SHREE SATYAM SEVA SAMITI,BHILWARA vs. CIT(EXEMPTION),, JAIPUR

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ITA 531/JODH/2024Status: DisposedITAT Jodhpur05 August 2026AY 2025-2610 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(E)'s orders and restored the applications for fresh adjudication. The assessee was granted one final opportunity to furnish all required documents and explanations.

What were the facts?

The assessee's applications for registration under Section 12AB and approval under Section 80G were rejected by the CIT(E) due to non-compliance with notices and failure to establish genuineness of activities. The assessee had also not obtained registration under the Rajasthan Public Trust Act.

What were the issues?

Whether the CIT(E) erred in rejecting the applications for registration and approval without affording sufficient opportunity and considering all evidence. The genuineness of the assessee's activities and compliance with statutory requirements were also at issue.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE

For Appellant: Shri Rajendra Jain (Advocate) and Smt. Raksha Birla CA
For Respondent: Ms. Shivani Bansal CIT-DR

PER: SHRI MAKARAND VASANT MAHADEOKAR :

These two appeals filed by the assessee are directed against two separate orders dated 26.04.2024 passed by the learned Commissioner of Income Tax (Exemption), Jaipur [“CIT(E)”]. The first order was passed under section 12AB(1)(b)(ii)(B) of the Income Tax Act, 1961 [“the Act”], rejecting the assessee’s application for registration under section 12AB

2 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) and cancelling the provisional registration granted on 29.03.2022. The second order was passed in relation to the application for approval under section 80G(5), whereby the application was rejected and the provisional approval granted on 29.03.2022 was cancelled. Since both appeals arise from connected applications, involve common facts and the application under section 80G was rejected consequentially upon the rejection of registration under section 12AB, the appeals were heard together and are being disposed of by this consolidated order. 2. In the appeal arising from the rejection of registration under section 12AB, the assessee has raised the following grounds: 1. That on the facts and in the circumstances of the case, the order passed by ld CIT(Exemption) is bad in law and bad in facts 2. That on the facts and in the circumstances of the case, the ld CIT(Exemption)grossly erred in rejecting the application for grant of registration u/s 12AB of the Act, particularly when the appellant trust fulfilled all the conditions for granting of registration as per provision of law. 3. That on the facts and in the circumstances of the case, the ld CIT(Exemption)grossly erred in recording the observation and allegation for rejecting the application for grant of registration u/s 12AB of the Act is contrary to material on record and also against the principle of natural justice. 4. That on the facts and in the circumstances of the case the Ld CIT (Exemption) grossly erred inholding the assessee trust had not carried out genuine activities which is contrary to facts on record . 5. That on the facts and in the circumstances of the case, the ld CIT(Exemption)grossly erred in without appreciating the facts and legal position in right perspective and judicious manner.

3 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) 6. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 7. The petitioner prays for justice & relief. 3. In the appeal arising from the rejection of approval under section 80G, the assessee has raised the following grounds: 1. That on the facts and in the circumstances of the case, the order passed by ld CIT(Exemption) is bad in law and bad in facts 2. That on the facts and in the circumstances of the case, the ld CIT(Exemption)grossly erred in rejecting the application for grant of registration u/s 80G of the Act, particularly when the appellant trust fulfilled all the conditions for granting of registration as per provision of law. 3. That on the facts and in the circumstances of the case, the ld CIT(Exemption)grossly erred in recording the observation and allegation for rejecting the application for grant of registration u/s 80G of the Act is contrary to material on record and also against the principle of natural justice. 4. That on the facts and in the circumstances of the case, the ld CIT(Exemption)grossly erred in without appreciating the facts and legal position in right perspective and judicious manner. 5. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 6. The petitioner prays for justice & relief. Facts of the Case 4. The assessee filed applications in Form No. 10AB on 07.10.2023 for registration under section 12AB and on 09.10.2023 for approval under section 80G. Pursuant to the notice dated 25.02.2024, the assessee furnished a reply on 08.03.2024 but did not comply with the subsequent show-cause notice dated 09.04.2024.

4 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) 5. The learned CIT(E) rejected the application under section 12AB vide order dated 26.04.2024 on the grounds of non-registration under the Rajasthan Public Trust Act, 1959, failure to establish the genuineness of the activities, unexplained payments to persons specified under section 13(3), and the presence of an object relating to activities outside India. The provisional registration dated 29.03.2022 was also cancelled.

6.

By a separate order dated 26.04.2024, the learned CIT(E) rejected the application under section 80G since registration under section 12AB had been denied. The provisional approval dated 29.03.2022 was also cancelled.

7.

Aggrieved by both orders, the assessee is in appeal before the Tribunal.

8.

At the time of hearing, the learned AR reiterated the facts and grounds raised in both appeals. He submitted that the proceedings for obtaining registration under the Rajasthan Public Trust Act, 1959 were at the final stage and that the assessee expected to receive the registration shortly.

