS-984-ITAT-2022 (Mum)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: S.K. MUKHI
• Keywords: Condonation of delay; Set aside; Capital asset; Opportunity of being heard; Reasonable cause; Corroborative evidences; Gift; Principle of natural justice; Valuation report; Rectification of order; Charitable institution; Cancellation of registration; Benefit of exemption
• Section: 143(3); 142(1); 154; 32; 11; 12AA; 131; 12A; 139; 12; 119(2)(b); 10B; 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH “B”,CHANDIGARH. BEFORE SH. LALIET KUMAR HON’BLE JUDICIAL MEMBER AND SH. KRINWANT SAHAY, HON’BLE ACCOUNTANT MEMBER (Physical Hearing) I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 Sant Kirpal Vidyak Mission (Now Aman Nagar Jalandhar Bye Pass, Ludhiana, Punjab. [PAN: AAATS5369L] (Appellant) Vs. Addl. CIT, NFAC, National E-assessment Centre, Delhi. (Respondent) Appellant by Sh. S.K. Mukhi, Adv. Respondent by Smt. Kusum Bansal, CIT. DR Date of Hearing 29.04.2025 Date of Pronouncement 02.05.2025 ORDER PER:LALIET KUMAR, JM: The instant appeal of the assessee is directed against the orderof the ld. National Faceless Appeal Centre (NFAC), Delhi, dated 17.06.2022 for A.Y. 2017- 18. 2. The assessee has taken the following grounds: I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 2 “1. That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse and thus needs to be quashed. 2. That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse having passed without passing and confronting the Draft Assessment Order (DAO) to the appellant /assessee as per the statutory requirement of law and thus, without affording sufficient opportunity of being heard being against established principles of law and that of natural justice and thus needs to be quashed. 3. That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse having passed without waiting disposal of for the rectification application u/s 154 filed and lying pending before the Ld. A.O. on the similar issues as taken in the grounds of appeal in form No. 35 filed before the Ld. CIT(A). 4. That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous andperverse having passed without affording sufficient opportunity of being heard having sought adjournment on sufficient grounds, thus being against established principles of law and that of natural justice and thus needs to be quashed. 5. That the orders of Ld. CIT (Appeals), U/S, 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI is erroneous and illegal having confirmed the original assessment order by the Ld. Α.Ο. u/s 143(3) which was passed by not considering the facts and circumstances and the contentions of the appellant along with existences and replies filed as so summoned by the Ld. A.O., wherein Registration Order/Certificate u/s 12A by the CIT-1 Ludhiana was duly + filed AND the holding of Ld. CIT (A) that exemption u/s 12A was cancelled by the CIT (Exemption) is patently wrong, which was infactcancelled by the Ld. A.O., having no jurisdiction. 6. That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse having decided the same on merits without considering the correct facts and representation by the appellant having not provided sufficient and proper opportunity and thereby treating the surplus of income over expenditure to the extent of Rs. 3,08,59,430/- as appellant's Income by erroneously holding that Exemption Certificate u/s 12A was cancelled by the CIT (Exemption), which infact was cancelled by Ld. A.Ο., having no jurisdiction and thus needs to be quashed, I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 3 7. That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous andperverse having decided the same on merits without considering the correct facts and representation by the appellant having not provided and thereby treating cash deposit to the extent of Rs. 3,41,28,000/-, which amount was infact legal receipts and treating the same as appellant's Income by erroneously upholding the findings of the Ld. A.O. and thus needs to bé quashed. 8. That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse having decided the same on merits without considering the correct facts. and representation by the appellant without disposing off or considering the fact that the earlier years appeals for the A.Y., 2015-16 and 2016-17 being pending before the CIT (A) itself on the major issue ofcertificate of exemption u/s 12A and thus needs to be quashed. 9. That the appellant craves leave to add, amend or delete any of the grounds of appeal on or before the disposal of the present appeal.” 3. Brief facts of the case as per the assessment order are as under: 3.1 The appellant e-filed its return of income for the A.Y. 2017-18 on 02-04- 2019 declaring NIL income belatedly and also filed audit report in form 10B on 31-08-2018 after due date. The case was selected for complete scrutiny. 