2024 (3) TMI 728 - AT - Income Tax

Tribunal Orders Reassessment of Trust's Tax Exemption, Emphasizes Importance of Proper Documentation and Compliance.

The Tribunal remitted the case back to the Ld. AO for reconsideration after acknowledging the new registration approval submitted by the assessee, a Trust ... Exemption u/s. 11 being a Trust registered u/s. 12A - disallowing the exemption claimed by the assesse as while filing the return of income the assessee did not provide the details of new registration / approval obtained u/s. 12AB - HELD THAT:- Now, before the Tribunal, the assessee has filed a copy evidencing the new approval for registration u/s. 12AB. Therefore, hereby remit the matter back to the file of the Ld. AO to examine the new approval filed before the Tribunal (Form 10AC,) and decide the issue afresh after affording a reasonable opportunity of being heard to the assessee as per the principles of natural justice and in accordance with law. Accordingly, grounds raised by the assesse are allowed for statistical purposes. Issues involved:The issues involved in this case are related to the disallowance of exemption claimed by the assessee u/s 11 of the Income Tax Act, 1961, and the subsequent appeal process against the orders passed u/s 143(1) and u/s 154 of the Act.Issue 1: Disallowance of exemption u/s 11 of the Act- The assessee, a Trust registered u/s 12A of the Act, filed its return of income for AY 2021-22 claiming exemption u/s 11 of the Act.- The Ld. AO disallowed the exemption u/s 11 and determined the total income of the assessee at Rs. 27,86,845, leading to a demand of Rs. 8,23,200.- The disallowance was based on the assessee's failure to provide details of new registration/approval obtained u/s 12AB of the Act.- The assessee filed a rectification petition which was disposed of by the Ld. AO u/s 154, upholding the disallowance.- The assessee appealed to the Ld. CIT(A) with a delay of 99 days, which was dismissed.- The grounds of appeal before the Tribunal challenged the CIT(A)'s order and sought directions to allow the claimed exemption and expenditure. Issue 2: Appeal Process- The Ld. AR representing the assessee argued for remitting the matter back to the Ld. AO to consider the new approval of registration obtained after the appeal process had commenced.- The Ld. DR representing the department supported the decisions of the Revenue Authorities.- The Tribunal, after hearing both sides, acknowledged the new approval submitted by the assessee during the appeal.- The Tribunal remitted the matter back to the Ld. AO to re-examine the new approval and decide the issue after affording a reasonable opportunity to the assessee.- The appeal of the assessee was allowed for statistical purposes.This judgment highlights the importance of complying with procedural requirements and providing necessary documentation to support claims for exemptions under the Income Tax Act. It also underscores the role of appellate authorities in reviewing decisions based on new evidence presented during the appeal process.