Porwal Yuvak Sang Kota Vs ITO ( ITAT Jaipur)
Once Registration Rejection Falls, ₹70.42 Lakh Addition Cannot Stand Unexamined: Jaipur ITAT Restores Trust’s Exemption Claim
Summary: The assessee, Porwal Yuvak Sang Kota, was a charitable society claiming exemption of its income u/s 11 & 12. For AY 2023-24, it disclosed receipts or donations aggregating to ₹70,42,140 & showed an equivalent amount as application of income towards its charitable activities. Accordingly, it claimed that no taxable surplus arose.
During scrutiny proceedings, the AO noticed that the assessee’s application for registration u/s 12AB had been rejected by the CIT(E) through an order dated 30 March 2024. Treating the assessee as an unregistered entity, the AO denied exemption u/s 11 & 12, assessed the entire gross receipts of ₹70,42,140 as income from other sources, & framed the assessment u/s 143(3) r.w.s. 144B.
The assessee challenged the assessment before the CIT(A). However, the CIT(A) confirmed the addition essentially on the ground that the assessee did not possess a valid registration u/s 12AB & was consequently ineligible for exemption u/s 11. Aggrieved by the confirmation of the addition, the assessee approached the Tribunal.
Issues before the Tribunal
The principal issue was whether the denial of exemption & taxation of the entire receipts could survive when the order rejecting the assessee’s registration u/s 12AB had subsequently been set aside by the Tribunal.