3.2 It is observed by the AO that the appellant filed its ITR for the A.Y. 2017-18 on 17.3.2018 belatedly and audit report in form 10B was filed on 31.8.2018 after due date. The Assessing Officer further mentioned in the order that the appellant has not submitted valid certificate of registration u/s. 12A of the I T Act, 1961 before the AO. I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 4 3.3 The assessee vide reply dated 29.11.2019 had mentioned that the copy of the 12A certificate was submitted at the time of last year hearing that is A.Y. 2016-17. It was further submitted in the reply that the assessment order u/s 143(3) for the A.Y. 2015-16 and 2016- 17 was passed by the Assessing Officer and the appeals and these two assessment years are pending before the ld. CIT(A). 3.4 The Assessing Officer after a gap of almost two years vide letter dated 03.03.2021 has asked the assessee to furnish the following documents a. Trust Deed/Memorandum of Association b. Certificate of Registration u/s 12A c. Certificate under 80G of IT Act if applicable d. Certificate of Registration from Charity Commissioner e. Certificate Details of any amendment made in the Trust Deed since incorporation. 3.5 The assessee vide its reply dated 03.03.2021 had complied with the notice issued by the Assessing Officer. The reply of the assessee is available at page 41 and 42, the typed copy of the reply is as under: I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 5 Dated: 03.03.2021 To: The Addl/Joint/Deputy/Assistant Commissioner of Income Tax NeAC, Delhi Subject: Case of SANT KIRPAL VIDYAK MISSION... for A.Y. 2017–18 Main Body: With reference to your notice dated 03.03.2021 wherein you had said that we had not replied to the questionnaire given by you. We want to submit that we had replied to your questions vide our letter dated 29.11.2019 and 30.11.2019. Copy of these letters are again given for your reference along with proof of submission. We are giving point-wise reply of your letter dated 03.03.2021. 1. ITR is filed along with Form 10B and income tax return is submitted in letter dated 30.11.2019. We are submitting following paper for your record:  Trust deed and certificate of registration (Form No. 12A is enclosed)  PAN is enclosed 2. Chotte Lal Ji had expired and in his place Harish Kumar is admitted as trustee. 3. Notices served on our client were duly replied vide our letter dated 30.11.2019. 4. Following are the comments on valuation report submitted by department to your honour. However, we want to submit that no copy of valuation report was submitted by you to us. Sr. No. Name of Property Valuation as per Department Cost of Investment Reason For Variation 1. Green Land Convent School Subhash Nagar 2,90,37,831/- 2,95,00,000/- It is within 10% of variation admitted by department 2. Green Land Convent School Dugri 3,03,38,993/- 2,92,75,000/- We have incurred less amount that valued by department however it is within 10% of variation admitted by I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 6 department 3. Green Land Convent School 32 Sector 3,22,12,562/- 2,97,50,128/- We have incurred less amount that valued by department however it is within 10% of vatiation admitted by department. 4. Green Land Convent School Aman Nagar 2,73,37,842/- 2,90,01,845/- It is within 10% of variation admitted by department 5. Green Land Convent School Civil City 1,29,45,255/- 1,31,03,900/- It is within 10% of variation admitted by department Total 13,18,72,483/-, 13,06,30,873 We have already submitted that we are purchasing building material in lump sum. We are not maintaining any separate record of cost incurred by us on each and every school building. One account is maintained. However, amount incurred by us on buildings is less than your valuation. Your honour has got valued our building for the A.Y. 2016-17. Our valuation is less than your valuation. Copy of appeal filed for A.Ys. 2016-17 and 2016-17 is enclosed. We have taken building expenses as application of money. Expenses as per your then your valuation being less, we should be given benefit. If you then would have objection to it. Our application of money is less than your valuation. Our cash book from 01.11.2016 to 31.12.2016 is submitted along with reply of 30.11.2019. Cash has been deposited out of cash available in books. This cash has been generated due to cash withdrawals from banks and fee received. Our cash book is duly reflected. Proof submitted. No cash has been deposited during demonetization. Gift received, sale of land and other capital asset, cash has been deposited out of old income, school income and other income. We are running schools and we have school income and other income. Copy of bank statements had been filed by reply dated 29.11.2019. Sosource of cash deposited in banks is duly explained. Cashbook asked for has already been submitted. Cash has been