UMA LAXMI CHARITABLE TRUST,JODHPUR vs. CIT(EXEMPTION), JAIPUR

During the course of proceedings relating to registration under section 12AB, the learned CIT(E) issued a notice dated 07.07.2023 calling upon the assessee to furnish various documents including audited accounts, corpus donations, donor details, bank statements, vouchers, evidence of charitable activities, details of accumulation under section 11(2), social media details and other supporting documents. The assessee furnished part details. Upon examination thereof, the learned CIT(E) noticed certain discrepancies and consequently issued a show cause notice dated 08.12.2023 fixing the matter for compliance on 13.12.2023.

According to the learned CIT(E), no compliance to the show cause notice was made. Proceeding on the basis of material already available on record, the learned CIT(E) observed various discrepancies regarding corpus donations, provisions created under section 11(2), absence of supporting vouchers, non-furnishing of donor details, bank statements and evidence of charitable activities. The learned CIT(E) ultimately concluded that the assessee had failed to establish the genuineness of its

Consequent upon rejection of registration under section 12AB, the learned CIT(E), by another order of even date, rejected the assessee's application for approval under section 80G. Apart from holding that approval under section 80G could not be granted in the absence of registration under section 12AB, the learned CIT(E) further observed that the application in Form No.10AB seeking regular approval under section 80G had not been filed within the time prescribed under clause (iii) of the first proviso to section 80G(5) of the Act. According to the learned CIT(E), there was no statutory power available to condone the delay and consequently the application itself was liable to be rejected as non-maintainable.

Aggrieved by both the orders, the assessee has preferred the present appeals before us.

Before us, the learned Authorised Representative (AR) submitted that both the impugned orders deserve to be set aside primarily on account of violation of principles of natural justice. He submitted that the learned CIT(E) has proceeded on the assumption that the assessee

It was further submitted that rejection of registration merely on the basis of alleged non-compliance without examining the material which the assessee intended to produce is contrary to the mandate of section 12AB as well as the principles of natural justice. The learned AR accordingly prayed that the order rejecting registration under section 12AB be set aside and the matter be restored to the file of the learned CIT(E) for fresh adjudication after granting one effective opportunity to the assessee.

Insofar as the appeal relating to approval under section 80G is concerned, the learned AR submitted that one of the principal reasons assigned by the learned CIT(E) is that approval under section 80G cannot survive in the absence of registration under section 12AB. Since

On the second issue relating to limitation, the learned AR submitted that the trust was constituted on 18.01.2021 and was granted provisional registration. According to him, the delay in filing Form No.10AB occurred because registration under the Rajasthan Public Charitable Trust law/Devsthan Vibhag had first to be obtained before approaching the Income-tax authorities. He further submitted that the application filed on 23.06.2023 was covered by CBDT Circular F.No.370133/06/2023-TPL dated 24.05.2023. It was argued that the learned CIT(E) has adopted an unduly restrictive interpretation of the Circular by holding that the benefit thereof is confined only to applications under section 12AB.

The learned AR further placed reliance upon the decision of the Coordinate Bench of the Ahmedabad Tribunal in Best Buds Pet Care v. CIT (Exemption), ITA No.731/Ahd/2023 dated 30.11.2023, wherein, according to him, under similar circumstances the Tribunal restored the

Per contra, the learned Departmental Representative (DR) strongly relied upon both the impugned orders. The learned DR submitted that despite adequate opportunities, the assessee failed to furnish complete information and satisfactory evidence before the learned CIT(E). It was submitted that the learned CIT(E) had noticed several discrepancies relating to corpus donations, accumulation under section 11(2), donor details, charitable expenditure and supporting evidence, and in the absence of satisfactory explanation was fully justified in recording a finding that the genuineness of the activities had not been established.

We have carefully considered the rival submissions and perused the orders of the learned CIT(E), the material placed before us, the written submissions filed by the assessee and the judicial precedent relied upon. Since the rejection of approval under section 80G is primarily founded upon the rejection of registration under section 12AB and both the appeals arise out of the same proceedings, we consider it appropriate to first adjudicate the issue relating to registration under section 12AB.

