2025 (11) TMI 902 - AT - Income Tax

Exemption under Section 11 for AY 2018-19 granted as Revenue's denial unsustainable; assessments showed assessee's existence

ITAT Chennai allowed the appeal, holding the Revenue's denial of exemption u/s. 11 was unsustainable. The tribunal found assessments and intimations were ... Denial exemption u/s. 11 - CAC Charities does not independently possess section 12A registration - HELD THAT:- Assessment has been framed in the name of CNC CAC Charities. This itself goes to prove that Revenue had indeed accepted the fact that the only assessee which is in existence is CNC CAC Charities. Further, the Ld.AR had placed on record, the scrutiny assessment orders for assessment years 2002-03 and 2013-14 framed u/s. 143(3) of the Act dated 24.02.2025 and 14.03.2016 respectively in the name of CNC CAC Charities. Assessment years 1998-99 and 2003-04, intimation u/s. 143(1) of the Act dated 08.02.1999 and 17.03.2004 respectively were also issued in the name of Calimidi Namberumal Chetty Charities Calimidi Alavandar Chetty Charities. Hence the entire contentions of the Revenue richly deserve to be rejected as devoid of merits and contrary to evidences available on record. Hence, we have no hesitation to delete the addition made in the facts and circumstances of the instant case and direct the Ld.AO to grant exemption u/s. 11 of the Act to the assessee for the assessment year 2018-19. This has been rightly appreciated by the NFAC, on which we do not find any infirmity. Accordingly, the grounds raised by the Revenue are dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether a trust is entitled to exemption under section 11 where returns for the relevant year are filed in a name variant but using the PAN and 12A registration of an existing registered trust (identity/continuity issue). 2. Whether past assessment orders and long-standing filing and recognition by the Department can be relied upon to establish that two name-variants refer to the same registered trust for purposes of section 11/12A. 3. Whether the Assessing Officer can bring to tax the receipts of a registered trust on the ground that the return was filed in a different name when the assessment itself was framed using the PAN of the registered trust (consistency and estoppel by departmental action). ISSUE-WISE DETAILED ANALYSIS Issue 1: Entitlement to exemption under section 11 where return name differs from registered name but PAN/12A registration correspond to the registered trust Legal framework: Section 11 provides exemption to income applied for charitable purposes; registration under section 12A is a condition for recognition of a trust's entitlement to such exemption. PAN is the identifier used by the Department for tax administration. Precedent Treatment: The tribunal relied on administrative history of assessments and intimation notices issued in the name of the registered trust and name-variants; no contrary judicial precedent was invoked or overruled in the judgment. Interpretation and reasoning: The Court examined documentary history: original settlement, will effecting transfer, subsequent renaming/usage of the combined style (both names), filing of PAN application indicating full names but a shortened name printed on PAN due to character limits, and repeated departmental actions (returns, scrutiny assessments, intimations) taken in the PAN/registered name. The Tribunal found no adverse contrary evidence from Revenue disputing identity/continuity. The AO's focus on the literal name on the return was held insufficient where the PAN used belonged to the registered trust and records demonstrated transfer/renaming and continued use of the registered entity. Ratio vs. Obiter: Ratio - where a return is filed in a name variant but uses the PAN and has an established administrative record linking it to a registered trust, entitlement to section 11 exemption can be recognized based on identity/continuity; mere variance in the printed name on a return does not defeat registration under section 12A. Obiter - comments on administrative practicability of PAN character limits and naming conventions. Conclusion: Exemption under section 11 was to be allowed for the assessment year in question because the PAN and 12A registration related to the same trust despite name-variation on the return; Revenue failed to rebut the documentary evidence establishing continuity. Issue 2: Reliance on past assessments and departmental records to establish identity of two name-variants as the same entity Legal framework: Administrative acts (assessments, intimations) and consistent departmental recognition of an entity's PAN/name over time are relevant evidentiary materials for determining identity and dealings between taxpayer and Department; registration u/s 12A is a statutory fact determinative of exemption entitlement. Precedent Treatment: The Tribunal treated prior scrutiny orders and intimation notices issued in the name of the registered trust as corroborative evidence; no prior authority was distinguished or needed. Interpretation and reasoning: The Court gave weight to multiple assessment-year documents (scrutiny orders and 143(1) intimations) issued in the registered trust's name, the PAN application clarifying full and printed names, and the absence of contrary evidence from Revenue. These factors collectively established that the two name-variants related to a single registered entity. The AO's contrary conclusion rested on the return's printed name alone and was inconsistent with the Department's own prior acts and the PAN used in framing assessment. Ratio vs. Obiter: Ratio - consistent departmental action and documentary evidence over years can substantiate that a name-variant on return refers to the same registered trust, supporting continued claim of exemption. Obiter - none material beyond evidentiary weight attributed to administrative records. Conclusion: Past assessments and departmental records were sufficient to demonstrate identity/continuity; reliance by the Tribunal on these records to uphold exemption was proper and dispositive. Issue 3: Validity of Assessing Officer's action to tax receipts where assessment was framed using the PAN of the registered trust despite asserting the return named an unregistered entity Legal framework: The identity of the assessee for assessment proceedings is determined by the PAN and the entity on which the assessment is framed; inconsistency in departmental positions may affect the validity of additions. Precedent Treatment: The Tribunal treated the AO's internal inconsistency - alleging an independent unregistered entity yet framing assessment using the PAN of the registered trust - as undermining the AO's basis for taxing the receipts. Interpretation and reasoning: The Court reasoned that if the AO's trigger for taxation was the return being filed in the name of an alleged independent unregistered trust, the proper administrative step would have been to frame assessment in that alleged entity's name. Instead, the AO framed assessment in the name of the registered trust using its PAN, thereby demonstrating acceptance of the registered trust as the assessee and negating the AO's asserted basis for denial of exemption. This inconsistency led the Tribunal to conclude that the AO's addition was unsustainable. Ratio vs. Obiter: Ratio - an Assessing Officer cannot sustain an addition based on a denial of identity when the assessment proceedings themselves are conducted and framed in the name/PAN of the registered entity; such internal inconsistency invalidates the ground for taxation. Obiter - procedural fairness implications of departmental recognition. Conclusion: The addition was to be deleted because the assessment record itself established that the Department treated the registered trust (PAN-holder) as the assessee, negating the AO's premise that an independent unregistered entity was entitled to be taxed. Overall Disposition Based on documentary evidence of original trust creation, transfer of assets pursuant to will, renaming/usage history, PAN application particulars, prior assessments and intimations in the registered trust's name, and absence of contrary evidence, the Tribunal affirmed entitlement to exemption under section 11 for the assessment year and set aside the addition. The Revenue's grounds were dismissed; the assessee's cross-objection was rendered infructuous.