deposited out of available cash in books. Soquestion of disallowance of cash deposited does not arise. I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 7 3.6 Based on the submission given by the assessee, the ld Assessing Officer, had for the reason best known to him had rcorded the finding at page 2 and 3 of his order: “4. It is observed that the assessee has filed its ITR for the A.Y. 2017-18 on 17.3.2018 belatedly and audit report in form 10B was filed on 31.8.2018 after due date. The assessee has not submitted valid certificate of registration u/s. 12A of the I T Act, 1961. However, the assessee has claimed that the certificate of registration u/s. 12A is not traceable at present. In absence of certificate u/s. 12A, the exemption under Section 10, 11, 12 and 13 of the Act is not found allowable and eligible as per law and will be liable / chargeable to tax. Hence, to provide proper opportunity of being heard, vide notice u/s. 142(1) dated 3.3.2021 wherein the assessee was asked to show cause as to why the assessee’s claim of exemption in respect of income of the charitable or religious trust should not be disallowed and such income be taxed u/s. 164(2) of the Act at Rs. 3,08,59,430/- (surplus as per Income & Expenditure Account). 3.2 In response, the assessee responded in a very evasive manner vide letter dtd. 3.3.2021 which is placed on record: 3.3 The above reply of the assessee has been carefully considered but is not found acceptable. The assessee has not submitted certificate of registration u/s. 12A. However, the assessee has stated that the Commissioner of Income tax had cancelled exemption certificate u/s. 12A of the I T Act. The basic condition of filing ITR within the specified due date given in section 139(1) has not been met making the assessee ineligible for exemption. Further, once the Commissioner of Income tax had cancelled the exemption u/s. 12A of the Act, the exemption is withdrawn and hence all the receipts of the trust either by voluntary contribution or income derived from its property would be an income of the trust in a normal course and shall be chargeable to tax. 3.4 Under the provisions of section 12A of the Act, where the total income of a trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year are to be audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. 3.5 Further, as per Rule 17B of the Income-tax Rules, 1962 (hereinafter referred to as ‘the Rules’) the audit report of the accounts of such a trust or institution is to be furnished in Form no. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed form along with the return of income results in disentitlement of the trust from claiming exemption under sections 11 and 12 of the Act. 3.6 So far as the contention of the assessee, that the AO has no power to withdraw exemption u/s 11 and 12, and such a vested power with the Commissioner of Income Tax is concerned, it is I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 8 stated that during the assessment proceedings, the AO is required to examine as to whether the activities of the assessee Trust are as per the objects for which registration u/s 12AA was granted by the Commissioner of Income Tax and whether or not the assessee fulfils the conditions for claiming exemption u/s 11 and 12. If not, the AO is legally empowered to disallow the same. It is clarified that the power to cancel the registration u/s 12AA vests with the Commissioner of Income Tax which is different from disallowance of exemption u/s 11 and 12. Therefore, contention of the assessee has no merits.” 3.7 The Assessing Officer beside observing the above head denying the benefit of exemption u/s 11 and 13 of the Act and thereby added the income of Rs.3,08,59,430/- and had also made addition u/s 69A for an amount of Rs. 3,41,28000/- in the hands of the assessee. 4. Feeling aggrieved by the order of the ld. Assessing Officer, the assessee preferred the appeal before the ld. CIT(A) however, the ld. CIT(A) had dismissed the appeal of the assessee as assessee failed to appear before the authority despite the notice issued on 13.12.2021, 02.03.2022, 17.03.2022, 04.05.2022 and 02.06.2022, vide the impugned order dated 17.06.2022. 5. Feeling aggrieved by the order passed by the ld. CIT(A) the assessee is in appeal before us for the ground mentioned herein above. 