Ahmedabad Kadi Vijapur Pragana Shrimali Soni Uttejak Mandal Vs ITO (ITAT Ahmedabad)
AO had assessed the trust as an AOP and made an addition of ₹8,36,509, holding it ineligible for exemption u/s 11 since it was not registered u/s 12AA
Assessee’s Arguments
- Claimed assessment selection was incorrect & beyond CBDT guidelines.
- Stated that the trust neither had surplus income nor claimed exemption u/s 12AA in this year.
- Contended AO wrongly computed figures, ignoring audited accounts showing a net deficit of ₹3.43 lakh, instead of income.
- Argued AO even noted contradictory figures in show cause notice vs. final order.
- Blamed earlier CA for lapses, filing condonation affidavit for 1256 days’ delay in appeal
Tribunal’s Findings
- Delay condoned, as mistake of earlier CA should not prejudice assessee.
- On scrutiny selection – Tribunal held it was a complete scrutiny, not limited scrutiny, hence valid.
- On exemption – Tribunal observed:
- Trust was not registered u/s 12AA in AY 2017-18, registration was only granted from AY 2022-23onwards.
- Trust catered to a specific community, which disqualified it from exemption under section 11.
- AO rightly treated receipts as taxable, not exempt.
- Assessee’s claim of net deficit was not accepted since exemption itself was not available.
- Relied on CBDT Circular No. 01/2015 & case laws confirming that unregistered trusts cannot claim s.11 exemption
Outcome
- Addition of ₹8,36,509 sustained.
- Appeal of assessee dismissed in full
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
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