KSHATRIYA VIKAS SEWA SAMITI,RAJASTHAN vs. CIT(A), JAIPUR, JAIPUR

The particulars of the appeals are as under: ITA No. Nature of proceedings 395/Jodh/2024 Rejection of regular registration under section 12AB and cancellation of provisional registration 372/Jodh/2024 Rejection of application for approval under section 80G(5)

In ITA No. 395/Jodh/2024 the assessee has raised the following grounds of appeal: 1. On the facts and circumstances of the case, ld. CIT(E), Jaipur has erred in rejecting assessee’s application for registration under section 12AB of the Income-tax Act, 1961 without affording reasonable opportunity of being heard and without taking into accounting consideration the genuineness of the activities of the Assessee as emanating from its Trust Deed. 2. On the facts and circumstances of the case, ld. CIT(E) has erred in rejecting assessee’s application for registration under section 12AB of the Income-tax Act, 1961 on the ground inter alia that the Trust was not registered under the Rajasthan Public Trust Act, 1959, without appreciating the fact that registration under RPT Act is not a pre-condition for registration under section 12AB. 3. The appellant craves leave of the Hon’ble ITAT to add, amend, delete or vary from one or more grounds of appeal.

On examination of the available material, the learned CIT(E) observed that the application was incomplete and that the assessee had not furnished its deed, financial statements for the financial year 2022- 23, note on activities and supporting evidence concerning the genuineness of its activities. The learned CIT(E) further observed that the assessee had not established that it was registered under the Rajasthan Public Trust Act, 1959. Accordingly, by order dated 08.03.2024, the learned CIT(E) rejected the application for regular registration under section 12AB. By the same order, the provisional registration granted to the assessee on 07.03.2023 was also cancelled.

In the proceedings under section 80G(5), the learned CIT(E) noticed that the assessee had filed its application under clause (ii) of the

Aggrieved by the aforesaid orders, the assessee is in appeal before us.

The learned AR submitted that the notices issued by the learned CIT(E) were delivered to the registered e-mail address of the assessee. However, the authorised person of the assessee was not accustomed to accessing the said e-mail account regularly and, therefore, the notices did not come to his knowledge. Consequently, the assessee could not furnish the documents and explanations called for by the learned CIT(E). It was submitted that the non-compliance was neither deliberate nor with any intention to withhold the relevant material.

Regarding the genuineness of the activities, the learned AR fairly admitted that the assessee could not furnish the requisite documents and supporting evidence before the learned CIT(E) due to non- awareness of the notices. The assessee undertook to furnish a complete note on its activities, financial statements, accounts, supporting evidence and all other documents that may be required for examining the genuineness of its activities.

As regards the alleged non-submission of the deed and deficiencies in Form No. 10AB, the learned AR submitted that the deed had been furnished along with the application. Nevertheless, the assessee undertook to furnish the same again and to make good any deficiency in its application. It was, accordingly, prayed that one more

In respect of the application under section 80G(5), the learned AR submitted that clause (ii) of the first proviso to section 80G(5) had been selected inadvertently instead of clause (iii). It was contended that the learned CIT(E) ought to have considered the request of the assessee to treat the application as having been filed under the appropriate clause instead of rejecting it solely on account of an incorrect selection in Form No. 10AB. It was further submitted that the application under section 80G(5) is consequential to the application for registration under section 12AB and, therefore, both matters may be restored to the learned CIT(E) for consideration together.

Per contra, the learned DR relied upon the respective impugned orders. It was submitted that the assessee had failed to furnish the documents and information called for by the learned CIT(E) despite being granted sufficient opportunities. In the proceedings under section 80G(5), the assessee had selected a clause which was not applicable to it and had also failed to respond to the notice issued by the learned

We have considered the rival submissions and perused the material available on record. The assessee had filed separate applications in Form No. 10AB on 30.09.2023 seeking regular registration under section 12AB and approval under section 80G(5). Both applications were rejected principally on account of the non-compliance of the assessee and the resultant absence of the material required for examining its eligibility.

In the proceedings under section 12AB, the learned CIT(E) rejected the application on the grounds that Form No. 10AB was incomplete, the deed and requisite financial and activity-related documents had not been furnished, the assessee had not established its registration under the Rajasthan Public Trust Act, 1959 and the genuineness of its activities could not be verified. The provisional registration granted to the assessee on 07.03.2023 was also cancelled by the same order.

It is further submitted that the assessee has since obtained registration under the Rajasthan Public Trust Act, 1959 and a copy of the registration certificate has been filed as Annexure-C to the written submissions. The said certificate was not available for verification before the learned CIT(E). Thus, the material now relied upon by the assessee requires examination at the level of the learned CIT(E).

The eligibility of the assessee for registration under section 12AB has to be determined after examining its objects, statutory compliances and the genuineness of its activities on the basis of complete material. Since the relevant documents were not available before the learned CIT(E), there was no effective examination of these aspects on merits. Considering the explanation furnished and the undertaking given by the

Accordingly, the order dated 08.03.2024 passed under section 12AB(1)(b)(ii) is set aside and the application for regular registration is restored to the file of the learned CIT(E) for adjudication afresh. The assessee shall furnish the registration certificate issued under the Rajasthan Public Trust Act, 1959, its deed or governing instrument, financial statements, note on activities, supporting evidence and all other information and documents that may be called for.

The learned CIT(E) shall verify the material so furnished and decide the application afresh in accordance with law after granting a reasonable opportunity of hearing to the assessee. Since the cancellation of the provisional registration is contained in the same impugned order and is consequential to the rejection of the application for regular registration, the cancellation of provisional registration is also set aside for the limited purpose of fresh adjudication along with the application for regular registration.

Coming to the application under section 80G(5), it is evident that the same was rejected because the assessee had applied under clause (ii)

Since the application for regular registration under section 12AB has been restored to the learned CIT(E), the connected application for approval under section 80G(5) also requires fresh consideration in the light of the outcome of the proceedings under section 12AB. Accordingly, the order dated 08.03.2024 rejecting the application under section 80G(5) is also set aside and the matter is restored to the file of the learned CIT(E).

The learned CIT(E) shall consider the request of the assessee to treat the application as having been filed under the appropriate clause of the first proviso to section 80G(5), to the extent permissible in law, and shall thereafter adjudicate the application afresh. The application under section 80G(5) shall be considered after deciding, or simultaneously with, the application for registration under section 12AB. A reasonable opportunity of hearing shall be afforded to the assessee.

Accordingly, the substantive grounds raised in ITA No. 395/Jodh/2024 and ITA No. 372/Jodh/2024 are allowed for statistical purposes. The general grounds in both appeals require no separate adjudication.

In the result, both appeals filed by the assessee are allowed for statistical purposes.