ITO (Exemptions) Vs Asandas B Murjani Education Trust (ITAT Ahmedabad)
Assessee Trust applied for registration u/s 12AA on 23.02.2019 for AY 2019-20. AO initially failed to process the application properly & rejected it on 19.09.2019 without considering Assessee’s submission. The Trust again applied on 23.10.2019, & registration u/s 12AA was finally granted on 20.03.2020, but effective only from AY 2020-21, not AY 2019-20.
Since no registration was shown for AY 2019-20, Assessee filed return as AOP(BOI) declaring nil income, but claimed exemption u/s 11(1)(c) based on its charitable activities & actual application of income (₹2.45 crore).
AO:
- Denied exemption u/s 11(1)(c) since registration was not effective for AY 2019-20.
- Treated voluntary contributions (₹2.32 crore) as taxable income.
- Disallowed the entire application of income.
- Also levied penalty u/s 270A for alleged misreporting & under-reporting of income.
CIT(A) allowed exemption u/s 11 relying on ITAT’s earlier order (ITA No. 65/Ahd/2022 dated 13.12.2023) wherein the Tribunal directed the Department to grant 12AA registration for AY 2019-20 itself. Therefore, exemption was valid.
The Revenue appealed before ITAT.
Tribunal’s Key Findings:
- Registration u/s 12AA was later granted for AY 2019-20 as per Tribunal’s own earlier direction.
- Therefore, exemption u/s 11(1)(c) must be allowed.
- CIT(A) correctly directed the AO to allow exemption.
- Revenue’s appeal on exemption (ITA No. 1223/Ahd/2025) dismissed.
On Penalty u/s 270A (Misreporting/Under-reporting):
- Since the basis of penalty was denial of exemption, & now exemption stands allowed, there is no under-reporting or misreporting.
- No concealment, no misstatement – penalty unsustainable.
Once registration u/s 12AA is granted retrospectively (as directed by Tribunal), exemption u/s 11 cannot be denied, & penalty based on such denial automatically collapses.
