2020 (2) TMI 448 - AT - Income Tax

Tribunal grants exemption under Income Tax Act, sets aside lower authorities' orders

The Tribunal allowed the assessee's appeal, granting them exemption under Sections 11 and 12 of the Income Tax Act. The decision was based on the ... Exemption u/s 11 and 12 denied - deemed registration u/s 12AA - registration granted to the assessee u/s.12AA during the pendency of proceedings before the ld. CIT(A) - In the interim, the assessee had applied for fresh registration before the CIT(E) and CIT(E) has granted registration - HELD THAT:- As decided in SHRI KRISHNABAI GHAT TRUST VERSUS ITO (EXEMPTIONS) , WARD-1, PUNE [2019 (5) TMI 618 - ITAT PUNE] what AO can do, can be done by CIT(A) in an appeal before him. Even what the AO could have done but failed to do, can also be done by him. It shows that the powers of a CIT(A) in an appeal against an assessment order are almost similar to those of an AO. If extend this analogy to the provisions of section 12A(2), an irresistible conclusion which follows is that the benefit of the proviso is available not only when the assessment proceedings are pending before the AO but also when an appeal against the assessment order is pending before the ld. CIT(A). It is so for the reason that the appeal proceedings are nothing but continuation of the assessment proceedings. As at the time of granting registration by the ld. CIT (Exemptions) to the assessee, the appeal of the assessee was pending before the ld. CIT(A), in my considered opinion, the benefit of first proviso to section 12A(2) ought to have been granted. Ground thus raised is allowed by holding that the assessee would be entitled to exemption u/ss. 11 and 12 of the Act for the year under consideration on the reason that the registration was, in fact, granted to the assessee u/s.12AA during the pendency of proceedings before the ld. CIT(A). - Decided in favour of assessee. Issues:1. Denial of exemption u/s 11 and 12 of the Income Tax Act.Analysis:1. The appeal arose from the order of the Ld. CIT(A) for the assessment year 2012-13. The assessee, a trust, filed its return of income on 13.08.2012. The Assessing Officer framed the assessment u/s 143(3) on 20.03.2015, determining the total income at Rs. 7,79,620. The assessee's appeal before the Ld.CIT(A) was dismissed, leading to the current appeal.2. The key issue raised by the assessee was whether, after being granted registration u/s 12AA during the pendency of proceedings before CIT(A), they were entitled to exemption u/s 11 for AY 2012-13. The assessee argued that the provisions of Section 11 and 12 should apply accordingly. The interconnected issue was whether the CIT(A) should have directed the Assessing Officer to rectify the assessment order for 2012-13 based on the subsequent registration under Section 12AA.3. During assessment proceedings, the Assessing Officer found the assessee's claim for exemption u/s 11 and 12 unacceptable due to the unavailability of a valid copy of registration u/s 12AA. The denial was based on the lack of evidence supporting the trust's registration status, leading to the determination of total income at Rs. 7,79,620.4. The CIT(A) upheld the Assessing Officer's decision, emphasizing the absence of proof of registration in 1974 and the inapplicability of the proviso to Section 12A(2) introduced in AY 2014-15. The CIT(A) concluded that since registration was granted for AY 2015-16 after the completion of assessment proceedings for 2012-13, the proviso did not apply.5. Aggrieved by the CIT(A)'s order, the assessee appealed, reiterating their arguments and presenting the case for exemption under the proviso to Section 12A(2) based on the Pune Tribunal's decision in a similar case.6. The assessee's representative argued for exemption under the proviso, citing the pending appeal before CIT(A) as equivalent to pending assessment proceedings. The Revenue supported the lower authorities' decisions.7. After considering the submissions, the issue at hand was the denial of exemption u/s 11 and 12. The Assessing Officer's denial was based on the lack of registration evidence, but the subsequent registration granted during the appeal process raised questions of eligibility for exemption.8. Referring to the Pune Tribunal's decision in a similar case, the Tribunal held that the assessee was entitled to exemption under Sections 11 and 12 based on the proviso to Section 12A(2) as the registration was granted during the pendency of the appeal before CIT(A).9. The Tribunal set aside the lower authorities' orders, directing a fresh assessment allowing the assessee the benefit of exemption u/s 11 and 12. The decision was based on the interpretation of the proviso and the timing of registration in relation to the appeal process.10. Consequently, the assessee's appeal was allowed, granting them exemption u/s 11 and 12 of the Income Tax Act.