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Facts
The assessee trust applied for registration under Section 12AB of the Income Tax Act. The CIT(E) rejected the application due to incomplete documents and lack of compliance, citing insufficient opportunity for the assessee. The assessee contended that the rejection was ex-parte and against principles of natural justice.
Held
The Tribunal held that the CIT(E) did not provide sufficient opportunity to the assessee to be heard, leading to a miscarriage of justice. The delay in filing the appeal was condoned due to a genuine misunderstanding by the assessee.
Key Issues
Whether the CIT(E) properly afforded the assessee an opportunity of being heard before rejecting the registration application under Section 12AB and whether the delay in filing the appeal should be condoned.
Sections Cited
12AB, 12(1)(ac)(iii), 12A, 12AB(1)(b)
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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order dated 05.12.2023 of Learned Commissioner of Income Tax (Exemption), Mumbai [hereinafter referred to as the “CIT(E)”], wherein the Ld. CIT(E) has rejected application for seeking registration/approval u/s
The brief facts of the case are that, assessee trust is in existence for many years and was granted provisional registration. As per requirement of law, the assessee has filed form 10AB u/s 12(1)(ac)(iii) seeking registration u/s 12AB of the Act. On verification of the application in Form 10AB filed by the applicant / assessee, Ld. CIT(E) found that the application was not complete and all the documents required to be accompanying the application were not furnished and hence notice was issued on 13.10.2023 requesting the assessee to file the necessary documents. The assessee requested adjournment to provide a response to the said notice and final notice was issued on 06.11.2023 with compliance due date of 01.12.2023. The assessee could not provide responses in due time because the assessee does not have full time accountant to look after the accounts and taxation of the trust, therefore assessee could not file the documents as called for. The Ld. CIT(E) has rejected the final registration u/s 12A only on technical ground and passed an ex-parte order.
Mata Chameladevi Educational and Charitable Trust 3. Aggrieved by the order of Ld. CIT(E), Assessee preferred the present appeal before us and has raised the following grounds of appeal:-
GROUND NO. 1: DENIAL OF NATURAL JUSTICE Based on the facts and circumstances of the case, and in accordance with the law, the learned AO erred in not granting sufficient opportunity to the appellant to comply with the notices issued citing that the application was getting time barred. Such action of the learned AO is against the principles of natural justice.
GROUND NO. 2: UNJUSTIFIED DENIAL OF REGISTRATION U/S 12A Based on the facts and circumstances of the case, and in accordance with the law, the learned AO denied the permanent registration u/s 12A to the appellant, which is unjustified, as the appellant trust is an educational institution which imparts education undisputedly.
GROUND NO. 3: NON-CONSIDERATION OF DOCUMENTS SUBMITTED Based on the facts and circumstances of the case, and in accordance with the law, the learned AO erred in rejecting the 12A registration despite the appellant having submitted the trust deed and BPT Certificate along with the application, which prove the educational activities being undertaken by the appellant trust.
RELIEF PRAYED 1. The matter be restored back to the CIT (Exemptions), Mumbai. 2. To stay the order of the CIT (Exemptions), Mumbai, till a new order is passed.
Mata Chameladevi Educational and Charitable Trust 4. The assessee has moved an application for condonation of delay i.e. 437 days in filing the appeal against the rejection order dated 05.12.2023. In this regard, the assessee has filed an affidavit for seeking condonation of delay and the contentions of the assessee are extracted below:-
that the appellant applied for registration u/s 12A by filing Form No. 10AB on 17/06/2023.
2. that the CIT (Exemptions), Mumbai rejected this application on 05/12/2023 ("First Rejection Order").
3. that after the First Rejection Order, CBDT issued Circular No. 7/2024 dt. 25/04/2024, providing certain extensions for filing 12A registration applications.
4. that under a bona fide belief that the CBDT Circular's extension applied to the appellant trust, the trust filed a fresh application on 13/06/2024 instead of appealing the First Rejection Order.
5. that the CIT (Exemptions), Mumbai rejected the second application on 23/12/2024 ("Second Rejection Order"), declaring it "non-maintainable" as the trust did not meet the conditions in the CBDT Circular.
6. that the appellant filed an appeal against the Second Rejection Order on 19/02/2025, and only after filing the said appeal the trust realised that it should have filed appeal against the First Rejection Order.
