Timing of income tax return filing for exemption eligibility: belated returns filed within permitted cutoff satisfy timing condition and secure deduction

Clarifies that filing a belated income-tax return within the last date permitted under the belated-return mechanism constitutes compliance with statutory requirements for claiming exemption linked to registration conditions; this follows application of the belated return mechanism and reliance on a CBDT circular treating section 139(1) and section 139(5) as parts of a unified filing regime, such that a return filed before the belated-return cutoff satisfies the timing condition for exemption entitlement, resulting in denial of addition and allowance of the exemption claim.

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Issues Involved:
The appeal by Revenue against order of National Faceless Appeal Centre under Income Tax Act.

Issue 1:
Whether CIT(A) erred in holding that assessee was entitled for exemption despite failure to file return of income as per provisions of section 12A(1)(ba) of Income Tax Act 1961.

Details:
The revenue challenged CIT(A)'s decision regarding exemption entitlement despite failure to file return of income timely under section 12A(1)(ba) of the Act.

Issue 2:
Whether CIT(A) erred in not appreciating that provision of section 12A(1)(ba) mandates filing return of income within time allowed under section 139(4A) for exemption eligibility.

Details:
The revenue contested CIT(A)'s interpretation of section 12A(1)(ba) regarding the requirement to file return of income within specified time under section 139(4A) for exemption eligibility.

Judgment Summary:
The sole issue in the appeal concerned the CIT(A)'s deletion of additions made by Assessing Officer/CPC for disallowance of deduction under section 11 of the Act due to failure to file return of income timely as per section 12A(1)(ba) read with section 139(4A) of the Act. The assessee's counsel cited a Tribunal decision in a similar case, emphasizing compliance with CBDT Circular No.F.No.173/193/2019-ITA-I. The Tribunal found that the assessee, a charitable trust, filed the return of income and audit report within the extended due date, fulfilling conditions under section 12A(1)(ba) of the Act. The Circular clarified the time allowed for filing returns post insertion of clause (ba) in section 12A(1), emphasizing compliance with section 139 provisions. As no contrary decision was presented, the Tribunal dismissed the revenue's appeal, aligning with the precedent set in the mentioned case.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, emphasizing compliance with section 12A(1)(ba) and section 139 provisions for exemption eligibility, as clarified by the CBDT Circular. The appeal by Revenue was dismissed in favor of the assessee.

Note:
Separate judgments were not delivered by the judges in this case.

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