6. The ld. AR for the assessee had made the following submission a. That the assessing officer had failed to applied his mind during the assessment proceedings and had wrongly recorded that the assessee had not filed the copy of the 12A certificate issued by the authorities in the year 2003. I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 9 b. The Assessing Officer had also failed to apply his mind to the fact that the assessee was continuously being granted the benefit of section 11 and 13 from the date of grant of registration by the revenue authority. c. The Assessing Officer has a wrongly recorded the submission that the Ld. CIT(A) had cancelled the exemption certificate u/s 12A of the IT Act. d. The ld. AR submitted that the finding recorded by the Assessing Officer was contrary to record in asmuch as the assessee had never made a statement or submission that the 12A certificate has been cancelled by the Ld. CIT(A). e. The ld. AR submitted that the during the assessment proceeding the entire cash book and other documents were provided to the Assessing Officer explaining the trail of cash which is clear from the reply dated 03.03.2021. ld. AR relied upon the decision in the case of: Smt. Charu Aggarwal vs. DCIT ITA No.310/Chd/2021 deciding on 25.03.2022. f. The ld. AR had submitted that the Ld. CIT(A) has wrongly passed the order, without deciding the appeal on merit. It was submitted by him that failure on the part of the Ld. CIT(A) to decide the matter will not go in favour of I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 10 the revenue for seeking the remand of the matter. It was submitted that there is no power with the tribunal to remand the matter back to the file of the lower authority and in support of the above proposition he relied upon the following judgments: I. Sony Pictures Networks India Pvt. Ltd. vs. ITAT, Mumbai [2019] 411 ITR 447 (Bombay HC). II. Coca cola India P. Ltd. Vs. Assistant Registrar representing ITAT [2014] 52 taxmann.com 399 (Bombay HC). III. Microsoft India (R & D) Pvt. Ltd. vs. DCIT [2021] 431 ITR 483 (Delhi Hon'ble High Court) IV. Blackstone FP Capital partners Mauritius V Limited [TS-984-ITAT-2022 (Mum)] 7. Per contra, the Ld. CIT DR had submitted that the assessee had failed to provide the certificate of 12A before the Assessing Officer and further the reply of the assessee was evasive and general in nature. It was submitted on account of the above said reason the Assessing Officer had made the addition in the hands of the assessee. It was further submitted that as assessee failed to appear before the Ld. CIT(A), therefore, Ld. CIT(A) has rightly passed the order against the assessee. The ld. DR relied upon the order passed by the lower authority. 8. As the department was disputing the grant of registration to the assessee, and subsequent rectification order passed for the Assessment Year 2018-19, the I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 11 tribunal vide order sheet entry dated 15.01.2025 and 22.04.2025 had directed to provide the record of the registration granted to the assessee and subsequent rectification order passed in the Assessment Year 2018-19 to the following effect: I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 12 I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 13 9. In pursuance to the direction dated 22.04.2025, the revenue had filed a report on 29.04.2025 which is to the following effect. “In the above case, the brief facts of the case are that the assessee has filed its ITR for the A.Y. 2017-18 on 17.03.2018 belatedly and audit report in form 10 B was filed on 31.08.2018 after due date. As per the order sheet, it has been observed that notices u/s 142(1) has been issued to the assessee in regard to procure the document/evidence to substantiate its claim u/s 11 & 12. The same has been enclosed as annexure 1 (on page-1 to 8) for your kind perusal and ready reference. 2. It has been observed that the assessee has been non- cooperative during the proceedings before the jurisdictional Assessing Officer and the Commission of Income Tax (exemptions). In regard, the summons had been issued u/s 131 (enclosed as page no. 9 to 12) of Income Tax Act, 1961. 3. During the Assessment proceedings, after the issuance of summons dated 18.11.2019 the hearing was fixed on or before 20.11.2019 granting another opportunity to the assessee to appear before the appropriate authority. On 29.11.2019 the assessee was informed about non submission of any document as asked vide various statutory notices except copy of Balance Sheet and Income & Expenditure account for the F.Y. 2016-17, which was received manually on 20.11.2019. The concerned Assessing Officer was not satisfied about the correctness as well as completeness of the accounts submitted by the assessee. The I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 14 related document is enclosed for ready reference as annexure '2' (on page-13 to 16). 