7. that the delay resulted solely from the appellant's genuine misunderstanding regarding the CBDT Circular's applicability, not from negligence.
Mata Chameladevi Educational and Charitable Trust 8. that there is a sufficient cause, and it deserves liberal construction to advance substantial justice when no negligence or lack of bona fides exists.
9. that the delay in filing the appeal against the First Rejection Order be condoned and the appeal be allowed to be filed.
Ld. DR has opposed the contentions of assessee and stating that the explanation given by the assessee is not sufficient, therefore requested for dismissal of the appeal.
No contrary material has been brought on record by the revenue to contradict the contents of the affidavit of the assessee and we have no reason to disbelieve the affidavit filed by the assessee.
We have considered the grounds of condonation of delay in filing the appeal and found that there was unintentional mistake due to which the delay has occurred and assessee has explained the reasons for delay which is genuine, real and sufficient cause for condoning the delay in the interest of natural justice. Accordingly, we condone the delay and admit the appeal for adjudication on merit.
We have heard Ld. AR and Ld. DR and examined the record. At the outset, it is pointed out by Ld. AR that the Ld. CIT(A) has passed the impugned order without giving sufficient opportunity to the assessee as Mata Chameladevi Educational and Charitable Trust the assessee does not have any full time accountant to look after the accounts and taxation of the trust and Ld. CIT(E) has rejected the application on 05.12.2023 without giving sufficient opportunity of being heard, therefore the impugned order passed by the Ld. CIT(E) is not legally sustainable in the eyes of law. Ld. AR requested that the impugned order be set aside and matter be restored to the file to Ld. CIT(E) for giving proper opportunity of hearing to the assessee for furnishing the required documents, if any, in respect of regularisation of the provisional approval u/s 12AB r.w.s. 12(1)(ac)(iv) of the Act.
On the other hand, Ld. DR supported the impugned order of Ld. CIT(E) stating that the appeal is liable to be dismissed.
We have considered the rival submissions of both the parties and examined the record. On perusal of the impugned order of Ld. CIT(A), it is noticed that the applications was decided in a hurry as limitation period was expired for deciding the application on 31.12.2023 which is evident in para 3 & 4 as extracted below:-
On verification of the application in Form 10AB filed by the assessee, it was found that the application was not complete, and all the documents required to be accompanying the application were not furnished. Hence, a notice was Mata Chameladevi Educational and Charitable Trust issued to the applicant vide DIN & Notice No. ITBA/EXM/F/EXM43/2023- 24/1057052748(1) dated13.10.2023 requesting the assessee to furnish the complete set of documents mentioned in the notice. The assessee sought adjournment and the hearing was adjourned to 01.12.2023.
The Applicant has made no compliance to the terms of the above notices. 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 of achieving its objects. In the absence of necessary compliance by the Applicant, I am unable to arrive at a satisfaction on these parameters. As such, in view of the statutory limitation to decide on the application on or before 31.12.2023, I am left with no other option but to reject the application seeking registration under section 12AB of the Act.
It is a settled law that the quasi judicial authorities which include the revenue authorities are bound to abide the principal of natural justice and it is mandatory to give sufficient opportunity to the assessee of being heard before deciding the matter. It is evident from the above facts and circumstances that Ld. CIT(A) has passed the impugned order without giving sufficient opportunity to the assessee as the assessee does not have any full time accountant to look after the accounts and taxation of the trust and Ld. CIT(E) has rejected the application on 05.12.2023 despite the request to give more time to the assessee. Moreover the period for filing the Form 10AB was extended by the CBDT Circular No. Page | 7 Mata Chameladevi Educational and Charitable Trust 7/2024 dated 25th April 2024 wherein the period for submitting Form 10AB was extended till 30.06.2024. This fact shows that the assessee has not been given sufficient opportunity of hearing which has resulted into miscarriage of justice, therefore impugned order passed by the Ld. CIT(E) is not legally sustainable in the eyes of law.
For these reasons, we set aside the impugned order passed by Ld. CIT(E) and restore the matter to the file of Ld. CIT(E) for fresh adjudication of the case of assessee for grant of approval u/s 12AB of the Act after giving proper opportunity of effective hearing to the assessee. The appellant/assessee shall present its case before the Ld. CIT(E) within 90 days of this order. The impugned order is accordingly set aside and appeal filed by the assessee is allowed in above terms.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 06.06.2025