Section 11 exemption adjustments cannot be sustained on a new ground without examining the original basis for denial.

Processing under section 143(1) denied section 11 exemption for non-filling of Part B3 of Schedule Part BTI, but the appellate authority sustained the adjustment on a different ground, namely filing Form 10B instead of Form 10BB. The ITAT held that the appellate authority could not uphold the adjustment on a basis not recorded by the processing authority without first examining the original reason for denial. Noting the CBDT extension condoning delay in filing Form 10BB up to 31 March 2024, the matter was remanded to the CIT(A) for de novo disposal after granting the assessee an opportunity of being heard.

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Issues: Whether the denial of exemption under section 11 while processing the return under section 143(1) was justified, and whether the appellate authority could sustain the adjustment on a ground different from that adopted by the processing authority.

Analysis: The return had claimed exemption under section 11 and was processed by denying the exemption for non-filling of Part B3 of Schedule Part BTI. The appellate authority, instead of examining that reason, sustained the adjustment on the footing that Form 10B had been filed in place of Form 10BB. The order also noted the CBDT's extension condoning delay in filing Form 10BB up to 31 March 2024. It was held that the appellate authority could not confirm the adjustment for a different reason without examining the basis recorded by the processing authority.

Conclusion: The denial of exemption was not sustained on the reasoning adopted by the appellate authority, and the matter was remanded to the CIT(A) for de novo disposal after affording the assessee an opportunity of being heard.

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