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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the assessee against the order dated 23.01.2020 passed by the Commissioner of Income Tax (Exemptions), Ahmedabad (‘CIT(E)’ in short), under s. 12AA(1)(b)(ii) of the Income Tax Act whereby the registration sought under s.12AA of the Income Tax Act, 1961 (the Act) for registration of trust was declined.
2. Aggrieved by the rejection of application for registration under s.12AA of the Act, the assessee preferred appeal before the Tribunal. [Jain Dehrasar Khandhali Trust vs. CIT(E)] - 2 - 3. We have heard both the sides on the issue and perused the order of the CIT(E) as well as material placed on record. The assessee has impugned the action of the CIT(E) for exercising discretion against the assessee for registration of applicant trust.
4. On perusal of the order of the CIT(E), it is noticed that CIT(E) has denied registration on the ground that certain requirements as listed in para 4 of its order has not been met/ partially met. Consequently, replies to points raised to test the object trust and the genuineness of its activities was not found satisfactory by the CIT(E) as required under s.12AA(1) of the Act.
5. In its defense, as stated on behalf of the assessee, the scope of enquiry conducted by the CIT(E) were broadly met and relevant documents were placed. It was submitted that the assessee trust had applied for registration under s.12AA of the Act electronically on 19.07.2019 in prescribed Form 10A as stipulated alongwith certificate of registration, evidence towards creation of Trust and annual accounts and audit reports for AY 2016-17, 17-18 & 18-19. The assessee however could not file the audit report and audited financial statement for AY 2019-20 before the CIT(E) which is, however, placed before the Tribunal. It is the contention on behalf of the assessee that CIT(E) hurriedly rejected application for registration of Trust expressing its inability to verify the genuineness of objects and activities carried out by the trust. The CIT(E) narrated that the trust had failed to furnish requisite details called for and alleged that the trust has not intended to start the charitable/religious activities. In this regard, it is the case of the assessee that trust has filed replies vide letter dated 31.12.2019 and 08.01.2020 in response to notice issued by the CIT(E) on two occasions. It is asserted that the substantial details as placed by way of paper book before the Tribunal were duly filed before the CIT(E). Some documents however could not be filed owing to the reason that the concerned accountant [Jain Dehrasar Khandhali Trust vs. CIT(E)] - 3 - conversant with the facts discontinued in January 2020 causing disarray. It is the case of the assessee that the CIT(E) was not justified in rejecting the application of the assessee ex parte vide order dated 23.01.2020 without affording adequate opportunity. It is alleged that the CIT(E) hurried to seek multiple details in a short period of one month after no apparent action taken initially on registration application for three months. It is thus urged on behalf of the assessee that apparently hurried disposal of the application of the assessee ex parte without providing enough opportunity is unjust and requires to be cancelled.
6. In this backdrop, we straightway notice that as per proviso to Section 12AA(1), no order under sub clause (ii) to Section 12AA(1) of the Act shall be passed unless the applicant has been afforded reasonable opportunity of being heard. The requirement of reasonable opportunity is therefore expressly inbuilt in law itself governing registration. Evidently, enquiries were conducted by the CIT(E) vide two letters issued in the month of December 2019 in response to registration application filed in the month of July 2019. It is not the case of CIT(E) that the assessee has failed to comply altogether. The assessee has also filed two replies; one in the month of December and other in the beginning of January 2020. The CIT(E) has thereafter passed order adverse to the assessee in January 2020 itself without any further opportunity on alleged unsatisfactory compliance. In the circumstances, where the assessee has admittedly furnished many details and is not grossly negligent in furnishing the information, it is only desirable that one more opportunity is granted to the assessee to satisfy the designated authority i.e. CIT(E), for its rightful entitlement for registration in accordance with law. This will promote fair play and well accord with principle of natural justice as ensured by the legislature in unequivocal terms. [Jain Dehrasar Khandhali Trust vs. CIT(E)] - 4 - Consequently, we set aside the order of the CIT(E) dated 19th 7. July, 2019 and restore the issue back to the file of the designated authority for de novo consideration of all aspects for the purposes of registration in the light of facts involved as well as the judicial precedents rendered in the context. Needless to say, the application shall be disposed of by the designated authority after granting proper opportunity to the applicant assessee. The assessee is also cautioned to dutifully attend the de novo proceedings before the designated authority without any demur. All points are kept open for re- consideration of the designated authority without any fetters. It shall be open to the assessee to support the application for registration afresh before the designated authority with all documentary evidences as it may consider expedient.
8. In the result, appeal of the assessee is allowed for statistical purposes.
This Order pronounced in Open Court on 06/01/2021
Sd/- Sd/- (MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 06/01/2021 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ ‘B’ अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No. 274/Ahd/2020
Jain Dehrasar Commissioner of बनाम/ Khandhali Trust Income-tax Vs. 1404/2, Astodia Kapad (Exemption) Bazar, Ahmedabad Ahmedabad 380001 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AABTJ3995Q .. (अपीलाथ� /Appellant) (��यथ� / Respondent)
Shri Himanshu Shah, A.R. अपीलाथ� ओर से /Appellant by : ��यथ� क� ओर से/Respondent by : Shri R. R. Makwana, Sr.D.R.
