SRI MODH VISA GOWBHUJA SAJNA,HYDERABAD V. DCIT., EXEMPTION CIRCLE-1(1), HYDERABAD

ITA 582/HYD/2025

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The case involves Sri Modh Visa Gowbhuja Sajna, a charitable and religious trust, which appealed against the order of the CIT(Appeals) that upheld the decision of the Centralized Processing Centre (CPC), Bengaluru. The CPC had declined the trust's claim for exemption under Section 11 of the Income Tax Act for the assessment year 2019-20, amounting to Rs. 1,76,44,761, due to the absence of registration under Section 12A/12AA or approval under Section 10(23C) of the Act. The trust argued that it had a deemed registration under Section 12A based on its application filed in 1991, which was not acted upon within six months, as per the provisions effective from 1999. However, the Tribunal found that the application was not validly pending as it lacked a formal request for condonation of delay, and thus, the provisions for deemed registration did not apply.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706916 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2019-2020
• Appeal Filed On: 01-04-2025
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 11; 12AA; 12A

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad श्री मंजूनाथ जी., माननीय लेखा सदस्य एवं श्री रवीश सूद, माननीय न्याययक सदस्य SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.582/Hyd/2025 (यनर्ाारण वर्ा/ Assessment Year:2019-20) Sri Modh Visa Gowbhuja Sajna, R/o. Nampally, Hyderabad. PAN : AAETS4159A Deputy Commissioner of Income-Tax, Exemption Circle-1(1), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri B. Satyanarayana Murthy, C.A. राजस्व का प्रतततितित्व/ Department Represented by : Shri. Gurpreet Singh, Sr. DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 24.06.2025 घोर्णा की तारीख/Date of Pronouncement : 07.07.2025 O R D E R प्रयत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee society is directed against the order passed by the CIT(Appeals)/NFAC, Delhi, dated 01/02/2025, which in turn arises from the intimation dated 18/05/2020 issued by the Centralized Processing Centre (CPC), Bengaluru under Section 143(1) of the Income-tax Act, 1961 (in short, \"the Act\"). The assessee society has assailed the impugned order on the following grounds of appeal before us (as uploaded): “1. The Orders of the lower authorities in the case Appellant are contrary to the facts of the case and the Provisions of Law. 2. The learned Commissioner of Income Tax (Appeals) should have appreciated that the adjustment made by CPC in its intimation dated 18.5.2020 is outside the jurisdiction of the СРС. 3. The learned Commissioner of Income Tax (Appeals) should have appreciated that the adjustment made by the CPC is not justifiable as it is debatable even because the learned Commissioner of Income Tax adjudicated the issue by passing an Order running into 23 paras on 9 pages. 4. The learned Commissioner of Income Tax (Appeals) should have appreciated that the Appellant Society is entitled to the exemption provided in Section 11 of the Income Tax Act as it has complied with the requirements U/s.12A of the Income Tax Act 5. The learned Commissioner of Income Tax should have appreciated that the Appellant Company filed an Application for Registration on 1.4.1991 and therefore it is deemed to have been granted Registration with effect from 01.12.1989 as the For Sti Modh Visa Gowbhuja Sajoa President Registration papers should be deemed to have been transferred to the Commissioner of Income Tact with effect from 1.6.1999. 6. The learned Commissioner of Income Tax (Appeals) erred in holding that the Supreme Court in the case of the Commissioner of Income Tax Vs Society for the Promotion of Education [2016] 238 Taxman 339 (SC) did not lay down any Principle of Law whereas the Supreme Court clearly held that if the Application U/s.12A/12AA kept pending by the Commissioner of Income Tax for a period of 6 months, such applicant shall be deemed to be Registered U/s.12A/12AA with effect from the end of 6 months. 7. The learned Commissioner of Income Tax (Appeals) has wrongly relief on the Full Bench decision of Allahabad High Court in the case of CIT vs Muzzafernagar Development Authority 372 ITR 209, which was passed prior to the Judgment of the Supreme Court. 