BASA SATYANARAYANA DEVATHILAKULA CHARITABLE TRUST,EAST GODAVARAI vs. CIT(EXEMPTIONS), HYDERABAD

In the above captioned appeal, the appellant filed an appeal before ITAT with the delay of 271 days. Before adjudicating the appeal on merits, the appellant requested the Bench to condone the delay in filing of the appeal for the reasons mentioned in the statement of facts and a notarized affidavit filed during the appellate proceedings. The Ld.AR of the appellant requested the Bench to peruse the notarized affidavit filed by the appellant Trust, wherein, detailed reasoning was given for filing the appeal with the delay as under :

The Ld.DR opposed the delay petition filed by the appellant Trust, stating that there is very casual approach by the assessee and it should have taken proper care with regard to the appeal matters and filed appeal immediately after rejection of registration u/s 12AB by the Ld.CIT(E) within the due date.

After hearing both sides with regard to delay, the Bench is of the opinion that there is bonafide reason for the appellant Trust for not filing the appeal before ITAT against the order of Ld.CIT(E), in view of the detailed reasoning mentioned in the notarized affidavit and arguments of the Ld.AR during the hearing proceedings. The Trust was under the bonafide impression that the corpus fund and other receipts were exempt from tax. They were under the impression that even if the registration was not granted by CIT(E), there will not be any effect on the Trust with regard to the tax liability. But once a show cause notice was issued by the Ld.AO, NFAC, the assessee Trust became serious with regard to tax implications and sought opinion from the Sr.Tax Consultant as mentioned in the affidavit. The Bench is satisfied with the reasons mentioned in the affidavit and the arguments made before the Bench and hence the delay is condoned.

As far as the merits are concerned, it is observed that the Ld.CIT(E) has rejected the registration of Trust u/s 12AB of the Act, because the assessee has not submitted any information or documentary evidence with regard to the show cause letter dated 25.01.2024, which is reproduced as under :

Aggrieved by the rejection of Registration of Trust by Ld.CIT(E), an appeal was filed by appellant Trust before ITAT now. Before the ITAT, the Ld.AR of the appellant has stated that the information called for in this second notice dated 25.01.2024 is by and large repetitive of multiple issues embedded in the earlier notices dated 29.10.2023 and 23.11.2023, for which detailed replies were already filed before the Ld.CIT(E). The replies given by the appellant Trust in their earlier exhaustive reply dated 23.11.2023 covers all the issues raised by the Ld.CIT(E) again. The appellant Trust was under the bonafide impression that there is no need to file replies again because almost all the queries raised in the notice dated 25.01.2024 were already replied by their letter dated 23.11.2023. The plea of the Ld.AR of the appellant before the Bench is that the Ld.CIT(E) should have seen the replies given earlier and granted registration instead of rejecting the registration sought u/s 12AB of the Act. The Ld.AR of the appellant has filed a copy of the comprehensive reply dated 23.11.2023, which was filed before the Ld.CIT(E) and pleaded that these replies cover all the issues, which were raised again by the Ld.CIT(E). While concluding the argument, the Ld.AR of the appellant Trust has stated that there is small mistake in not filing reply to the show cause notice of Ld.CIT(E) dated 25.01.2024 by saying that the replies to the questionnaire were already filed and the same was not brought to the notice of the Ld.CIT(E). Hence, it was pleaded that the order of the Ld.CIT(E) may be set aside and direct the Ld.CIT(E) to grant registration u/s 121AB of the Act.

The Ld.DR opposed the arguments of the Ld.AR of the appellant Trust and stated that when a show cause notice was given by the Ld.CIT(E), the appellant Trust should have responded by stating that most of the replies were already submitted, if replied were already filed and the appellant failed to do so. And hence, the action of Ld.CIT(E) is correct and his order of rejection should be upheld.

After hearing both the sides, the Bench decides to remit the issue back to the file of the Ld.CIT(E). Ld. CIT(E) is directed to verify whether all the queries raised by him in the second notice dated 25.01.2024 were already replied by the appellant Trust as claimed before the ITAT. After taking into consideration the replies/responses filed before the Ld.CIT(E), a fresh order with respect to granting of registration may be passed after giving an effective opportunity to the appellant Trust. In view of the above, the appeal of the appellant Trust is allowed for statistical purpose.

In the result, appeal filed by the Assessee is allowed for statistical purpose.