VINAYAKA EDUCATION TRUST,NADIAD V. THE DDIT, CPC, BENGALURU JURIS. AO- THE ITO, EXEMPTION WARD, VADODARA

ITA 1402/AHD/2025

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Vinayaka Education Trust, a charitable trust, appealed against the orders of the CPC and CIT(A) which denied it exemption under sections 11 and 12 of the Income Tax Act for the Assessment Year 2021-22. The CPC had disallowed the exemption on the grounds that the trust did not provide details of registration under the amended provisions of section 12AB in its return. The CIT(A) upheld this decision, noting that the trust's registration was not valid for the year in question. However, the Tribunal found that the trust's registration under section 12A was valid and that the CPC's and CIT(A)'s decisions were based on a misinterpretation of the law and the facts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792540 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Appeal Filed On: 04-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. P. RASTOGI
• Assessee Lawyers: CHETAN SHAH
• Keywords: Revenue expenditure; Principle of natural justice; Rectification of order; Assessment record; Charitable institution; Benefit of exemption
• Section: 154; 11; 12A; 12; 10B

Judgement Text

"आयकर अपीलीय अिधकरण,अहमदाबाद Ɋायपीठ ‘B’ अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ] BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1402/Ahd/2025 Asstt. Year: 2021-22 Vinayaka Education Trust Near Panchayat Office, Dakor Road, Alindra - 387115 PAN: AABTV 1870 A Vs. Income Tax Officer Ward, Exemption Vadodara - 390007 (Applicant) (Responent) Assessee by : Shri Chetan Shah, AR Revenue by : Shri R.P . Rastogi, CIT-DR सुनवाई कȧ तारȣख/Date of Hearing : 01/12/2025 घोषणा कȧ तारȣख /Date of Pronouncement: 05/12/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal by the assessee arises from the order passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 15.05.2025. The said order confirms the action of the Assessing Officer, CPC Bengaluru in passing the intimation under section 143(1) dated 23.08.2022 and the subsequent rectification order under section 154 dated 06.03.2023 assessing the income of the assessee trust at Rs. 3,99,83,342/- and raising a consequential tax and interest demand of Rs. 1,87,34,360/-. Printed from counselvise.com ITA 1402/Ahd/2025 Asst. Year: 2021-22 2 2. Facts of the Case 2.1 The brief factual background of the case, as emanating from the assessment records and the orders of the lower authorities, is that the assessee, a charitable trust registered under section 12A of the Act since 05.01.2011, filed its return of income for the Assessment Year 2021-22 in Form ITR-7 on 31.12.2021. The assessee declared nil income after claiming exemption under section 11. It is on record that the assessee had incurred revenue expenditure of Rs. 3,67,53,006 towards its charitable objects and had claimed accumulation under section 11(1)(a) amounting to Rs. 59,97,501. 2.2 The return filed by the assessee was processed by the CPC under section 143(1). The CPC disallowed the exemption under section 11 on the ground that in the Schedule Part A General of the return of income the details of registration under the amended provisions of section 12AB or section 10(23C) were not filled in the specific column relating to the section under which registration was obtained. The Central Processing Centre noted that the law had been amended with effect from 01.06.2020 requiring all existing charitable entities to apply afresh for registration under section 12AB or section 10(23C). On this basis the CPC considered the assessee as not having a valid registration for the purpose of claiming exemption under section 11 for the year under consideration. Consequently, the CPC computed the total income of the assessee at Rs. 3,99,83,342/- by treating the entire receipts as taxable income and disallowed the application of income of Rs. 3,67,53,006/- and the accumulation of Rs. 59,97,501/-. Interest under sections 234A, 234B, 234C and 234F was also charged and a demand of Rs. 1,87,34,360/- was raised. 2.3 Aggrieved by the intimation under section 143(1), the assessee filed an application for rectification under section 154, however, the CPC passed the order dated 06.03.2023 under section 154 reiterating the same computation as in the intimation under section 143(1) and confirmed the demand without granting any relief to the assessee. Printed from counselvise.com ITA 1402/Ahd/2025 Asst. Year: 2021-22 3 2.4 The assessee carried the matter in appeal before the CIT(A). The CIT(A) considered the submissions of the assessee and the documents produced, including the Form 10A and the registration order in Form 10AC. However, the CIT(A) held that on perusal of the Form 10AC dated 13.01.2022 it was evident that the registration granted was valid for Assessment Years 2022-23 to 2026-27 and not for the Assessment Year 2021-22 which was the year under consideration. On this basis the CIT(A) held that the assessee did not have a valid registration under section 12AB for the relevant year and that the CPC was justified in denying exemption under section 11. The CIT(A) also upheld the view that the CPC had correctly processed the return under section 143(1) and there was no mistake apparent from the record to be rectified under section 154. The CIT(A) thus dismissed the appeal of the assessee and sustained the demand. 3. Being dissatisfied with the order of the CIT(A), the assessee has preferred the present appeal before us raising the following grounds of appeal: 1. “Order passed U/s 250 passed by the Ld. Commissioner of Income Tax (Appeal) NFAC and Ld AO at CPC, Bengaluru is bad in Law and against the natural justice. 