ITAT Remands Assessment After Trust Obtains Retrospective Section 12A Registration :

The Income Tax Appellate tribunal (ITAT) Ahmedabad has given relief to the trust, which was denied exemption of Section 11 and 12 of the Income Tax Act.

The assessee, Society for Village Development, is a charitable trust registered under the Bombay Public Trust Act, 1950. For the assessment year 2023-24, it filed its return declaring zero income after claiming exemption under Section 11 of the Income Tax Act, 1961. During scrutiny assessment under Section 143(3) read with Section 144B, the AO denied the exemption on the ground that the trust did not have a valid registration under Section 12A. The AO also disallowed 30% of the expenditure for want of supporting documents and assessed taxable income at Rs 19,368,720.

The CIT(A) affirmed the assessment. Aggrieved by the order, the assessee preferred an appeal before the Tribunal.

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The Tribunal observed that after completion of the assessment, the CIT(E) granted registration to the assessee on 11 July 2025, for the Assessment Years 2023-24 to 2027-28. This later development was not taken into account by the CIT(A). As the later grant of registration had a direct impact on the assessee's claim to exemption under Section 11, the Tribunal observed that the appellate order could not be sustained.

Accordingly, the tribunal set aside the assessment order and restored the matter to the AO. The Tribunal directed AO to frame a fresh assessment after taking into consideration the registration granted by the CIT(E). The Tribunal also directed that the assessee should be given a reasonable opportunity of hearing and be allowed to place all documents and submissions on record.

As the matter was restored for fresh adjudication, the remaining grounds challenging the addition and other issues were treated as ineffective, with liberty reserved to the assessee to raise all contentions before the AO.