2025 (3) TMI 214 - AT - Income Tax

D enial of exemption u/s 10(23C)(iiiae) - assessee a trust had not filed its original return of income for the relevant assessment year but had filed the return in response to a notice u/s 148 - HELD THAT -Section 139(4C) of the Act only mandates the filing of the return of income in specified circumstances by entities claiming their incomes as exempt under different provisions of the Act. Such section does not provide for denial of claim of exemption if the return of income is not filed. Even otherwise the income returned by the assessee and accepted by the AO amounts to only Rs. 1, 00, 760/-. Assessee being a trust has been assessed in the capacity of AOP which finds mention in the body of the assessment order also. The basic limit upto which incomes of AOP s are not subject to tax it was pointed out to us was Rs. 2, 50, 000/-. This was pointed out by assessee and not controverted by the DR. Even considering the provisions of section 139(4C) of the assessee the assessee was not required to file any return of income. Therefore it is evident from the above discussion that the denial of claim of exemption u/s 10(23C)(iiiae) was not in accordance with the provisions of law. The order passed by the CIT(A) is therefore set aside. Appeal of the assesse is allowed.

Summary

The appeal in this case was filed by the assessee against the order passed by the Commissioner of Income (Appeals), Kolkata under section 250(6) of the Income Tax Act, 1961 for the assessment year 2012-13. The grounds raised in the appeal included challenging the reopening of assessment, denial of exemption under section 10(23C)(iiiae) of the Act, and the legality of the lower authorities' actions.The main issue before the Tribunal was the denial of the claim of exemption under section 10(23C)(iiiae) of the Act. The assessee, a trust, had not filed its original return of income for the relevant assessment year but had filed the return in response to a notice under section 148 of the Act. The Assessing Officer accepted the income declared by the assessee but denied the claim of exemption under section 10(23C)(iiiae) on the grounds that the original return had not been filed within the due date.The Commissioner of Income (Appeals) upheld the denial of exemption, stating that under the law, the assessee could only claim exemption if the original return had been filed within the due date. However, the Commissioner did not specify any provision in the assessment order for denying the exemption.During the Tribunal hearing, it was revealed that the denial of exemption was based on section 139(4C) of the Act, which requires entities claiming exempt income to file their returns in specified circumstances. The Tribunal analyzed the relevant provisions and found that the denial of exemption solely based on the failure to file the original return was not in accordance with the law. The Tribunal also noted that the income returned by the assessee was below the taxable limit for Association of Persons (AOPs), further supporting the allowance of the exemption claim.In conclusion, the Tribunal set aside the order of the Commissioner of Income (Appeals) and allowed the appeal of the assessee, holding that the denial of the claim of exemption under section 10(23C)(iiiae) was not justified under the provisions of the law.This judgment highlights the importance of adherence to legal requirements for claiming exemptions and the need for authorities to provide specific legal grounds for their decisions.