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Facts
The appellant, Beloshe Educational and Charitable Trust, applied for exemption under Section 12A and 80G. The CIT(Exemption) rejected the application, citing violations in the Trust Deed's objects clause related to applying/receiving funds outside India. The appellant contended that the show-cause notice was issued at the fag end of the time-barring period, leaving insufficient time to respond.
Held
The Tribunal held that the CIT(E) erred by issuing the show-cause notice on 22.12.2024 and passing the rejection order on 28.12.2024, which did not provide sufficient time for the appellant to respond. The Tribunal directed the CIT(E) to grant one more opportunity.
Key Issues
Whether the rejection of exemption application by CIT(E) was justified given the short notice period and if the appellant should be given another opportunity to respond and make amendments.
Sections Cited
12A, 80G, 11, 12AB, 10AC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “B” Bench, Mumbai.
Before: Shri Narender Kumar Choudhry (JM) & Shri Omkareshwar Chidara (AM)
GROUNDS OF APPEAL: Based on the facts and circumstances of the case and further as per explanations offered, the Order Passed by Ld. CIT(Exemption) Mumbai is grossly unjust and erroneous and purely based on assumed facts and premises. Ground 1 - To allow the exemption Under Form 10AC for 12A and 80G Approval of the Income Tax Act, 1961 : The Ld. CIT (Exemption) has erred in passing rejection order for Approval under Form 12A & 80G . The Exemption is denied on the basis of clause mentioned in the Trust Deed that Point No.5(ii), 5(iv),5(xxii) of the Objects are in violation of provision of section 11 of the I.T.Act as the Trust Intends to apply/receive funds outside India. The appellant has never utilized or have received funds outside India however the Appellant has made an Application with Charity Commission Mumbai where it is principally registered for Amendment in the Objects clause of the Trust Deed, The Appellant has also prepared a Supplementary Trust Deed removing the word " outside India " from the Point No.5(ii), 5(iv),5(xxii) of the Original Trust Deed and the Copy of the said Application is also attached herewith for your reference.
2 Beloshe Educational and Charitable Trust Appellant plead before your honour to direct CIT (Exemption) to grant the exemption U/S.12A & 80G of the Income Tax Act, 1961.
From the order of Ld. CIT(E), it is observed that three hearing notices were sent to appellant trust stating that the application in Form No. 10AB was not complete, all the documents required to be accompanied were not furnished. It was also mentioned that the Trust Deed of appellant Trust/MOA point No. 5(iii),(iv), (xxi) and 5(xxii) of the objects are in violation of provisions of section 11 of the Income Tax Act as the Trust intends to apply/receive funds outside India. In view of the above, a show-cause notice was issued to appellant Trust on 22.12.2024 and there is no response from the appellant Trust. The Ld. CIT(E) has further observed that:-
“Since Registration under section 12AB is to be granted in terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the trust or institution, the genuineness of activities, and the compliance of any other law for the time being in force as are material for the purposes of achieving its objects. Thus, based on the reasons mentioned above, this application for registration u/s 12A is not allowable. As such, in view of the statutory limitation to decide on the application on or before 31.12.2024, the undersigned is left with no other option but to reject the application seeking registration under section 12AB of the Act.”
Aggrieved by the order of Ld. CIT(E), the appellant Trust filed an appeal with the above Grounds of Appeal. The Ld. AR of the appellant has pleaded before the Bench that the show cause notice about violation of provisions of section 11 dated 22.12.2024 was sent to the appellant at fag end of the time barring period and no time was left to the appellant to explain the position of Trust. The Ld. AR has argued that the Trust never spend the money nor intended to spent money outside the country and an opportunity may be given to explain its position before Ld. CIT(E). The Ld. AR has stated that they have already prepared a Supplementary Trust Deed removing the word “Outside India” and a copy of the said application was attached.
3 Beloshe Educational and Charitable Trust 4. Ld. DR has argued that three opportunities were given to the appellant Trust and as there was no response, the Ld. CIT(E) is correct in denying the registration to the appellant Trust.
Heard both side. From the order of Ld. CIT(E), it is observed that even though three opportunities were issued within two months, the last notice which is the reason for rejection of application seeking registration under section 12AB of the Act was sent on 22.12.2024. There was no sufficient time to respond to this notice as the Ld. CIT(E) has passed the order on 28.12.2024 itself. The Bench is of the opinion that sufficient time should have been given to the appellant Trust to respond to the effective notice which deals with the issue, and hence the order of Ld. CIT(E) is set aside with the direction that he should give sufficient time opportunity to respond. After giving opportunity, Ld. CIT(E) shall pass fresh order, especially when Ld. AR of appellant has stated that the requisite amendment was already passed.
The Ld. CIT(E) is directed to give one more opportunity and pass the order.
The appeal of appellant is allowed for statistical purposes. Order pronounced in the open Court on 31/07/2025.