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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI VIKRAM SINGH YADAV & SHRI RAJ KUMAR CHAUHAN
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. Both the appeals are filed by the appellant/assessee against the separate orders dated 15.01.2025 of Learned Commissioner of Income Tax & 1746/Mum/2025 Tarapur Education Society (Exemption), Pune [hereinafter referred to as the “CIT(E)”], wherein the Ld. CIT(E) has rejected the appellant application for grant of registration u/s 12A(1)(ac)(iii) of the Income Tax Act and approval under clause (iii) of section 80G of the Act.
Since the facts of both the appeals filed by the assessee are exactly same and parties are same, hence both the appeals are taken up together in order to avoid the multiplicity of the decision.
3. Assessee has raised the following grounds of appeal in ITA No. 1745/Mum/2025:-
Ground No 01: Lack of adequate notice and opportunity to respond: i. The Assessee is governed by senior individuals experienced in their respective fields but not in technological matters. As a result, the Assessee was unaware of the specific documents and details required for submission during the proceedings under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961 ('the Act'). The rejection of application for regular registration was based on the assumption that no response was received, without considering that the Assessee might not have been properly informed of the notices due to technological limitations. ii. Additionally, the Assessee did not receive any physical copies of the notices from the department. As a result, the Assessee was not made aware of the communications issued by the department, which establishes the fact that the Income Tax Department erred to exercise due diligence to ensure & 1746/Mum/2025 Tarapur Education Society that the notices were communicated to the Assessee properly. The absence of proper notice delivery, particularly in physical form, deprived the Assessee of a clear understanding of the requirements, thus impacting their ability to respond appropriately within the prescribed timelines. iii. Furthermore, it is essential to highlight that the Assessee was not afforded a reasonable opportunity to submit the required details and documents. The conclusion reached by the Commissioner regarding the assessment was made prematurely and without providing adequate time for the Assessee to comply with the documentation requirements. iv. The Assessee has diligently compiled and possesses all the relevant details and documents required to be furnished under Section 12A(1)(ac) (iii) of Act. It is pertinent to emphasize that the activities undertaken by the Assessee are both genuine and bona fide, aligning fully with the prescribed objectives for charitable entities under the Act. v. We humbly request your goodself to reconsider the application for registration in light of the documentation available, which substantiates the Assessee's eligibility for such registration.
Ground No 02: Issues while filing updated returns: i. Following the rejection of its regular registration application by the Hon'ble CIT (E) - Pune, the Assessee opted to file updated returns for AY 2022-23, AY 2023-24, and AY 2024-25. As an educational institution substantially financed by the government, the Assessee is eligible for exemption under Section 10(23C)(iiiab) of the Income Tax Act. Consequently, the Assessee decided to claim this exemption instead of those under Sections 11 and 12. The total income and tax liabilities were recomputed, confirming that no tax was payable and no refunds were due for the three assessment years.
& 1746/Mum/2025 Tarapur Education Society ii. However, while filing the updated returns, the Assessee encountered issues as the income tax portal does not accept returns with zero tax liability. Given these challenges, the Assessee respectfully requests the acceptance of the updated ITR 7 for AY 2022-23 to AY 2024-25. Since the Assessee has recomputed its income without claiming exemptions under Sections 11 and 12, an opportunity to file the updated retums is requested.
The Assessee craves, to consider each of the above grounds without prejudice to each other and craves, leave to add, alter, delete or modify all or any of the above grounds..
