TaxTMI 
TaxTMI 
2026 (8) TMI 674
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....orn affidavit of Shri George Severino Fernandes, Trustee of the assessee trust. 3. In the affidavit, it has been stated that the assessee had preferred an appeal before the learned CIT(A) against the intimation issued under section 143(1) of the Act. The said appeal came to be dismissed by the learned CIT(A) vide order dated 24.04.2025. It has been explained that the deponent, not being conversant with the procedural intricacies of income-tax litigation, forwarded the appellate order to the Chartered Accountant with the bona fide belief that the matter, including the filing of a further appeal before the Tribunal, would be appropriately attended to by the professional consultant. 4. It has further been stated that, owing to an inadvertent communication gap and oversight, the deponent did not follow up the matter with the Chartered Accountant. Upon subsequent enquiry, he learnt that no action had been taken for filing the appeal before the Tribunal. Immediately thereafter, the assessee took steps to pursue the remedy and filed the present appeal. It has, therefore, been pleaded that the delay was neither deliberate nor intentional but occurred on account of a bona fide misunde....
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....l within the prescribed period. Accordingly, notwithstanding the objection raised by the learned Departmental Representative, the delay of 242 days is condoned and the appeal is admitted for adjudication on merits. Facts of the Case 9. The assessee is a resident public charitable trust registered under section 12A of the Act. It filed its return of income in Form ITR-7 on 29.11.2023, declaring total income of Rs. 50,42,812/-, after claiming exemption under section 11 of the Act. The return was processed by the CPC under section 143(1) of the Act vide intimation dated 23.12.2024. The CPC determined the total income at Rs. 64,77,700/-, as against the returned income of Rs. 50,42,812/-, and raised a demand of Rs. 7,81,570/-. The tax liability, after relief, was computed at Rs. 22,23,147/-, as against Rs. 16,04,523/- shown by the assessee, and interest under sections 234B and 234C was correspondingly recomputed. 10. The material on record shows that, during the financial year 2016-17 relevant to the assessment year 2017-18, the assessee had accumulated an amount of Rs. 40,00,000/- under section 11(2) of the Act. According to the assessee, out of the said accumulation, an amoun....
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.... thereof" were omitted from section 11(3)(c), was prospective in operation and could not be applied to accumulations made in the financial year 2016-17. It was submitted that the assessee had acted in accordance with the law prevailing at the time of accumulation and was entitled to utilise the accumulated amount during the sixth year. The assessee further submitted that applying the amended provision to an earlier accumulation would create an impossible situation, since the Finance Act, 2022 received the assent of the President on 30.03.2022, leaving virtually no time to utilise the amount by 31.03.2022. 14. The assessee also contended that the income-tax return utility itself permitted reporting of utilisation during the financial year 2022-23 of the amount accumulated in the financial year 2016-17. It was submitted that the CPC had not pointed out any arithmetical error or mismatch in the return or the audit report and had not assigned any reason for treating Rs. 14,34,887/- as income chargeable under section 115BBI. It was therefore contended that the question regarding the applicable period for utilisation involved a debatable issue of law which could not have been adjusted....
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....t, where the accumulated amount was not utilised within the five-year period ending on 31.03.2022, the same became taxable in the financial year 2022-23 relevant to the assessment year 2023-24. The learned CIT(A), therefore, held that the amount was required to be utilised by 31.03.2022 and that its subsequent utilisation during the financial year 2022-23 did not entitle the assessee to exemption. 19. The learned CIT(A) consequently held that the assessee had furnished inconsistent data in the statutory forms and the return of income and that the CPC was justified in not allowing the amount of Rs. 14,34,887/- in accordance with sections 11(2) and 11(3) of the Act. The adjustment made in the intimation under section 143(1) was accordingly upheld and the appeal of the assessee was dismissed. 20. Aggrieved by the order of the learned CIT(A), the assessee is in appeal before us and has raised the following grounds: Ground I A. On the facts and the circumstances of the case, and in law, the CITA erred in confirming the addition of Rs. 14,34,887/- U/s 115BBI of the Income Tax Act. B. On the facts and circumstances of the case and in law the CIT failed to ....
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....unt of Rs. 14,34,887/- represented application, during the financial year 2022-23, of the income accumulated under section 11(2) in the financial year 2016-17. According to him, under section 11(3), as it stood at the time of accumulation, the assessee was entitled to utilise the accumulated income within the prescribed period of five years or in the year immediately following the expiry thereof. Since the amount had been utilised on or before 31.03.2023 for the objects of the trust, no addition was warranted. 22. The learned AR further submitted that the issue involved interpretation of section 11(3) and was, in any event, debatable in nature. Therefore, such an adjustment could not have been made while processing the return under section 143(1) of the Act. In support of these submissions, he relied upon the decisions of the Coordinate Benches in Yashwantrao Chavan Maharashtra Open University v. CIT (Exemption), ITA No.505/PUN/2025, St. Anthony's Church v. ITO (Exemption), ITA No.3011/Mum/2025, and Roman Catholic Church of St. Paul v. ITO (Exemption), ITA No.3396/Mum/2025. He accordingly prayed that the addition of Rs. 14,34,887/- sustained by the learned CIT(A) be deleted. ....
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....therwise also we find merit in the argument of the Ld. Counsel for the assessee that the 5 year period ends on 31.03.2022 and therefore the unutilized amount could have been brought to tax in assessment year 2022-23 and not in assessment year 2023-24. In the light of the above discussion, we set aside the order of the Ld. Addl / JCIT(A) on this issue and direct the Assessing Officer/CPC to delete the adjustment. The grounds raised by the assessee are accordingly allowed." 27. The same issue was thereafter considered by the Co-ordinate Bench in St. Anthony's Church v. ITO (Exemption), ITA No.3011/Mum/2025, order dated 28.08.2025. The relevant findings in paragraphs 5.1 and 5.2 are reproduced below: "5.1. From the above, it is noted that the words „or in the year immediately following the expiry thereof‟ was omitted by the Finance Act 2022 with effect from 01.04.2023 applicable for assessment year 2023-24 onward. In other words, assessee was required to utilize the same before the end of the 6th year i.e., financial year 2022-23. Assessee in the instant case, undisputedly, has utilized the amount of Rs. 15,79,570/- before 31.03.2023 and for the balance amount ....
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....wing the prescribed period of 5 years, the assessee has in fact applied the accumulated surplus funds to the extent of Rs. 37,00,000/- which is not in dispute before 31.03.2023. Even otherwise, it is worth noting a fact that 5-year period ended on 31.03.2022 and therefore, the unutilized amount could have been brought to tax in the Assessment Year 2022-23 and not in Assessment Year 2023-24. Thus, in our considered view, the addition made by the ld. Assessing Officer in the course of processing of return u/s. 143(1) and sustained in the first appellate stage is deleted." 29. On a careful consideration of the aforesaid decisions, we find that the issue arising in the present appeal is squarely covered in favour of the assessee. In each of the above cases, the accumulation had been made during the financial year 2016-17 and the accumulated amount was applied during the financial year 2022-23. The Coordinate Benches have consistently held that the statutory conditions governing an accumulation are those which prevailed at the time when the accumulation was made. Under the then prevailing provisions, the accumulated income could be utilised during the prescribed period of five years ....