2. On the facts and in circumstances of the case and in law Ld CIT(A), NFAC grossly erred in confirming the disallowance made by the Ld AO. Therefore, the appellate order so passed deserves to be quashed. 3. That the CIT (A) NFAC was not Justified in upholding the disallowance of exemption claimed u/s 11 amounting to Rs. 3,67,53,006 and Exemption U/s 11(1)(a)/11(1)(b) Rs 59,97,501. 4. That the CIT (A) NFAC while sustaining the addition failed to appreciate that the assessee was registered as Charitable Trust u/s 12A as per the previous history the exemption u/s 11 was allowed to the assessee. 5. That the CIT (A) NFAC had given a wrong finding that the new registration as per the amended provisions of sec 12AB are applicable to AY 2020-21 whereas the same are applicable from A.Y 2022-23. 6. That the CIT (A) NFAC failed to appreciate that disallowance of exemption u/s 11 could not have been made while processing the return u/s 143 (l)(a). Printed from counselvise.com ITA 1402/Ahd/2025 Asst. Year: 2021-22 4 7. Intimation passed U/s 143(1) is against fact that, though we have filled the audit report in Form 10B vide Ack No. 521657880220922 on 22/09/2022, in the Intimation it has been mentioned that “NO FORMS FILED”. 8. Intimation passed U/s 143(1) is itself erroneous, as correct amount worked out in the Annexure - Schedule ER (Revenue Expenditure) at Sl No F of Rs 36753006, which was mentioned ZERO in the calculation sheet at Sr No 4(i). 9. Your appellant craves, leave to add, alter, & or to emend modify substitute all or any ground of appeal before final hearing if necessity so arise”. 4. The learned Authorised Representative (AR) reiterated the facts and submitted that the assessee is a charitable educational trust duly registered under section 12A of the Act since 05 January 2011 and has been enjoying exemption under sections 11 and 12 year after year. The learned AR referred the certificate of registration granted vide order dated 05.01.2011 placed on page No. 6 of the paper book. 4.1 The learned AR pointed out that the assessee thereafter filed an application under section 154 explaining that the assessee had already filed Form 10A for re-registration on 06.01.2022 within the extended due date granted by CBDT and that registration had been granted by the learned Principal CIT in Form 10AC dated 13.01.2022. The AR also placed on records the copy of the Form 10AC (Paper book page No. 7. The AR further stated that in spite of this, the CPC passed rectification order under section 154 dated 06.03.2023 confirming the disallowance on the very same ground that the details of new registration were not available. 4.2 The learned AR submitted that the CIT(A) also upheld the disallowance without appreciating the factual submissions and the statutory position. The CIT(A) proceeded on the footing that Form 10AC issued on 13.01.2022 granted registration for AYs 2022-23 to 2026-27 and that since the year under appeal was AY 2021-22, the assessee was not eligible. The learned AR submitted that this finding was contrary to the statutory scheme. Printed from counselvise.com ITA 1402/Ahd/2025 Asst. Year: 2021-22 5 4.3 The learned Authorised Representative submitted that pursuant to the amendments brought into the statute by insertion of section 12AB with effect from 01.06.2020, all existing charitable institutions were required to apply for re-registration on or before 30.06.2021. It was submitted that due to the difficulties faced by trusts in electronic filing, the Central Board of Direct Taxes (“the Board”) extended the due dates for filing Form 10A under section 119 of the Act on multiple occasions. The AR placed reliance on the series of extensions granted by CBDT as under: Extended date Circular No. 31.08.2021 No. 12 of 2021 dated 25.06.2021 31.03.2022 No. 16 of 2021 dated 29.08.2021 25.11.2022 No. 22 of 2022 dated 01.11.2022 30.09.2023 No. 6 of 2023 dated 24.05.2023 4.4. It was submitted that in view of the above CBDT Circulars, the assessee's earlier registration under section 12A continued to remain valid up to 30.09.2023. It was therefore argued that for the previous year 2020-21 relevant to AY 2021-22, the assessee's registration under section 12A/12AA was fully valid and subsisting and the assessee was eligible for exemption under sections 11 and 12. The learned Authorised Representative submitted that the CIT(A) failed to appreciate the effect of the extension of time granted by the CBDT and wrongly proceeded as if the new provisions were applicable for AY 2021-22. 4.5. The learned AR submitted that the assessee had applied for re- registration in Form 10A on 06.01.2022, i.e., within the extended time permitted by CBDT. It was further submitted that the return of income was filed on 31.12.2021 and the order granting re-registration under section 12AB was passed only on 13.01.2022. Therefore, it was impossible for the assessee Printed from counselvise.com ITA 1402/Ahd/2025 Asst. Year: 2021-22 6 to mention the new registration details in the ITR which had already been filed much earlier on 31.12.2021. The AR argued that the non-mentioning of the new registration number in the ITR was purely technical and could not be used as a ground to deny exemption. 5. The learned Departmental Representative, on the other hand, supported the orders of the lower authorities. 6. We have carefully considered the rival submissions and perused the material placed on record. The central issue for adjudication is whether the assessee trust, which was originally registered under section 12A since 05.01.2011 and was subsequently granted provisional registration under section 12AB vide Form 10AC dated 13.01.2022, was eligible to claim exemption under sections 11 and 12 for the Assessment Year 2021-22, and whether the CPC was justified in denying the exemption under section 143(1)(a) and in reiterating the same in the rectification order passed under section 154. 