Dr. Shalmali Khasbardar Foundation Vs ITO (Exemption) (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai allowed the appeal filed by the assessee, a registered public charitable trust under the Bombay Public Trusts Act, against the order of the Commissioner of Income Tax (Appeals) for AY 2021-22.
The assessee was not registered under Section 12A of the Income-tax Act during the relevant assessment year. It filed its return of income declaring taxable income of ₹1,66,700 without claiming exemption under Section 11. Since the declared income did not exceed ₹2.5 lakh, the assessee believed that Section 139(4A) and Rule 12(1)(g) were not applicable and, accordingly, filed its return in Form ITR-5 instead of Form ITR-7. In the return, it declared its status as an AOP with sub-status as Trust.
The Centralized Processing Centre (CPC), while processing the return under Section 143(1), accepted the returned income but computed tax at the maximum marginal rate (MMR), raising a demand of approximately ₹64,000.
Before the Commissioner (Appeals), the assessee contended that no prior intimation of the proposed adjustment had been issued as required under the first proviso to Section 143(1). It also argued that the application of the maximum marginal rate was incorrect because its taxable income was below the basic exemption limit and it had not claimed exemption under Section 11.