8. For these and other grounds that may be urged at the time of the hearing of the Appeal it is prayed that the Order of the learned Commissioner of Income Tax (Appeals) may kindly be set aside or modified as may be deemed fit. “ 2. Succinctly stated, the assessee society that claims to be a charitable and religious trust, had filed its return of income for A.Y. 2019-20, declaring Nil income (after raising a claim of exemption u/s 11 of Rs. 1,76,44,761/-). The AO/CPC, Bengaluru for want of details of registration under Section 12A/12AA or approval under Section 10(23C) of the Act, vide its intimation issued u/s 143(1) of the Act, dated 18.05.2020, declined the claim of the assessee society for exemption u/s 11 of the Act of Rs. 1,76,44,761/-, and determined its total income at ₹1,76,44,761/-. 3. Aggrieved, the assessee society carried the matter in appeal before the CIT(Appeal), but without success. For the sake of clarity, we deem it apposite to cull out the observations of the CIT(A) as under: “6. DECISION: I have carefully considered the submissions made by the appellant, the facts on record and the applicable law in this regard. 6.1 In this case, as seen from the record, the appellant filed ITR for AY 2019-20 originally on 28.09.2019.The return was processed u/s 143(1) on 18.05.2020. CPC passed order u/s 143(1) dated 18-05-2020 without allowing the exemption Under Section 11 for Rs.1,76,44,761 stated to be incurred by the Appellant Society for carrying out Charitable objects. The appellant has raised the ground that CPC is not justified in passing the Intimation without giving a notice U/s 143(1a) and by relying on the 143(1a) given during the lock down period. In this regard it is seen from the record in e-proceedings that communication of proposed adjustment u/s 143(1)(a) of Income Tax Act, 1961 was issued by CPC dated 10-01-2020 which is well before the lockdown period due to the Corona virus pandemic. Hence this ground is dismissed. 6.2 As regards the ground regarding jurisdiction of CPC, it is seen that section 143(1)(a) of the I.T Act empowers CPC to adjust incorrect claims if such incorrect claim is apparent from any information in the return. It is seen that the reasons given by AO-CPC for the adjustment u/s 143(1) are as under: As per the details furnished in the return, Assessee is not registered u/s 12A/12AA or approved u/s 10(23C)(iv) or 10(23C)(v) or 10(23C)(vi) or 10(23C)(via). Claim of exemption has been made in Sl. No. 4i to 4viii of Schedule Part B-TI. These fields are applicable for claim of exemption under section 11 or 10(23C)(iv) or 10(23C)(v) or 10(23C)(vi) or 10(23C)(via). Hence exemption is not allowable. As seen from the ITR filed by the appellant on 28.09.2019 under Part A-GENERAL PERSONAL INFORMATION the column “Details of registration or approval under Income Tax Act (Mandatory if required to be registered)” has not been filled and has been left blank, which is the reason why CPC has made the above remarks and disallowed the exemption u/s 11. Hence, the appellant's ground is dismissed. 6.3 The appellant has submitted further that it had filed an application U/s 12A in Form 10A dated 19.04.1991 before CIT, AP-2, Hyderabad which was duly acknowledged by the Commissioner on 01.05.1991. However the said application was neither rejected nor accepted and as the appellant trust didn’t receive any letter of rejection from the CIT,AP-2, Hyderabad, it has been giving detail of the File No:- HQ-II/12A & 80G/39/91-92 given by the Commissioner to the application as the registration of the trust. In this regard the appellant relied on the decision of the Apex Court in Commissioner of Income-tax, Kanpur v. Society for Promn. of Edn., wherein a case where assessee-society filed an application under section 12A for grant of registration on 24-2-2003 and same was not responded to within six months, registration of application was to be deemed to have taken effect from 24-8-2003. 6.4 It is pertinent to note however that the above cited Supreme Court decision in the case of Society for the Promotion of Education (Supra) did not lay down any principle of law and, on the contrary, kept the questions of law open to be considered. Further, the above ratio of the Allahabad High Court’s decision in the case of the Society for the Promotion of Education, Adventure Sport & Conservation of Environment vs. CIT 372 ITR 222 was doubted by another Division Bench in the case of CIT vs. Muzafar Nagar Development Authority and the Bench referred the case before it to a Full Bench of the Allahabad High Court reported in CIT vs. Muzafar Nagar Development Authority 372 ITR 20, wherein it was held as under: 23. In the circumstances, we answer the questions referred to the Full Bench for reference in the following terms: (i) Non disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under Section 12AA (2) of the Income Tax Act 1961 would not result in a deemed grant of registration; and (ii) the judgment of the Division Bench of this Court in Society for the Promotion of Education Adventure Sport & Conservation of Environment (supra) does not lay down the correct position of law. In view of the above, as the appellant is not in possession of a valid registration u/s 12A, the CPC rightly disallowed the claim for exemption u/s 11. Accordingly, the appellant’s grounds are not found maintainable and are hence dismissed. 