6.1. The principal objection of the CPC and the Commissioner (Appeals) was that the assessee had not furnished “registration/approval details” under the new regime of section 12AB in the return of income and, therefore, the exemption claimed in Schedule Part B-TI could not be allowed. The CIT(A) further held that the registration granted through Form 10AC was effective only from AY 2022-23 to AY 2026-27 and did not cover the relevant assessment year. The learned Departmental Representative has also relied on this reasoning. 6.2. The assessee, on the other hand, has asserted that its registration under section 12A was valid and subsisting throughout the previous year 2020-21 relevant to the assessment year under consideration. It has been demonstrated from the record that the assessee had already applied for re- registration in Form 10A on 06.01.2022, which was well within the extended time permitted by the Central Board of Direct Taxes through successive circulars issued under section 119. The return of income was filed earlier on Printed from counselvise.com ITA 1402/Ahd/2025 Asst. Year: 2021-22 7 31.12.2021, whereas the order granting re-registration under section 12AB was passed only on 13.01.2022. In such circumstances, the absence of the new registration number in the ITR is merely a timing and technical mismatch arising out of the statutory process itself, and not a substantive ground to deny exemption. 6.3. The scheme of the statute post-amendment is important to examine. Section 12A continues to govern the conditions for eligibility to exemption under sections 11 and 12. Sub-section (2) of section 12A, along with its proviso, explicitly provides that where a trust or institution has obtained registration, the benefit of exemption shall be available for any assessment year for which an application for registration was made, provided the objects and activities remain the same. The proviso further grants relief by ensuring that where the registration is granted after the due date, the exemption shall not be denied merely on the ground that the application for registration was filed belatedly, so long as the objects and activities remain unchanged. 6.4. The legal effect of the proviso to section 12A(2), read in its proper context, makes it clear that the registration once existing and validly continued under the pre-amended law cannot be ignored to deny exemption for an assessment year during which the trust’s application for renewal or revalidation is pending or eventually approved. The assessee has placed on record its earlier registration under section 12A, which had not been withdrawn, suspended or cancelled at any time. The re-registration under section 12AB granted subsequently from AY 2022-23 onwards does not extinguish the earlier registration for the period prior thereto. The transition from section 12A/12AA to section 12AB was legislatively intended to be non-disruptive, ensuring continuity of benefits while administrative processes were being realigned. 6.5. Viewed thus, the reasoning of the CPC and the CIT(A) that exemption was not allowable merely because the new registration number was not filled in the ITR cannot be sustained. The exemption under sections 11 and 12 flows from the existence of a valid registration under section 12A/12AA, and in the Printed from counselvise.com ITA 1402/Ahd/2025 Asst. Year: 2021-22 8 assessee’s case such registration was undisputedly extant for the relevant previous year. The assessee’s act of applying for renewal within the extended time further fortifies its position, and the granting of registration vide Form 10AC is a substantive affirmation of the trust’s eligibility and continuity. 6.6. In the totality of these facts, we find that the assessee satisfied the foundational requirement of having a subsisting and valid registration under section 12A throughout the previous year relevant to AY 2021-22. The assessee duly applied for renewal within the extended time granted by CBDT, and the registration under section 12AB granted thereafter only reinforces the continuity of its charitable status. The proviso to section 12A(2) shields the assessee from denial of exemption for any intervening year where registration has been granted subsequently. The technical non-mentioning of the new registration number in the ITR does not override the substantive entitlement of the assessee to exemption under sections 11 and 12. 7. We therefore hold that the denial of exemption by CPC under section 143(1)(a) and its confirmation by the Commissioner (Appeals) is unsustainable. The assessee is entitled to exemption under sections 11 and 12. Consequently, the disallowances of application of income amounting to Rs. 3,67,53,006/- and accumulation of Rs. 59,97,501/- are liable to be deleted. The Assessing Officer is directed to allow the exemption under sections 11 and 12 as claimed in the return of income. 8. In the result, the appeal of the assessee stands allowed. Order pronounced in the Court on 05/12/2025 at Ahmedabad. Sd/- Sd/- (SANJAY GARG) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 05/12/2025 Nimisha Arora True Copy Printed from counselvise.com ITA 1402/Ahd/2025 Asst. Year: 2021-22 9 आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण / DR, ITAT, 6. गाड[ फाईल /Guard file. आदेशानुसार/BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation- 2. Date on which the typed draft is placed before the Dictating Member 3. Date on which the approved draft comes to the Sr.P.S./P.S. – 4. Date on which the fair order is placed before the Dictating Member for Pronouncement 5. Date on which the file goes to the Bench Clerk : 05.12.2025 6. Date on which the file goes to the Head Clerk……………………………. 7. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. Date of Dispatch of the Order……………… Printed from counselvise.com "