Shree Tarak Guru Jain Vs DCIT, CPC, Bengaluru/ITO (Exemption) (ITAT Jodhpur)
The ITAT Jodhpur considered two appeals filed by a charitable trust for Assessment Years 2017–18 and 2019–20, challenging the denial of exemption claimed under section 11(2) of the Income Tax Act. The denial arose at the stage of processing of returns by the Centralised Processing Centre (CPC) under section 143(1), which was later upheld by the National Faceless Appeal Centre (NFAC).
The appellate authority had rejected the trust’s claim on the ground that section 13(9), applicable from Assessment Year 2016–17, prohibits allowance of exemption under section 11 where the return is filed belatedly. The assessee contended that CPC has limited powers under section 143(1)(a) and cannot deny exemptions involving interpretation of law, particularly those governed by sections 11, 12A, and 13. It was argued that such disallowance goes beyond prima facie adjustments and requires examination in regular assessment proceedings.
The assessee further submitted that no prior intimation or opportunity was provided before making the adjustment under section 143(1)(a), which is a mandatory requirement under the first proviso to that provision. Reliance was placed on judicial precedents holding that denial of exemption without prior intimation is invalid. It was also pointed out that the belated return was accepted as a valid return and was not treated as defective under section 139(9), with revenue and capital expenditure otherwise being accepted.
