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TMI Blog2018 (10) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment passes by the Assessing Officer by holding that the provisos to Section 12A are prospective in nature, which is against the well settled law. 4. That the Learned Commissioner of Income Tax (Appeals) is not justified in upholding the addition of Rs. 54,02,845/- as made by the Assessing Officer, which is against the facts and the circumstances of the case. 5. That the Learned Commissioner of Income Tax (Appeals) has grossly erred in upholding the action of Assessing Officer, when the reassessment framed u/s 147-148 itself is illegal, without proper sanction, void ab initio and without jurisdiction. 6. That the appellant craves leave to add or amend the ground of appeal before the appeal is finally heard and disposed off." 3. Briefly facts relating to the case are that the assessee had applied for registration u/s10(23C)(vi) of the Act, on 03- 05-2012 which was denied by the Chief Commissioner of Income Tax, Shimla, vide order dated 15-05-2013. The assessee had also applied for registration as a charitable society u/s 12AA of the Act, on the same day which was granted by the Principal Commissioner of Income Tax , Shimla vide order date 07-11-2012 with effect from 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired under the provisions of Section 12A(b) of the Act. Further the CIT(A) took note of the fact that the income assessed of the assessee society had been reduced to Rs. 54,02,845/- by way of rectification order passed u/s 154 of the Act as against Rs. 1,42,21,000/-assessed earlier. The relevant findings of the CIT(A) at Para 7 of the order is as under: "7 (i) I have considered the facts of the case and submissions of the appellant. The appellant applied for registration u/s 10(23C)(vi) on 03-05-2012 which was denied by worthy CCIT, Shimla, vide order dated 15-05- 2013. No appeal against the above order is stated to have been filed before Hon'ble ITAT. The appellant also applied for registration u/s 12AA on the same date which was granted by Pr. CIT, Shimla, vide his order dated 07-11-2012, w.e.f. 01-04-2012 and effective from Assessment Year 2013-14. (ii) No regular return of income u/s 139 was filed by the appellant for Assessment Year 2012-13. Consequent to refusal of registration u/s 10(23C)(vi), a notice u/s 148 of the Act was accordingly issued to the appellant on 27/28-05-2014. In response, a return of income was filed on 31-03-2015 declaring income at Rs. Nil. (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings u/s 147/148 of the Act for Assessment Year 2012-13. I have considered the above contention of the appellant and find that it is not tenable. The provisions of section 11, 12, 12A, 12AA and 13 governing income from property held for charitable or religious purposes must be read as a whole such that no provision of any section becomes redundant. The 1st and 2nd provisos to section 12A(2) have been inserted to allow benefit of registration to such trusts/societies which are granted registration u/s 12AA at any particular point of time in respect of their pending or completed or un- opened assessments as well. The mandate of the 1st proviso is that such benefit of registration will also be given in all assessments pending completion on the date of registration. The intent behind 2nd proviso is only to bar the assessing officer from taking recourse to provisions of section 147/148 to make the income of the preceding years taxable in case of trusts/societies which have been granted registration. As per the 3rd proviso, the above benefits are not available in the case of any trust or institution which is refused registration or where registration in cancelled at any time u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 88,18,160/- as per the rectification order dated 08.08.2016) was taxable income of the appellant for the Assessment Year 2012-13. Grounds of appeal 1 & 2 are dismissed. As mentioned by the appellant in its written submissions, Learned Assessing Officer has already passed the rectification order u/s 154 on 08.08.2016 and assessed the income at Rs. 54,02,845/- by reducing the advance fees of Rs. 88,18,160/- received during Assessment Year 2011-12. Ground of appeal-3 becomes infructuous. Ground of appeal 4 is general in nature. No addition/alteration to grounds has been made during appeal." 5. Before us, the sole contention raised by the Ld. Counsel for the assessee was that the reopening could not have been resorted to on account of the specific provision of the second proviso to Section 12A(2) of the Act, debarring resort to the same for the year preceding the assessment year for which registration u/s 12A of the Act is granted. Our attention was drawn to the relevant proviso and the CBDT Circular No.01 of 2015, F.No. 142/13/2014-TPL containing the explanatory notes to the introduction to the relevant provisions by way of Finance Act (2) (2014) as under: "12A [(2) Where an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been refused approval u/s 10(23C)(vi) of the Act and had not filed its return of income .It is not disputed that the assessee had been granted registration u/s 12AA for the subsequent assessment year i.e. A.Y 2013-14. The contention of the assessee challenging the reopening is that the second proviso to section 12A(2) of the Act, debars resorting to reopening u/s 147 of the Act, for subjecting to tax the income for the impugned year merely on account of absence of registration u/s 12A. 8. The contention of the Revenue on the other hand is that since the assessee failed to fulfil the condition stipulated for claiming exemption u/s 11 &12 of the Act of filing return of income alongwith report of audit, u/s 12A(1)(b) of the Act, its income for the impugned year was taxable and the reopening therefore was valid. 9. Evidently it is not the case of the Revenue that the reopening was valid on the ground of absence of registration u/s 12A of the Act for the impugned year and therefore its income becoming taxable. In fact, we find, that the CIT(A) has accepted that reopening could not have been resorted to on account of absence of registration u/s 12A for the impugned year on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or claiming exemption u/s 11 & 12 of the Act, alongwith the grant of registration u/s 12AA of the Act. In the case of the assessee, we find, that the return of income has been filed in response to notice u/s 148 of the Act. Therefore the condition of filing of return of income stands fulfilled. The section, we find, nowhere prescribes the filing of return by any due date, therefore the findings of the CIT(A) that the assessee having not filed its return within the prescribed time it had failed to comply with the requirement prescribed, is not tenable. As for the requirement of filing report of audit in the prescribed form, the said condition has been held by courts to be merely procedural and therefore directory in nature and not mandatory for the purpose of claiming exemption u/s 11 & 12 of the Act. The Hon'ble Jurisdictional High Court in the case of CIT v. Shahzadanand Charity Trust [1997] 228 ITR 292 (Punj. & Har.), has categorically held so in para 10-14 of its order as under: "10. Calcutta High Court in Rai Bahadur Bissesswarlal's case (supra) while interpreting s. 12A(b) held that the provision was directory in nature and the AO could allow the assessee to file the audit r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee some delay has occurred in filing the said report, the ITO, for reasons to be recorded, has been authorised to condone the delay in furnishing the auditor's report and accepting the same at a belated stage. It has been clarified that the exemption available to the trust under s. 11 may not be denied merely on account of delay in furnishing the auditor's report. The word "shall" occurring in s. 12A cannot, under the circumstances, be read as a "must" making it mandatory for the trust to furnish the auditor's report along with the filing of the return. If for certain unavoidable circumstances, the assessee is unable to furnish the auditor's report along with the return then the same can be furnished at a later date with the permission of the AO who may permit the assessee to do so after recording its reasons for so doing." 13. Counsel appearing for the Revenue then argued that as per this circular, the auditor's report could only be furnished upto the stage of framing of assessment as the power to condone the delay for accepting the auditor's report at a later date has only been given to the ITO and not thereafter, i.e., at the appellate stage. We find no merit in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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