7. In the result, the appeal against order u/s. 143(1) of the Act for AY 2019-20 in the case of Sri Modh Visa Gowbhuja Sajna is dismissed.” 4. The assessee society, being aggrieved with the CIT(A) order, has carried the matter in appeal before us. 5. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record as well as the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions 6. On a perusal of the record, it transpires that the assessee society claims to be a charitable and religious trust formed in the 19th century by Late Seth Lakshmandas and Late Seth Lakshmidas for the welfare of the \"Visa Modh Gowbhuja Community\". It is claimed to have been formed before the year 1900. 7. On 01.05.1991, the assessee society had filed an application in “Form No. 10A” read with Rule 17A with the Commissioner of Income Tax (CIT), Andhra Pradesh-II, Hyderabad, seeking registration under Section 12A of the Act. Since the application was filed beyond the prescribed time, the assessee society in its covering letter had requested for the condonation of the delay, stating that it had remained under an honest impression that it was not entitled to exemption under Section 11 of the Act. 8. The CIT-II, Hyderabad, vide his letter dated 23.08.1991, pointed out certain defects in the application and specifically, under Para 2 of the letter, directed the assessee society to submit reasons for the delayed filing of the application and to make a request for condonation of the same. 9. The assessee society, however, responded to the above communication only on 28.10.1993, i.e., after a lapse of more than two years. Moreover, despite specific instruction, the assessee society neither furnished the reasons for the delay in filing of the application under Section 12A of the Act; nor made any request for condonation of the same. Thereafter, no further correspondence took place, and no order was passed by the CIT either accepting or rejecting the application. 10. The assessee society filed its return of income for the assessment year 2019–20, claiming exemption under Section 11 of the Act of Rs. 1,76,44,761/-. However, the A.O/CPC, Bengaluru vide his intimation issued under Section 143(1) of the Act, dated 18.05.2020 declined the claim of the assessee society for exemption under Section 11 of the Act, on the ground that it had not furnished the details regarding its registration under Section 12A/12AA or approval under Section 10(23C) of the Act. 11. The assessee society, being aggrieved, preferred an appeal before the CIT(A). It was the claim of the assessee society that it had filed an application for registration u/s 12A on 01.05.1991, which was pending before the CIT-II, Hyderabad as on 01.04.1997, i.e. the date from which Section 12AA came into effect. Elaborating further, it was submitted by the assessee society that under Section 12AA(1A) of the Act, all applications pending as on 01.06.1999 were deemed to have been transferred to the jurisdictional Commissioner of Income-tax and ought to be processed from the stage they were. The assessee society claimed that since no order was passed within six months from the end of 01.06.1999, the registration was to be deemed to have been granted under Section 12AA(2) of the Act. The assessee society claimed that based on such deemed registration, it had thereafter been claiming exemption under Section 11 in the earlier years. Also, it was pointed out by the assessee society that it had thereafter been provisionally registered under Section 12A(1)(ac)(vi) of the Act for A.Ys. 2022–23 to 2024–25, followed by a regular registration under Section 12A(1)(ac)(vi)(A) of the Act. 12. However, the CIT(A) did not find favour with the contentions of the assessee society, and upheld the declining of its claim for exemption u/s 11 of the Act by the AO/CPC, Bengaluru 13. The assessee society being aggrieved with the CIT(A) order has carried the matter in appeal before us. 14. We have thoughtfully considered the contentions advanced by the Ld. Authorized representatives for both parties, and perused the orders of the lower authorities and the material available on record. 