4. It is pertinent to mention that several opportunities were extended to the assessee, wherein the assessee was requested to submit valid certificate ofexemption u/s 12 A. However, the assessee submitted unsigned and non-certified photocopy of the certificate which does not exhibits the authenticity of the document. The copy of the certificate is enclosed herewith as annexure '3' (on page-17) for your kind perusal. It is pertinent to mention here that an order with the reference number CIT- 1/LDH/Tech./12-A/27/2003-04/3287 showcasing only month and year as Dec 2003 and no particular date is mentioned. On another glance of the page it is seen that document/page has been attested by an Income Tax Officer dated 16.12.2022, whereas the assessee has submitted the similar document vide his written submission dated 29.11.2019 5. Thereafter, during the appeal before CIT (Exemption) the assessee was issued 5 notices from 13.12.2021 to 02.06.2022. The appellant had only sought adjournment continuously but not filed any submission. Therefore, the CIT (Exemptions) had no option but to dispose-of the appeal based on the material available on the record, factual matrix of the case, legal provisions as applicable for the year under consideration i.e. A.Y. 2017-18. I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 15 6. On 22.04.2025 the learned counsel for the assessee submitted that in A.Y. 2018-19 the assessee has filed application under section 154 and rectification order was passed on 02.08.2022 (page no. 18-19) vide which the benefit of section 11 and 12 was granted to the assessee. He further brought to notice of the Hon'ble bench that a Show Cause Notice dated 08.04.2025 issued for A.Y. 2018-19 vide which earlier order dated 02.08.2022 was sought to be rectified again. On the strength of this Show Cause Notice coupled with the reply filed by the assessee, he demonstrated that complete record is possessed by the ACIT and he could easily place it before ITAT. 7. It shall be brought under consideration of the Hon'ble bench that CIT (Exemptions) has rejected the certificate of registration u/s 12 A of the assessee pertaining to A.Y. 2018-19 which was followed by rectification application. The documents are being enclosed hereinafter annexed as Annexure '4' (on page- 20 to 25). 8. It is very important to bring to the notice of Hon'ble Bench that the assessee has continuously failed to produce the original document even after ample of opportunities including multiple summons granted by the assessing officer and CIT (Exemptions). Initially the AR has submitted a cropped copy of the uncertified and undated document alleged as certificate u/s 12 A(a) by the learned counsel of the assessee in his submission dated 03.03.2021, thereafter the assessee counsel has submitted a paperbook dated 29.08.2024, in which the similar copy of the I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 16 alleged document has been placed for the consideration of the Hon'ble Bench to be assumed as the original document. 9. The information regarding authenticity of certificate issued u/s 12A(a) was called from the office of the Principal Commissioner of Income Tax-1, Ludhiana. In their reply dated 25.04.2025, they have forwarded a copy of dispatch register of F.Y. 2003-04 of date 11.12.2003. In that, an entry no. 3887 is marked only as 'regarding registration u/s 12A(a)', which neither approves nor disapproves of registration u/s 12A(a)', thus the validity of the certificate could not be ascertained by the document supplied by the office of PCIT-1, Ludhiana. The same is annexed as Annexure '5' (on page-26 to 31) for your kind perusal and ready reference. 10. It has been observed that the counsel for the assessee has been persistently non-cooperative, and has exhibited dismissive attitude towards compliances and in his written submission, whereas the department had been constantly calling for the record. 11. Therefore, it is prayed to this Hon'ble Bench to set aside the case of the assessee to CIT(Exemptions) and to verify the documents submitted by the assessee in lieu of granting an opportunity to the assessee to be heard.” 10. The learned AR submitted that the assessment orders for the Assessment Years (AYs) 2017-18 and 2018-19 were both passed by the same Assessing Officer on the same day. In the assessment order for AY 2017-18, the AO denied I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 17 the benefit of sections 11 and 13 of the Income Tax Act on the ground that the assessee did not have registration with effect from December 2003. 10.1 A similar assessment order was also passed by the AO for AY 2018-19, again denying the benefit of sections 11 and 13 on the same basis—that the assessee was not holding registration with effect from December 2003. 10.2 However, when the assessee pointed out this mistake to the AO in respect of both Assessment Years, the AO corrected the error only for AY 2018-19. The correction was made through a rectification order dated 02.08.2022, in which the AO recorded the rectification as follows: “that the assessee is a registered trust u/s 12AA(1)(b)(i) of the IT Act, 1961 vide order No. CIT/LDH/Tech/12-A/27/2003-04 and the assessee had already spent the 85% of its receipts as required u/s 11(1)(A)/11(1)(B) of the IT Act, 1961 for its objects.” 