KESHAW MADHAW SEWA NYAS,KANPUR vs. COMMISSIONER OF INCOME TAX (E), LUCKNOW

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ITA 77/LKW/2020Status: DisposedITAT Lucknow16 December 20203 pages
AI SummaryRemanded

What did the Tribunal hold?

The ITAT held that non-commencement of activities cannot be the sole ground for rejecting a Section 12A application. However, it found that the assessee had not furnished complete information as promised. The matter was remitted back to the CIT(E) to reconsider the application afresh after obtaining the complete information and affording a fresh opportunity of being heard.

What were the facts?

The assessee applied for registration under Section 12A of the IT Act. The CIT(Exemption) rejected the application primarily because the assessee had not started any activities and had not filed books of account or bank statements for previous years.

What were the issues?

Whether non-commencement of activities is a valid ground for rejecting Section 12A registration, and if the CIT(E) erred by not allowing the assessee to furnish promised information before rejecting the application.

Which sections of the Income-tax Act were involved?

Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH ‘B’ LUCKNOW

Before: SHRI A.D JAIN & SHRI T.S. KAPOOR

For Appellant: Shri Abhinav Mehrotra, Advocate
For Respondent: Shri S.K. Madhuk, DR
Pronounced: 16/12/2020

O R D E R PER T.S. KAPOOR, A.M.:

This is an appeal filed by the assessee against the order of ld. CIT(E) passed u/s. 12A of the Act. Though the assessee has taken many grounds of appeal but he crux of grounds of appeal is action of ld. CIT(E) by which he has refused registration u/s. 12A of the Act.

2. The ld. AR submitted that assessee had filed complete written submissions on 20.11.2019 but the ld. CIT(E) vide order dated 28.11.2019 dismsised the application of assessee by holding that the appellant has not started any activity and the books of account and bank statement were not filed in the previous year. Ld. AR submitted that the Hon’ble Supreme Court in the case of M/s Ananda Social and Educational Trust has held that non starting of activities cannot be the ground for rejection of application u/s. 12A of the Act. It was submitted that assessee had furnished all the information required by him and the ld. CIT(E) had not expressed any adverse findings or observations on the objects and activities of the trust and therefore it was prayed that the ld. CIT(E) be directed to grant registration u/s. 12A of the Act.

3.

Ld. DR on the other hand supported the order of ld. CIT(E) and held that books of account and bank statement were not filed and therefore, ld. CIT(E) was not in a position to express any satisfaction regarding genuineness of the activities and therefore, he has rightly rejected the application of the assessee.

4.

We have heard the rival parties and have perused the material available on record. We find that the main reason for rejecting the application of the assessee for registration u/s. 12A of the Act was that the assessee had not started any activities and there was no income tax return filed or books of account, bank statement of any previous financial year. In this respect, we are in an agreement with arguments of the assessee that carrying out of activities was not necessary in view of the judgment of Hon’ble Supreme Court in the case of M/s Ananda Social and Educational Trust (Supra). However, from the reply to the questioner issued by ld. CIT(E) placed at paper book pg. 4 onwards, we find that in reply to Question No.10, the assessee stated that details of the same would be filed in the next reply. Further, we find that in reply to Question No.15, the assessee submitted that trust deed does not have any irrecoverable clause and the amendment to the same is being filed tomorrow in the Kanpur Courts the certified copy of the same would be submitted in the next reply. Similarly in reply to question no.22 it was submitted that details would be submitted in next reply. From the records, we do not find that reply to these unanswered questions was furnished by the assessee, therefore, in the absence of complete information the ld. CIT(E) was not in a position to record his findings regarding genuineness of activities of the assessee. Further, we find that this reply was filed vide letter dated 11.1.2019 which the ld. CIT(E) has taken into consideration in his order. However, without raising any objection to the information not submitted by assessee which was promised to be submitted on the next date the ld. CIT(E)

passed order on 28.11.2019 and rejected the application of the assessee. In the present case, though the ld. CIT(E) did not raise any objection regarding the objects of the assessee but he did not afford the next opportunity to the assessee and did not wait for its reply to the unanswered questions to the questionnaire. Therefore, we deem it appropriate to remit the issue back to the ld. CIT(E) who after obtaining reply to unanswered questions from the assessee and keeping in view the judgment of Hon’ble Supreme Court in the case of M/s Ananda Social and Educational Trust (Supra) will reconsider the application afresh after affording an opportunity of being heard. Ld. CIT(E) should pass the order within a period of two months from the date of receipt of this order and the assessee is also directed to cooperate in the proceedings. In the result, appeal of the assessee is allowed for statistical purposes. 5.

(Order pronounced in the open court on 16/12/2020 in accordance with Rule 34(4) of I.T.AT. Rules.)

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