The consistent stand of the assessee before us is that the reply to the show cause notice dated 08.12.2023 could not be uploaded within the prescribed time because of technical glitches on the Income-tax portal and, therefore, the learned CIT(E) proceeded to decide the matter

At this stage, it would be appropriate to notice the scope of enquiry contemplated under section 12AB of the Act. While considering an application for registration, the Commissioner is required to satisfy himself regarding the objects of the trust and the genuineness of its activities. Equally, such satisfaction has to be arrived at after considering the material produced by the applicant and after granting an effective opportunity of being heard. The proceedings under section 12AB are not intended to result in denial of registration merely on account of procedural lapses where the applicant expresses willingness to furnish all requisite information and seeks an opportunity to explain the discrepancies noticed by the prescribed authority.

In the present case, we find that the impugned order proceeds substantially on the basis that the assessee failed to respond to the show cause notice dated 08.12.2023. The assessee, on the other hand, has

We are of the considered opinion that the controversy involved in the present appeal is predominantly factual in nature. The Tribunal, in appellate jurisdiction, is not expected to undertake the exercise of examining the primary evidences for the first time, particularly where the prescribed authority has not had the occasion to consider the assessee's explanation on those aspects. The interest of justice, therefore, would be adequately served if the assessee is afforded one more effective opportunity to place all relevant material before the learned CIT(E).

We accordingly set aside the impugned order passed under section 12AB and restore the matter to the file of the learned CIT(E) for

Coming to the appeal relating to approval under section 80G, we find that the learned CIT(E) has rejected the application on two grounds. Firstly, that approval under section 80G cannot be granted in the absence of registration under section 12AB and secondly, that the application filed in Form No.10AB was beyond the time prescribed under clause (iii) of the first proviso to section 80G(5) of the Act.

Insofar as the first ground is concerned, the same is purely consequential in nature. Since we have restored the issue relating to registration under section 12AB to the file of the learned CIT(E), the very foundation on which approval under section 80G has been rejected no longer survives. Consequently, the application seeking approval under

The second issue pertains to the alleged delay in filing Form No.10AB. The learned CIT(E) has taken the view that the limitation prescribed under clause (iii) of the first proviso to section 80G(5) is mandatory and that there is no statutory power available to condone the delay. The assessee, however, has contended that the application filed on 23.06.2023 is covered by CBDT Circular F.No.370133/06/2023-TPL dated 24.05.2023 and that the said Circular has not been properly appreciated by the learned CIT(E). The assessee has also placed reliance upon the decision of the Coordinate Bench of the Ahmedabad Tribunal in the case of Best Buds Pet Care v. CIT (E)(supra).

We have carefully considered the rival submissions on the issue relating to rejection of the application seeking approval under section 80G of the Act. We find that apart from holding that approval under section 80G could not be granted in the absence of registration under section 12AB, the learned CIT(E) has also rejected the application on the ground that Form No.10AB had not been filed within the time prescribed under clause (iii) of the first proviso to section 80G(5) of the

We further find that the assessee has specifically relied upon CBDT Circular No. 8 of 2022 dated 31.03.2022 and CBDT Circular No. 6 of 2023 dated 24.05.2023 issued under section 119 of the Act. It is the contention of the assessee that paragraph 7 of Circular No. 6 of 2023, which deals with pending applications and applications rejected solely on the ground of delay, has a bearing on the controversy involved in the present appeal. The assessee has also placed reliance upon the decision of the Coordinate Bench in the case of Best Buds Pet Care v. CIT (E), ITA No.731/Ahd/2023 dated 30.11.2023, wherein the Coordinate Bench, after considering the aforesaid Circular, restored the matter to the file of the learned CIT(E) for fresh adjudication as the applicability of

We also notice that subsequent to the passing of the impugned order, the CBDT has issued Circular No. 7 of 2024 dated 25.04.2024 extending the time for filing applications in Form No.10A and Form No.10AB in specified cases in order to mitigate genuine hardship faced by charitable institutions and trusts. Though the said Circular was admittedly not available when the learned CIT(E) passed the impugned order, the same indicates that the Board itself has, from time to time, been extending the timelines for filing such applications having regard to the practical difficulties faced by charitable institutions. Since the said Circular was not available before the learned CIT(E), we refrain from expressing any opinion on its applicability to the facts of the present case. However, in the interest of justice, we consider it appropriate that the assessee may also be permitted to place reliance thereon before the learned CIT(E), if so advised, who shall examine its applicability in accordance with law.

Since we have already restored the issue relating to registration under section 12AB to the file of the learned CIT(E), the rejection of

Before parting, we observe that restoration of both the matters should not be construed as an expression of opinion by this Tribunal on the merits of the assessee's claim. The learned CIT(E) shall independently examine the objects of the trust, the genuineness of its

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