Section 12A(1)(b) Amendment: Returns Filed Under Sections 139(1) or 139(4) Deemed Compliant

By CA Sandeep Kanoi Income Tax Judiciary February 9, 2025

TaxGuru Citation: 2025 taxguru.in 1029
Case Name: Panchmurti Education Society Vs ITO (ITAT Nagpur)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2017-18
Courts: All ITAT, ITAT Nagpur

Upgrade to Basic or Premium to download.

Already Upgraded? Log in.

Panchmurti Education Society Vs ITO (ITAT Nagpur)

The case of Panchmurti Education Society vs. ITO involved an appeal against the order of the Commissioner of Income Tax (Appeals)-2, Vadodara, regarding the assessment year 2017–18. The primary issue was the rejection of tax exemption under Sections 11 and 12 of the Income Tax Act due to the delayed filing of the income tax return. The assessee argued that the requirement for timely filing was not applicable for availing exemptions in that assessment year. Additionally, the assessee highlighted that its delay in submitting the Audit Report (Form 10B) was beyond its control as the exemption authority’s approval was received after the prescribed deadline. The educational institution, receiving government grants, had previously been granted exemption under Section 10(22) but faced challenges in securing registration under Section 12AA. The assessee contested a tax demand of ₹5.02 crore raised by the CPC, Bengaluru, and subsequent rejection of its appeal by the Commissioner of Income Tax (Appeals).

The ITAT Nagpur, after reviewing the facts, ruled in favor of the assessee. The tribunal noted that the amendment to Section 12A(1)(b), effective from April 1, 2023, clarified that returns filed under Sections 139(1) or 139(4) would be considered compliant. Since the registration was granted retrospectively based on tribunal directions, the delay in filing the audit report was not held against the assessee. The tribunal criticized the creation of tax demand on weak grounds and overruled the CIT(A)’s order. It concluded that the assessee had fulfilled the necessary conditions and granted full relief, allowing the appeal and directing acceptance of the returned income.