GUJARAT KALYAN PARISHAD,SURENDRANAGAR vs. CIT (EXEMPTIONS), AHMEDABAD

This is assessee’s appeal against order of the ld.CIT(Exemptions), Ahmedabad dated 21.8.2018 passed under section 12AA of the Income Tax Act, 1961.

Sole issue raised in the grounds of appeal of the assessee is that the ld.CIT(Exemptions) is erred in rejecting application of the assessee for grant of registration under section 12AA in the absence of submission of requisite details during the proceedings.

Brief facts of the case are that the assessee is a trust engaged in educational activities as well as providing medical relief to the needy persons. Assessee trust has filed an application for registration of the Trust under section 12AA of the Income Tax Act in form No.10A on 2.2.2018 along with copy of Registration Certificate issued by the Charity Commissioner. Pursuant to that, Department has issued a letter dated 10.4.2018 asking the assessee-trust to furnish a detailed note on the activities of the Trust as well as documents as mentioned in the said letter. However, no compliance was received from the assessee in response to the letter of the department nor put appearance on behalf of the assessee, despite providing opportunity to the assessee. In the absence of the details, the ld.CIT(E) rejected the application of the assessee-trust for grant of registration under section 12AA of the Income Tax Act, 1961. Aggrieved by action of the ld.CIT(E), the assessee is now before the Tribunal.

Before us, the assessee has filed paper book containing pages running over 62 pages. This paper book contains, inter alia, copy of the trust deed, copy of bank statements, audit reports, affidavit of the trust for non-submission of details earlier. The ld.counsel for the assessee submitted that necessary details could not be furnished to the Department due to callous attitude of the assessee’s accountant, with whom the assessee had a dispute with regard fixation of his salary. The assessee trust had given requisite the information and details as called for by the Department to the said accountant for handing over the same to the consultant chartered accountant of the assessee for submission of the same before the ld.CIT(Exemption) for consideration of its application for registration under section 12AA of the Act. The assessee was under the impression that the said accountant had complied with the requirement of the Department, but he did not do so. Therefore, it is because of insensitiveness on the part the assessee’s accountant, the assessee could not comply with the requirement of the Department, resulting rejection of the application of the assessee-trust for its registration. It is prayed that the order of the ld.CIT(E) may be set aside and the assessee may be given one more opportunity to furnish details and information required for consideration of its application for registration under section 12AA of the Act. Assessee has placed on record an affidavit dated 9.2.2021 to this effect. On the other hand, the ld.DR supported the order of the ld.CIT(E).

We have considered rival submissions and gone through the record carefully. As we noted herein, assessee is stated to be engaged in educational activities. It has registered with Charity Commissioner. We find that ld.CIT(Exemption) has rejected application of the assessee for grant of registration in the absence of details, which he sought from the assessee for consideration of application for registration. Before us, the assessee has filed a paper book containing copies of trust deed, books accounts, auditor’s report etc. It has also filed an affidavit duly sworn in by Shri Manharsinh Prabhatsingh Zala, Trustee of the assessee-trust, deposing therein the reasons for non- submissions of requisite details called for by the department for proceedings under section 12AA of the Act. It seems to us that upto the date of hearing, the assessee did not file the details. The ld.CIT has given opportunity upto 19.7.2018. Though the action of the ld.CIT in rejecting the application of the assessee may be justified to some extent, but looking to the reasons narrated by the trustee of the assessee-trust in his affidavit dated 9.2.2021 placed on record i.e. non- cooperation of its accountant who is looking after accounting and other related work of the Trust in timely submission of requisite details before the ld.CIT(E) during 12AA proceedings, little leniency for larger interest of justice is to be shown to the assessee, which is a trust said to be engaged in educational activities and providing medical relief to the needy sections of the society. Thus, we are of the view that assessee should be given one more opportunity to support its case, and therefore, in the interest of justice, we set aside the impugned order and restore the issue back to the file of the ld.CIT(E) for reconsideration of its application for registration after providing reasonable opportunity to the assessee. Assessee is also directed to cooperate and ensure timely submission of details/clarifications as and when called for by the CIT (Exemptions). We accordingly allow grounds of appeal of the assessee for statistical purpose.

In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the Court on 25th March, 2021 at Ahmedabad.