11. It was submitted that the rectification for the Assessment Year (AY) 2017- 18 has not been issued by the Assessing Officer (AO) till date. During the course of the hearing, the Tribunal directed both parties to file the status of the proceedings in respect of AYs 2015-16 and 2016-17. In compliance with this direction, the learned Authorized Representative (AR) for the assessee filed the assessment orders for these two years and also submitted a brief written note. The same has been taken on record. I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 18 12. We have heard the rival contentions of the parties and perused the material available on record. In the present case, the assessment order centres around the findings recorded by the AO in paragraphs 3.3 to 3.6, wherein the AO noted that the assessee does not have registration under section 12A of the Act. It was further opined by the AO that the Commissioner of Income Tax (CIT) had canceled the exemption under section 12A of the Act. 12.1 Upon reviewing the record, it is abundantly clear that the assessee had filed the certificate of registration along with its reply dated 03/03/2021. Moreover, we find no indication anywhere that the assessee ever mentioned that the CIT had cancelled its registration. There is no averment by the assessee regarding any cancellation of registration by the CIT. Both the Revenue and the assessee have failed to point out any such document or order passed by the learned CIT cancelling the registration under section 12AA of the Act. 12.2 In this case, when the certificate of registration was available on record with the Assessing Officer (AO), it was the AO’s duty either to accept the same or to assert, with reference to the revenue record, that the said certificate was no longer valid. The Revenue filed a report pursuant to the Tribunal’s direction dated 22/04/2025, wherein it was categorically mentioned that the record of the Revenue I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 19 is not traceable with respect to approving or disapproving the registration under section 12A of the Act. 12.3 In our considered opinion, the Revenue is the custodian of the record regarding the grant or refusal of registration to any assessee. The Revenue cannot shirk its primary responsibility by simply alleging that the record is unavailable or that it is not in a position to confirm or deny the registration status. We do not approve of this approach taken by the Revenue. 12.4 Ironically, in the present case, both the assessee and the Revenue were unable to produce the original certificate of registration under section 12A or the related records. Under these circumstances, the Tribunal is left with no option but to rely on the other undisputed and uncontroverted facts brought before us. We may refer to the attestation made by Mr. V.K. Garg, Income Tax Officer, on 16/12/2022, whereby he attested the 12A certificate. Further, we may also refer to the rectification order passed by the AO on 02/08/2022 for AY 2018-19, which mentions that the assessee has section 12A registration. 12.5 In addition to these documents, we may also refer to the assessment orders for AYs 2015-16 and 2016-17 passed by the AO, wherein the AO acknowledges in the orders that the assessee was holding valid 12A registration under the Act. In the I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 20 assessment order for AY 2016-17, the AO, in the relevant paragraphs, held as under: 2.0 The assessee is a society registered under the Societies Registration Act (XX of 1860) vide registration no. 656 of 1993-94 , dated 30/08/1993. The assessee is registered u/s 12AA of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) vide order of the Commissioner of Income Tax-1, Ludhiana, vide no. CIT- I/Ldh/Tech/12-A/27/2003-04/3887, dated Dec, 2003. The assessee has claimed exemption u/s 11 of the Act. “ 14.0 It is observed that the assessee has filed its ITR for the A.Y. 2016-17 on 30.03.2017 and audit report in form 10B was filed on 28.06.2017 i.e. almost 3 months after the ITR was filed. Vide notice u/s 142(1) dated 08.07.2019, the assessee was asked to explain as to why exemption claimed u/s 11 should not be denied as one of the mandatory conditions for claiming exemption u/s 11 and 12 specified in section 12A had not been fulfilled. In response, vide letter dated 31.07.2019, the assessee stated that original return was filed on 30.03.2017 and certain defects were raised by CPC and the same were rectified on 28.06.2017, therefore, original return will be considered as return filed u/s 139. Vide notice dated 05.08.2019 the assessee was communicated that exemption u/s 11 and 12 was proposed to be disallowed because it had filed delayed ITR and further delayed audit report in form no. 108 without any reasonable cause for the same in violation of section 12A. In response, on 13.08.2019, the assessee again submitted a similar reply as earlier and added that withdrawal of exemption u/s 11 and 12 can be done only by the Commissioner of Income Tax. 14.1 The reply of the assessee is not acceptable. Under the provisions of section 12A of the Act, where the total income of a trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have to be audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. 