Section 143(1) Appeal Stands Independent of Pending Section 12AB Registration Proceedings: ITAT Bengaluru Rules in Favour of Charitable Institution
Background and Context
The Income Tax Appellate Tribunal, Bengaluru, recently delivered a significant ruling addressing the interplay between registration proceedings under Section 12AB and statutory appeals arising from intimations issued under Section 143(1) of the Income Tax Act, 1961. The ruling arose in the case of Pushtiseva Foundation Vs CIT (ITAT Bengaluru) for Assessment Year 2024-25, and it settles an important procedural question concerning the independence of two distinct statutory jurisdictions operating simultaneously in relation to the same assessee.
The core question before the Tribunal was straightforward yet consequential: can a statutory appeal filed against a Section 143(1) intimation — wherein exemption under Section 11 was denied — be dismissed as infructuous on the ground that registration proceedings under Section 12AB were pending consideration before the CIT(E)?
The Tribunal answered in the negative, holding that such a dismissal was legally untenable.
Facts of the Case
Pushtiseva Foundation is a charitable institution that had originally obtained registration under Section 12AA of the Income Tax Act, 1961 and also held approval under Section 80G. With the introduction of the amended registration regime for charitable institutions, the assessee was obligated to seek fresh registration under Section 12AB.
The Filing Error and Its Consequences
While pursuing re-registration, the assessee inadvertently submitted Form No. 10AB on 28/06/2024, instead of the correct Form No. 10A. This error led the CIT(E) to reject the registration application vide order dated 23/12/2024.
Aggrieved by this rejection, the assessee appealed before the Tribunal. A Coordinate Bench, in ITA No. 1227/Mum/2025 vide order dated 04/08/2025, intervened in the case of Vishranthi Trust, setting aside the rejection order and restoring the registration matter to the CIT(E). The Bench specifically directed that the assessee be permitted to file a fresh application in Form No. 10A and that the CIT(E) thereafter consider the application afresh in accordance with law. Following these directions, the CIT(E) subsequently granted registration under Section 10(23C) of the Act vide order dated 17/04/2026.
The Section 143(1) Intimation
In the meantime, CPC, Bengaluru, issued an intimation under Section 143(1) dated 23/12/2025, denying the exemption claimed by the assessee under Section 11 and computing its total income at Rs. 2,10,87,780/-. The assessee challenged this intimation before the CIT(A).
Before the CIT(A), the assessee also raised an alternative contention: even if exemption under Section 11 were unavailable, the gross receipts could not be subjected to tax in entirety without allowing deduction for expenditure incurred in earning or applying those receipts.
Decision of CIT(A) and the Grievance
The CIT(A), in the impugned order dated 06/03/2026, dismissed the assessee's appeal as infructuous. The reasoning adopted was that since the Tribunal had already restored the Section 12AB registration proceedings to the CIT(E), the First Appellate Authority lacked jurisdiction over the matter. Accordingly, the denial of exemption under Section 11 was not independently adjudicated.
Dissatisfied with this approach, the assessee filed the present appeal before ITAT Bengaluru on the following revised grounds:
- Ground No. 1 – Violation of Principles of Natural Justice: The CIT(A) passed the impugned order without granting personal hearing through video conferencing as specifically requested by the assessee.