5 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) 9. The learned AR further submitted that the failure to comply with the show-cause notices was inadvertent. He undertook that, if one more opportunity were granted, the assessee would furnish the registration certificate under the Rajasthan Public Trust Act, complete accounts, supporting documents and explanations addressing each of the objections recorded by the learned CIT(E). He accordingly requested that both matters be restored to the file of the learned CIT(E) for fresh adjudication.

10.

The learned DR relied upon the respective orders passed by the learned CIT(E). He, however, raised no objection to both matters being restored to the file of the learned CIT(E) for fresh adjudication in accordance with law.

11.

We have considered the rival submissions and perused the material placed on record. The application for registration under section 12AB was rejected on three principal grounds, namely, non-registration under the Rajasthan Public Trust Act, failure to establish the genuineness of the activities and the existence of an object concerning international research activities and consultancy to governments.

6 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) 12. It is undisputed that the assessee did not furnish any reply to the final show-cause notice dated 09.04.2024. Consequently, the learned CIT(E) did not have the benefit of the assessee’s complete explanation or the supporting evidence concerning the payments to the Chairman, Secretary and other related persons, the alleged cash receipts and expenditure, the nature of the charitable activities and the object concerning activities outside India.

13.

The learned AR has now explained that the non-compliance was inadvertent and has requested one final opportunity. He has also stated that the process of obtaining registration under the Rajasthan Public Trust Act is at its final stage. The learned DR has raised no objection to restoration of the matters. However, the absence of objection from the Revenue does not dispense with the assessee’s obligation to establish its eligibility for registration and approval through complete and verifiable evidence.

14.

Registration under the Rajasthan Public Trust Act was one of the principal objections recorded by the learned CIT(E). The assessee shall, therefore, furnish the registration certificate, if obtained in the meantime, or complete evidence regarding the application and its present status.

7 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) The learned CIT(E) shall examine the same independently and in accordance with law.

15.

The objections concerning the payment of rent, salary and other amounts to persons connected with the management, the purpose of the payment of Rs.60,000/- to the Secretary, the alleged cash receipts and expenditure, and the limited expenditure upon the stated charitable activities are factual matters requiring examination of the accounts and supporting evidence. The assessee is required to furnish complete documentary evidence and offer a specific explanation on each of these issues.

16.

The learned CIT(E) shall also examine the scope and legal effect of clause 4(t) of the governing document concerning international and domestic research activities and consultancy to governments. The assessee shall be afforded an opportunity to explain the nature of the object, whether any activity was actually undertaken outside India and the applicability of section 11(1)(c).

17.

Having regard to the nature of the objections, the explanation furnished for the earlier non-compliance, the undertaking given by the learned AR and the absence of objection from the learned DR, we

8 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) consider it appropriate, in the interest of substantial justice, to grant the assessee one final opportunity to establish its eligibility for registration.

18.

We accordingly set aside the order dated 26.04.2024 and restore the application in Form No. 10AB filed on 07.10.2023 to the file of the learned CIT(E) for fresh adjudication under section 12AB in accordance with law.

19.

The assessee shall furnish complete accounts and all supporting documents and explanations required by the learned CIT(E) to establish the genuineness of its activities and compliance with the applicable statutory requirements. The learned CIT(E) may undertake such verification as is permissible in law. Any adverse material proposed to be relied upon shall be confronted to the assessee and a reasonable opportunity to respond shall be granted.

20.

Since the cancellation of the provisional registration granted on 29.03.2022 formed part of the same impugned order and was consequential to the rejection of the application for regular registration, the said issue is also restored to the file of the learned CIT(E) for fresh adjudication.

9 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) 21. The application for approval under section 80G was rejected consequentially because the assessee had been denied registration under section 12AB. Since the application under section 12AB has been restored for fresh adjudication, the issue of approval under section 80G also requires reconsideration.

22.

We accordingly set aside the order dated 26.04.2024 and restore the application in Form No. 10AB filed on 09.10.2023 to the file of the learned CIT(E). The learned CIT(E) shall decide the application for approval under section 80G afresh after adjudicating the application for registration under section 12AB and after affording a reasonable opportunity of being heard to the assessee. The consequential cancellation of the provisional approval granted on 29.03.2022 shall also be reconsidered.

23.

This relief is granted as one final opportunity. The assessee shall make complete and timely compliance with every notice issued by the learned CIT(E) and shall not seek unnecessary adjournments. If the assessee fails to comply without sufficient cause, the learned CIT(E) shall be at liberty to decide the applications on the basis of the material available on record.

10 ITA No. 530 and 531/Jodh/2024 (Assessment Year: NA) 24. The learned CIT(E) shall thereafter pass separate speaking orders in accordance with law. We have not expressed any opinion on the merits of the assessee’s eligibility for registration under section 12AB or approval under section 80G.

25.

Accordingly, the substantive grounds raised in both appeals are restored to the file of the learned CIT(E) and are treated as allowed for statistical purposes. The general grounds require no separate adjudication.

26.

In the result both the appeals are allowed for statistical purposes.

Order pronounced in open court on 05 / 08 / 2026.

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) ACCOUNTANT MEMBER VICE PRESIDENT Dated : 05 / 08 / 2026. Pritesh Vaishnav PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER,

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