TaxTMI 
TaxTMI 
2026 (7) TMI 33
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....er passed by the CPC under section 154 of the Act for the A.Y. 2019-20, passed on 14.02.2024. The grounds of appeal are as under:- "1. That the learned Commissioner of Income tax (Appeals) has erred in confirming the order passed by the Assessing Officer without considering the facts of the case. 2. That the learned Commissioner of income tax (Appeals) has wrongly rejected the exemption u/s 12A saying that there was no valid and timely submitted form 10B and form no 10 on record, even the form 10B (Audit Report) was submitted on 31/10/2019 within the prescribed time and form 10B (Audit report) available on income tax portal. 3. That the learned Commissioner of Income tax (Appeal) has also not given any finding abo....
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.... by the AO and the expenses claimed in the return had not been allowed. Thus, all the receipt of the society had been treated as its taxable receipts. The Addl/JCIT(A), went through the facts of the case. The Addl/JCIT(A) noted that the assessee had filed its ITR-7 for the A.Y. 2019-20 in the status of a company, declaring nil income and claimed exemption under section 11 of the Act on the basis of the registration under section 12A/12AA but the CPC had computed the income by treating the receipts as taxable and disallowing the application of income as per Schedule ER. The Addl/JCIT(A) noted that the return was filed as ITR-7 under section 139 declaring exempt income with exemption flag, 'Y' but no audit report in Form 10/10B was shown to h....
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....utorily prescribed conditions and timelines were mandatory and not mere procedural formalities. Thus, he held that the principle that emerged was that exemption granting provisions must be construed strictly and statutory pre-conditions, especially those linked to due date under section 139(1) must be complied with in letter and spirit for the assessee to avail the benefit. He further held that at the stage of 143(1), the CPC was empowered to make prima facie adjustments in respect of incorrect claims apparent from any information in the return, including claims that were inconsistent with the information furnished in the return or in the accompanying schedules. In the present case, the CPC had recorded a specific discrepancy that the, 'amo....
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....was no apparent error in the CPC declining to re-work the computation in rectification proceedings so as to allow further deductions from the receipts. Accordingly, he dismissed the appeal of the assessee. 4. The assessee is aggrieved at the dismissal of the said appeal. Sh. Akshay Agarwal, Advocate (hereinafter referred to as the ld. AR) submitted that the assessee had a valid registration under section 12A as a charitable trust. It had inadvertently filed its return in the status of a company. This made the return a defective return and accordingly, the CPC should have issued a notice to the trust under section 139(9) for the rectification of the defect. He drew our attention to the CBDT Circular No. 14(XL-35) of 1955 dated 11.04.1955,....
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.... in the cases of CIT vs. Commissioner of Income Tax vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 195 ITR 825 and CIT vs. Sankalp Welfare Society (2008) 303 ITR 64 (P&H) but it could be furnished before completion of assessment. The ld. AR pointed out that it was not true that the assessee had not filed its Form 10B in time. He furnished a copy of Form 10B bearing e-filing Acknowledgment No.246542051311019 which showed date of e-filing as 31.10.2019. It was further submitted that the amount accumulated or set apart for application to charitable or religious purposes, to the extent it did not exceed 15% of the income derived from property held under trust wholly for such purposes had been shown as Rs. 7,80,642/-. Accordingly, i....
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.... the same return was filed under the PAN of the Trust in which the fourth character of the ten-digit alpha numeric PAN number was 'T', as opposed to 'C' in the case of a company. Thus, there was clearly a defect in the return which merited a notice under section 139(9) before rejecting the claim of exemption made by the assessee. It does not appear that any notice under section 139(9) was issued. Be that as it may, we note that the inadvertent filing of the return in the status of a, 'company' does not change the nature of the trust. It continues to remain a charitable trust that has been granted registration under section 12A of the Income Tax Act, 1961 and therefore, it entitled for having its income assessed in accordance with the provis....