14.2 Further, as per Rule 17B of the Income-tax Rules, 1962 (hereinafter referred to as 'the Rules') the audit report of the accounts of such a trust or institution is to be furnished in Form no. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed form along with the return of income results in disentitlement of the trust from claiming exemption under sections 11 and 12 of the Act. I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 21 14.3 In the present case, the assessee was required to file ITR-7 alongwith audit report in form no. 10B by 30.09.2016 (date extended by CBDT to 17.10.2016) However, as per record, the assessee filed defective ITR-7 u/s 139(4) on 30.03.2017 vide acknowledgment no. 729817561300317 and valid ITR u/s 139(9) on 30.03.2017 vide acknowledgment no. 831497990280617 but without the audit report. Audit report in form 10B was filed for the first time 3 months after the ITR i.e. on 28.06.2017. There was no reasonable cause on the part of the assessee to furnish a delayed ITR and further delayed form no. 10B. 14.4 Further, the assessee has contended that the AO has no power to withdraw exemption u/s 11 and 12, a power which vests with the Commissioner of Income Tax. In this regard, it is stated that during the assessment proceedings, the AO is required to examine if the activities of the assessee are as per the objects for which registration u/s 12AA was granted by the Commissioner of Income Tax and whether or not the assessee fulfils the conditions for claiming exemption u/s 11 and 12. If not, the AO is bound to disallow the same. It is clarified that the power to cancel the registration u/s 12AA vests with the Commissioner of Income Tax which is different from disallowance of exemption u/s 11 and 12. 14.5 In view of the above, the assessee has failed to fulfil the conditions specified u/s 12A of the Act, therefore, exemption claimed u/s 11 of the Act is disallowed and the assessee is treated as an AOP. 12.6 The rectification order dated 02/08/2022 for Assessment Year (AY) 2018-19 makes it clear that the assessee is a trust registered under section 12A of the Act. Furthermore, we found that the assessee continues to impart education through its five schools, and there has been no change in the nature of its activities. In view of the above, we are of the considered opinion that the assessee is a registered trust under section 12A of the Act. 12.7 As we have held that the assessee holds a certificate of registration under section 12A of the Act and is a charitable trust, the necessary sequitur is that the assessment must be carried out by the Assessing Officer (AO) treating the assessee as a charitable trust. However, in the present case, the AO has treated the assessee I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 22 as an Association of Persons (AOP) on the pretext that the assessee did not have a certificate of registration. This finding is contrary to the record. 12.8 As mentioned hereinabove, for AYs 2015-16 and 2016-17, the AO also treated the assessee as an AOP, but in those years, the reasoning was that the assessee had failed to file the requisite audit report along with the return of income. It has been informed by the learned Authorized Representative (AR) that the appellate proceedings for AYs 2015-16 and 2016-17 are pending before the learned CIT(A). 12.9 The learned AR has also drawn attention to CBDT Circular No. 10/2019 dated 22/05/2019 issued by the Board, which states as under: 4. Accordingly, in supersession of earlier Circular/ Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trusts or institutions for condoning the delay in filing Form no. 1013 and in exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes hereby directs that: (i) The delay in filing of Form no. 1013 for AY 2016 17 and AY 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned. (ii) In all other cases of belated applications in filing Form no.1013 for years prior to AY 2018-19, the Commissioners of Income-tax are authorized to admit such applications for condonation of delay u/ s 119(2)(b) of the Act. The Commissioners will while entertaining such belated applications in filing Form no.10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. Further, all such applications shall be disposed off by 30.09.2019. I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 23 12.10 The learned AR submitted that the delay in filing Form 10B is required to be condoned by the Revenue, and that the Assessing Officer should not have assessed the assessee as an Association of Persons (AOP) for the Assessment Year under consideration. 