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TMI Blog2025 (1) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... return within the due date levied by the Commissioner of Income Tax (exemption) was without jurisdiction, consequently the reliance of Jt. Commissioner of Income Tax (Appeals) on the said condition is also bad in law. 3. That the Assessee society had complied with all the conditions 'aid down for availing exemption u/s. 11 & 12 of the Income Tax Act, 1961(Act). Hence in In the facts and circumstances of the case it is prayed to allow the exemption to the Assessee U/s 11 & 12 of the Act. 4. That the income of the trust is also exempted u/s. 10(23C) (iiiab) of the Act also as it is purely an educational institution receiving grant from the government. 5. That the Learned Jt. Commissioner of Income Tax (Appeals) failed to consider that the delay in submission of the Audit Report in form 10B was beyond the control of the society as the approval granted by the exemption authority was much after the due date of filing of Audit report in Form 10B for the Assessment Year 2017-18 as prescribed by the Act. Hence, it is prayed to condone the delay in filing of Audit report in Form 10B of the Act for the said Assessment Year in the facts and circumstances of the case 6. The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as satisfied that the object of the trust appeared prima facie charitable. The copy of the order of Rejection dated 29/09/2017 is placed on record. Being aggrieved, the assessee trust preferred appeal before the Tribunal, Nagpur Bench. Meanwhile, the assessee filed its return of income electronically for the assessment year 2017-18 on 30/03/2018. Subsequently, intimation under section 143(1) of the Act was received by the assessee on 24/03/2019 raising the demand against the assessee amounting to Rs. 5,02,23,100, by the Central Processing Centre, Bengaluru, a copy of which is placed on record. Against the said demand, the assessee filed appeal challenging the order dated 24/03/2019 passed under section 143(1)(a) before the Commissioner of Income Tax (Appeals) which was dismissed. On appeal before the Tribunal, the Co-ordinate Bench allowed the appeal of the assessee vide its order dated 09/06/2022 directing the Commissioner of Income Tax (Exempt.) to grant exemption under section 12A to the assessee w.e.f. the assessment year 2017-18, a copy of which is placed on record. Thereafter, the assessee received registration certificate under section 122A issued by the learned CIT(E), a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2017 and 31.03.2018 6. Assessment order for the assessment year 1989-90 and 1990-91 7. Copy of order of rejection dated 29/09/2017 8. Income Tax Return for the assessment year 2017-18 9. Copy of intimation u/s 143(1) 7. Our attention is drawn to Page-130 containing order for approval under section 12AA of the Act dated 23/11/2022, issued by the learned CIT(E), the same is reproduced below for better conceptual clarity:- "Order for approval on Set Aside Application under section 12AA of the Income Tax Act, 1961 ORDER u/s. 12AA OF THE INCOME-TAX ACT, 1961 READ WITH RULE 17A OF THE INCOME TAX RULES, 1962 (Order giving effect to the order dated 09-06-2022 of the ITAT, 'NAGPUR' BENCH, NAGPUR In appeal ITA No.383/NAG/2017) The applicant had filed an application for registration u/s 12AA of the Income Tax Act, 1961 оп 30-03-2017. The said application was rejected by the CIT(Exemptions), Pune vide order dated 29-09-2017. The applicant filed an appeal against the said order. The Hon'ble ITAT, 'Nagpur Bench, Nagpur, vide order dated 09-06-2022 in appeal ITA No.383/NAG/2017 has allowed the appeal of the applicant and directed the undersigne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directing the Appellate Assistant Commissioner to allow the assessee to submit the said audit report to him at the appellate stage. Held: Normally, a charitable or religious trust or institution is expected to file the auditor's report along with the return but, in cases where for reasons beyond the control of the assessee some delay has occurred in filing the said report, the assessing officer, for reasons to be recorded, has been authorised to condone the delay in furnishing the auditor's report and accept the same at a belated stage. It has been clarified that the exemption available to the trust under section 11 may not be denied merely on account of delay in furnishing the auditor's report. The word <169>shall<170> occurring in section 12A cannot, under the circumstances, be read as a <169>must<170> making it mandatory for the trust to furnish the auditor's report along with the filing of the rectum. If for certain unavoidable circumstances, the assessee is unable to furnish the auditor's report along with the return then the same can be furnished at a later date with the permission of the assessing officer who may permit the assessee to do so after rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt filed the same on 30.03.2018 and since the registration u/s 12A is valid subject to various conditions one of them being that the return of income is filed within time as mentioned in Sr.No. 9/6f the registration certificate granted by the CIT(E), Pune (screenshot attached)." 13. The learned CIT(A) finally dismissed the ground by observing as under:- "Thus it can be observed that the conditions prescribed under section 12A have not been fulfilled by the appellant. Therefore, it is quite clear that the benefit of the exemption u/s 11 and 12 of the act cannot be extended to the appellant as the conditions for the same are not fulfilled by the appellant as mentioned above. Thus, the addition of Rs. 11,26,85,825/- made to the total income of the appellant is Valid and stands confirmed. The appeal of the appellant is dismissed." 14. She also invited our attention to the extract of Circular being memorandum explaining the provisions of sections 11 and 12 of the Act. "15. Clarity of procedure in respect of change or modifications of object and filing of return of income in case of entities exempt under sections 11 and 12. 15.1 The provisions of section 12A of the Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the time allowed under section 139 of the Income-tax Act. 15. These amendments are clarificatory in nature. 15.7 Applicability: These amendments take effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years." 15. She also submitted that the amendment came into effect from the assessment year 2018-19, whereas the case pertains to the assessment year 2017-18. Moreover, it is manifest from Paper Book Page-103 that return of income was submitted on 30/03/2018, which was within the deadline under section 139(4) of the Act and the same, though delayed, is within the four squares of law. 16. From the analysis of facts it is apparent that the amendment under section 12A(1)(ba) of the Act is effective from the assessment year 2018-19. Further, CBDT has clarified vide instruction dated 23/04/2019, which is reproduced below that time allowed under section 139 of the Act encapsulates belated return also:- Dated: 23 April, 2019 To, The Pr. DGIT (Systems), New Delhi. Subject: Clarification with regard to the time allowed for filing of return of income subsequent to the insertion of Clause (ba) in sub- section 1 of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 12A of the Income-tax has been made so as to provide for additional condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Income tax Act." 3. Thus, for a trust registered U/s 12AA of the Act to avail the benefit of exemption u/s 11 shall inter-alia file its return of income within the time allowed u/s 139 of the Act. Accordingly, orders u/s 143(1)(a) in those cases in which demand has been raised on this issue may please be rectified. This issues with the approval of Chairman (CBDT). (Vinay Sheel Gautam) JCIT (OSD) (ITA-I) Telefax: 011-23093070 E-mail: [email protected]" 17. In view of the binding circular, the impugned order passed by the learned CIT(A) is cancelled and ground of the assessee is allowed as regards non-submission of return of income in time. It is a trite law that the Departmental Officers have to follow the Circular in law. 18. There is no cavil or doubt that the assessee trust has filed the return of income. Dur view is emboldened by the fact that section 12A(1)(b) of the Act has been amended w.e.f. 01/04/2023, by Finance Act, 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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