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Facts
The assessee, Shree Mahadeshwara Educational Trust, applied for registration under section 12AB and approval under section 80G. The CIT(Exemptions) rejected both applications as the assessee failed to respond to statutory notices and submit required documents. The assessee claimed that non-response was due to their accountant absconding after committing fraud.
Held
The Tribunal found the assessee's reason for non-appearance to be bonafide. Therefore, in the interest of justice, the matter was remitted back to the CIT(Exemptions) for fresh consideration, with a direction to grant a reasonable opportunity of hearing to the assessee.
Key Issues
Whether the rejection of applications for registration under section 12AB and approval under section 80G by the CIT(Exemptions) was justified, considering the assessee's explanation for non-compliance.
Sections Cited
12AB, 80G
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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
These two appeals at the instance of the assessee are directed against the separate orders of ld.CIT (Exemptions), Bengaluru both dated 20.6.2025 vide DIN & Notice No: ITBA/EXM/F/EXM45/2025-26/1077249869(1) rejecting the application for registration u/s. 12AB of the Income Tax Act, 1961 (in short “the Act”) and vide DIN & Notice No. ITBA/EXM/ F/EXM45/2025-26/1077249963(1) rejecting the approval u/s 80G of the Act. the assessee Trust has raised the following grounds of appeal:- the assessee Trust has raised the following grounds of appeal:-
4. The Brief facts of the case are that the assessee is a Charitable Trust created vide Trust Deed dated 14/12/2017 and amended deed of Trust dated 14/02/2023. The assessee Trust filed the applications in Form No. 10AB both dated 21/11/2024 for registration u/s. 12AB of the Act as well as for approval u/s. 80G(5) of the Act separately. The assessee trust were granted opportunities of being heard vide notices dated 15/05/2025, 23/05/2025 along with the show cause notices dated 29/05/2025 & 1601/Bang/2025 Shree Mahadeshwara Educational Trust, Bengaluru Page 4 of 7 and 11/06/2025, however, the assessee did not respond to any of the statutory notices. The ld. CIT(E), Bengaluru rejected the registration u/s. 12AB of the Act as well as approval u/s. 80G(5) of the Act by holding that the assessee had not responded to any of the notices issued and failed to appear and submit all the necessary documents/ details as required for registration as well as failed to prove the genuineness of the activities of the Trust and also fulfillment of all the conditions laid down in clauses (i) to (v) of section 80G of the Act.
Aggrieved by both the orders of the ld. CIT(E), Bengaluru both dated 20/06/2025 rejecting the registration u/s. 12AB of the Act as well as rejecting the approval u/s. 80G(5) of the Act, the assessee Trust has filed the present appeals against both the orders separately. The assessee trust has also filed a paper book comprising 50 pages containing therein synopsis, copy of trust deed, copy of police complaint and the copies of all hearing notices.
Before us, the ld. A.R. of the assessee vehemently submitted that the assessee Trust as well as M/s. LTG Infrastructure Ltd had entrusted the administration and maintenance of accounts to one Mr. Raveendra Reddy who was handling compliance related matters including communication with the Income Tax Department. Further, the ld. A.R. of the assessee submitted that all the notices pertaining to the proceedings under section 12AB and 80G of the Act were sent on the e-mail Id of the accountant i.e. raveendra.reddy@ltgindia.com. Unfortunately, during the period when the proceedings were going on, the said accountant was absconded and was not available to discharge his professional duty as he was involved in act of forgery, fraud and cheating on account of which M/s. LTG Infrastructure Ltd had lodged a formal complaint with the Police Department and accordingly prayed that & 1601/Bang/2025 Shree Mahadeshwara Educational Trust, Bengaluru Page 5 of 7 non-filing of responses to the statutory notices were beyond the control of the assessee trust and cannot be attributed to any deliberate default or negligence on part of the assessee trust and accordingly prayed that in the interest of just, equity and fair play, the entire issue of registration u/s. 12AB as well as approval u/s. 80G(5) of the Act may be remitted to the file of ld.CIT(E).
The ld.D.R. on the other hand had no objection if the matters are remitted back to the file of ld.CIT(E) for fresh consideration.
We have heard the rival submission and perused the material available on record. On going through both the orders of the ld.CIT(E) dated 20/06/2025, we observed that the ld.CIT(E) rejected both the applications filed by the assessee for registration u/s. 12AB of the Act as well as for approval u/s. 80G(5) of the Act on the ground that the assessee trust had failed to submit the necessary documents/details to prove the genuineness of the activity of the trust and also the compliance of such requirements of any other law as are material for the purpose of achieving its objects along with fulfillment of all the conditions laid down in clauses (i) to (v) of section 80G. Before us, the ld. A.R. of the assessee vehemently submitted that the assessee Trust as well as M/s. LTG Infrastructure Ltd had entrusted the administration and maintenance of accounts to one Mr. Raveendra Reddy who was handling compliance related matters including communication with the Income Tax Department. Further, the ld. A.R. of the assessee submitted that all the notices pertaining to the proceedings under section 12AB and 80G of the Act were sent on the e-mail Id of the accountant i.e. raveendra.reddy@ltgindia.com.Unfortunately, during the said period, the accountant was absconding and was not available to discharge his professional duty as he was involved in act of forgery, fraud and cheating on account of which M/s. LTG & 1601/Bang/2025 Shree Mahadeshwara Educational Trust, Bengaluru Page 6 of 7 Infrastructure Ltd had lodged a formal complaint with the Police Department and accordingly prayed that non-filing of responses to the statutory notices were beyond the control of the assessee trust and cannot be attributed to any deliberate default or negligence on part of the assessee trust. In support of his claim the A.R. of the assessee also drew our attention to the copy of police complaint placed at page nos.34-39 of the paper book as well as copies of all the hearing notices issued to the email id of the said accountant placed at page nos.40-45 of the paper book. In our considered opinion, the reason explained by the assessee trust for non- appearance before the ld. CIT(E) seems to be bonafide and genuine. This being so, in the interest of justice, equity and fair play, we deem it fit and proper to remit both these issues of registration u/s. 12AB of the Act as well as for approval u/s. 80G(5) of the Act to the file of ld.CIT(E) to decide a fresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to co-operate with the proceedings and submit the all the necessary documents/ records/ evidences/ certificates/ accounts to substantiate the genuineness of the activity of the trust and other conditions as required under the respective sections. It is ordered accordingly.
In the result both these appeals filed by the assessee trust are partly allowed for statistical purposes.