12.11 Further, it was submitted that the AO, in the assessment order, recorded that the assessee had not furnished the requisite evidence to prove the source of the deposits made in its bank account during the demonetization period. Additionally, the AO noted that the assessee had failed to demonstrate the cash in hand or cash balance as on 31/03/2014, 31/03/2015, and 31/03/2016. 12.12 It was contended that although the assessee had provided all relevant details to the lower authorities, the learned AR submitted that the assessee also filed a comparative chart of these three years along with its written submissions and the same may kindly be considered. 12.13 Given the above discussion, we consider that the present matter warrants remand to the file of the Assessing Officer, as various disputed facts remain unexamined. This situation has arisen due to the assessee's failure to produce the registration certificate during the assessment proceedings. Furthermore, the Assessing Officer proceeded under a misconception that the assessee’s registration under Section 12A had been cancelled by the Commissioner of Income Tax. I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 24 Furthermore, the issue of the assessee’s eligibility to claim exemption under Section 11 of the Income Tax Actalso requiresfresh examination by the Assessing Officer. On merits, it was incumbent upon the assessee to demonstrate the availability of cash balances in preceding years and to substantiate the source of cash deposited during the period of demonetisation, to the satisfaction of the Assessing Officer. These factual aspects are yet to be adjudicated, and the assessee must furnish all requisite documents and evidence supporting its claim. In view of the above, considering that the factual matrix remains incomplete and the evidentiary record is insufficient, we are of the considered opinion that, although the Tribunal ordinarily has the jurisdiction to adjudicate the matter on its own, in the peculiar circumstances of the present case, it is not feasible to do so. Accordingly, the Tribunal has no alternative but to remit the matter to the Assessing Officer's file for fresh adjudication in accordance with law. In light of the foregoing discussions, we find that the judicial precedents relied upon by the assessee are distinguishable on facts and, therefore, not applicable to the present case, as this is not a fit case where the Tribunal can render a conclusive decision at this stage in the interest of justice. 13. In view of the foregoing observations, the matter is hereby remanded to the file of the learned Assessing Officer with a direction to frame a fresh assessment I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 25 order after granting a reasonable opportunity of hearing to the assessee with the following directions: (i) The AO shall treat the assessee as a registered trust/society under section 12A of the Income Tax Act, 1961 for the purposes of assessment. (ii) The AO is directed to undertake a de novo assessment of the assessee, treating it as registered under section 12A of the Act, and to frame the assessment afresh strictly in accordance with law. (iii) The AO shall duly consider the applicability of CBDT Circular No. 10/2019 dated 22.05.2019 while framing the assessment, specifically with reference to determining whether the delay in filing Form No. 10B is condonable in terms of the said Circular. (iv) The AO shall examine and consider all evidentiary material and documents as may be furnished by the assessee to substantiate and explain the source of deposits made in its bank account during the Assessment Year under consideration. (v) The AO shall determine the assessee’s eligibility for exemption under sections 11 and 13 of the Act, in accordance with law. Should the AO find that there has been no contravention of the conditions prescribed under I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 26 section 13, the assessee shall be granted the benefit of exemption under section 11 of the Act. (vi) In conducting the above proceedings, the AO shall ensure that proper opportunity of being heard is afforded to the assessee, by issuing notice and allowing the assessee to submit its response and supporting evidence, in accordance with principles of natural justice. 14. It is clarified that nothing herein shall be construed as an opinion on the merits. The Assessing Officer shall decide the matter independently, in accordance with law, and without being influenced by any observations above. 15. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 02/05/2025 Sd/- Sd/- (Krinwant Sahay) (Laliet Kumar) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order "