सुनवाई क� तार�ख / Date of 23/12/2020 Hearing घोषणा क� तार�ख /Date of 06/01/2021 Pronouncement
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the assessee against the order dated 23.01.2020 passed by the Commissioner of Income Tax (Exemptions), Ahmedabad (‘CIT(E)’ in short), under s. 12AA(1)(b)(ii) of the Income Tax Act whereby the registration sought under s.12AA of the Income Tax Act, 1961 (the Act) for registration of trust was declined.
Aggrieved by the rejection of application for registration under s.12AA of the Act, the assessee preferred appeal before the Tribunal. [Jain Dehrasar Khandhali Trust vs. CIT(E)] - 2 - 3. We have heard both the sides on the issue and perused the order of the CIT(E) as well as material placed on record. The assessee has impugned the action of the CIT(E) for exercising discretion against the assessee for registration of applicant trust.
On perusal of the order of the CIT(E), it is noticed that CIT(E) has denied registration on the ground that certain requirements as listed in para 4 of its order has not been met/ partially met. Consequently, replies to points raised to test the object trust and the genuineness of its activities was not found satisfactory by the CIT(E) as required under s.12AA(1) of the Act.
In its defense, as stated on behalf of the assessee, the scope of enquiry conducted by the CIT(E) were broadly met and relevant documents were placed. It was submitted that the assessee trust had applied for registration under s.12AA of the Act electronically on 19.07.2019 in prescribed Form 10A as stipulated alongwith certificate of registration, evidence towards creation of Trust and annual accounts and audit reports for AY 2016-17, 17-18 & 18-19. The assessee however could not file the audit report and audited financial statement for AY 2019-20 before the CIT(E) which is, however, placed before the Tribunal. It is the contention on behalf of the assessee that CIT(E) hurriedly rejected application for registration of Trust expressing its inability to verify the genuineness of objects and activities carried out by the trust. The CIT(E) narrated that the trust had failed to furnish requisite details called for and alleged that the trust has not intended to start the charitable/religious activities. In this regard, it is the case of the assessee that trust has filed replies vide letter dated 31.12.2019 and 08.01.2020 in response to notice issued by the CIT(E) on two occasions. It is asserted that the substantial details as placed by way of paper book before the Tribunal were duly filed before the CIT(E). Some documents however could not be filed owing to the reason that the concerned accountant [Jain Dehrasar Khandhali Trust vs. CIT(E)] - 3 - conversant with the facts discontinued in January 2020 causing disarray. It is the case of the assessee that the CIT(E) was not justified in rejecting the application of the assessee ex parte vide order dated 23.01.2020 without affording adequate opportunity. It is alleged that the CIT(E) hurried to seek multiple details in a short period of one month after no apparent action taken initially on registration application for three months. It is thus urged on behalf of the assessee that apparently hurried disposal of the application of the assessee ex parte without providing enough opportunity is unjust and requires to be cancelled.
In this backdrop, we straightway notice that as per proviso to Section 12AA(1), no order under sub clause (ii) to Section 12AA(1) of the Act shall be passed unless the applicant has been afforded reasonable opportunity of being heard. The requirement of reasonable opportunity is therefore expressly inbuilt in law itself governing registration. Evidently, enquiries were conducted by the CIT(E) vide two letters issued in the month of December 2019 in response to registration application filed in the month of July 2019. It is not the case of CIT(E) that the assessee has failed to comply altogether. The assessee has also filed two replies; one in the month of December and other in the beginning of January 2020. The CIT(E) has thereafter passed order adverse to the assessee in January 2020 itself without any further opportunity on alleged unsatisfactory compliance. In the circumstances, where the assessee has admittedly furnished many details and is not grossly negligent in furnishing the information, it is only desirable that one more opportunity is granted to the assessee to satisfy the designated authority i.e. CIT(E), for its rightful entitlement for registration in accordance with law. This will promote fair play and well accord with principle of natural justice as ensured by the legislature in unequivocal terms. [Jain Dehrasar Khandhali Trust vs. CIT(E)] - 4 - Consequently, we set aside the order of the CIT(E) dated 19th 7. July, 2019 and restore the issue back to the file of the designated authority for de novo consideration of all aspects for the purposes of registration in the light of facts involved as well as the judicial precedents rendered in the context. Needless to say, the application shall be disposed of by the designated authority after granting proper opportunity to the applicant assessee. The assessee is also cautioned to dutifully attend the de novo proceedings before the designated authority without any demur. All points are kept open for re- consideration of the designated authority without any fetters. It shall be open to the assessee to support the application for registration afresh before the designated authority with all documentary evidences as it may consider expedient.
In the result, appeal of the assessee is allowed for statistical purposes.
This Order pronounced in Open Court on 06/01/2021
Sd/- Sd/- (MADHUMITA ROY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 06/01/2021 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।