15. Shri. B. Satyanarayana Murthy, the Ld. AR reiterated the submissions made before the CIT(A). The Ld. AR submitted that as the application for registration u/s 12A of the Act filed by the assessee society on 01/05/1991 was pending as on 01/06/1999, and since no order was passed thereafter, registration must be treated as deemed to have been granted. Elaborating further on his contention, the Ld. AR submitted that the earlier allowing of the claim of the assessee society for exemption under Section 11 supported its claim of deemed registration u/s 12A of the Act. Also, it was submitted that the subsequent provisional and regular registration validated its charitable character. 16. We have given thoughtful consideration to the contentions of the Ld. Authorized Representatives in the backdrop of the orders of the lower authorities. At the threshold, it is crucial to evaluate whether the assessee’s application dated 01.05.1991 was pending in the eyes of law as on 01.06.1999 so as to trigger the provisions of Section 12AA(1A) of the Act. 17. Admittedly, the CIT-II, Hyderabad, vide his letter dated 23.08.1991, had pointed out defects in the application filed by the assessee society on 01.05.1991 and specifically instructed it to submit reasons for the delay in its filing along with a request for condonation of the same. However, the assessee society failed to comply with the said direction, and had filed its reply after lapse of more than two years i.e. on 28.10.1993, and that too without furnishing the reasons leading to the delay in filing of the application for registration u/s 12A of the Act, much the less any request seeking condonation of the same. 18. We find that as per the “Proviso” to Section 12A(1)(a) as it stood at the time of filing of the application by the assessee society for registration u/s 12A of the Act (i.e prior to 01.10.1991), the Commissioner of Income-tax had a discretion to admit a delayed application, but such discretion could not be exercised in the absence of a formal request with reasons. Since no such valid application or condonation request was ever filed despite a specific instruction of the CIT, the original application filed by the assessee society for registration u/s 12A of the Act on 01.05.1991 could not be considered as valid or pending. 19. We, thus, concur with the Ld. D.R. that as no valid or proper application was pending as on 01.06.1999, therefore, the provisions of Section 12AA(1A) and 12AA(2) were not attracted. To sum up, in the absence of a valid application for registration having been filed by the assessee society for registration u/s 12A of the Act, there could have been no deemed registration as had been vehemently canvassed before us by the Ld. AR. 20. Apropos the Ld. AR’s reliance on the earlier years’ exemption that have been allowed to the assessee society under Section 11 of the Act, we are of the firm conviction that the same is of no assistance, as allowance in earlier years, if granted without verification of registration, does not confer any vested right or validate a claim under law. 21. Apart from that, we find that the assessee society had thereafter applied for provisional registration under Section 12A(1)(ac)(vi) (applicable to unregistered entities applying afresh), and not under Section 12A(1)(ac)(i) (applicable to already registered entities), thereby itself admitting that it was never registered earlier. 22. We thus, in terms of our aforesaid deliberations, are of the firm conviction that as there was no valid application pending as on 01.06.1999; therefore, the doctrine of deemed registration under Section 12AA(2) does not come to the rescue of the assessee society. Accordingly, finding no infirmity in the view taken by the CIT(Appeals), who in the absence of a valid registration under Section 12A/12AA of the Act had rightly sustained the declining of the claim of the assessee society for exemption u/s 11 of the Act by the A.O/CPC, Bengaluru, we herein approve the same. 23. Resultantly, the appeal filed by the assessee society being devoid and bereft of any substance is dismissed. 07th जुलाई, 2025 को खुली अदालत में सुनाया गया आदेश। Order pronounced in the Open Court on 7th July, 2025. Sd/- (मंजूनाथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER … Sd/- Hyderabad, dated 07.07.2025. **TYNM/sps आदेशकी प्रयतयलयप अग्रेयर्त/ Copy of the order forwarded to:- 1. यनर्ााररती/The Assessee : Sri Modh Visa Gowbhuja Sajna; 4-4-334, Girirajlane, Bank Street, Puthbowli, S.O. Nampally – 500095, Hyderabad. 2. राजस्व/ The Revenue : Deputy Commissioner of Income-tax, Exemption Circle-1(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. The Principal Commissioner of Income Tax (Exemptions), Circle – 1 (1), Hyderabad. 5. यवभागीयप्रयतयनयर्, आयकर अपीलीय अयर्करण, हैदराबाद / DR, ITAT, Hyderabad 6. गार्ाफ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Hyderabad "