4. Assessee has raised the following grounds of appeal in ITA No. 1746/Mum/2025:-
Ground No 01: Lack of adequate notice and opportunity to respond:
The Assessee is governed by senior individuals experienced in their respective fields but not in technological matters. As a result, the Assessee was unaware of the specific documents and details required for submission during the proceedings under Section 80G(5) (iii) of the Income Tax Act, 1961 ('the Act'). The rejection of application for regular registration was based on the assumption that no response was received, without considering that the Assessee might not have been properly informed of the notices due to technological limitations. ii. Additionally, the Assessee did not receive any physical copies of the notices from the department. As a result, the Assessee was not made aware of the communications issued by the department, which establishes the fact that the Income Tax Department erred exercise due diligence to ensure that the notices were communicated to the Assessee properly. The absence of proper notice delivery, particularly in physical form, deprived the Assessee & 1746/Mum/2025 Tarapur Education Society of a clear understanding of the requirements, thus impacting their ability to respond appropriately within the prescribed timelines. iii. Furthermore, it is essential to highlight that the Assessee was not afforded a reasonable opportunity to submit the required details and documents. The conclusion reached by the Commissioner regarding the assessment was made prematurely and without providing adequate time for the Assessee to comply with the documentation requirements. iv. The Assessee has diligently compiled and possesses all the relevant details and documents required to be furnished under Section 80G(5)(iii) of Act. It is pertinent to emphasize that the activities undertaken by the Assessee are both genuine and bona fide, aligning fully with the prescribed objectives for charitable entities under the Act.
V. We humbly request your goodself to reconsider the application for registration in light of the documentation available, which substantiates the Assessee's eligibility for such registration.
Ground No 02: Issues while filing updated returns: i. Following the rejection of its regular registration application by the Hon'ble CIT (E)-Pune, the Assessee opted to file updated returns for AY 2022-23, AY 2023-24, and AY 2024-25. As an educational institution substantially financed by the government, the Assessee is eligible for exemption under Section 10(23C)(iiiab) of the Income Tax Act. Consequently, the Assessee decided to claim this exemption instead of those under Sections 11 and 12. The total income and tax liabilities were recomputed, confirming that no tax was payable and no refunds were due for the three assessment years. ii. However, while filing the updated returns, the Assessee encountered issues as the income tax portal does not accept returns with zero tax Page | 5 & 1746/Mum/2025 Tarapur Education Society liability. Given these challenges, the Assessee respectfully requests the acceptance of the updated ITR 7 for AY 2022-23 to AY 2024-25. Since the Assessee has recomputed its income without claiming exemptions under Sections 11 and 12, an opportunity to file the updated returns is requested. iii. In light of the above, the Assessee respectfully requests that the updated ITR 7 for AY 2022-23 to AY 2024-25 be accepted, since the Assessee has recomputed the total income without claiming any exemption benefits under section 11 and 12 of the Act. We request your goodself to grant us the opportunity to file the updated returns for the AY 2022-23 to AY 2024-25.
The Assessee craves, to consider each of the above grounds without prejudice to each other and craves, leave to add, alter, delete or modify all or any of the above grounds. .
We have heard Ld. AR and Ld. DR and examined the record. At the outset, Ld. AR argued that the impugned orders passed by Ld. CIT(E) are ex-parte orders and assessee has not been given any opportunity to substantiate his case for which order is not sustainable in the eyes of law, therefore the impugned order be set aside and the matter be restored to the file of Ld. CIT(E) for fresh adjudication.
6. On the other hand, Ld. DR relied on the orders passed by Ld. CIT(E) and submitted that the appeal filed by the assessee is liable to be dismissed.
We have considered the rival submissions and perused the material placed on record. We notice that Ld. CIT(E) has passed an ex-parte Page | 6 & 1746/Mum/2025 Tarapur Education Society orders without giving an effective opportunity of hearing to assessee to substantiate his case and rejected the application for grant of registration u/s 12A(1)(ac)(iii) of the Act. The operative portion of the impugned order dated 15.01.2025 (ITA No.1745/Mum/2025) is extracted below:-
4. The assessee was requested to submit compliance by 21/11/2024.
The notice was duly served on the assessee through e-portal and email. Since the assessee did not furnish compliance to the said notice, another opportunity was given to the assessee vide notice dated 19/12/2024 requesting it to show cause as to why the application should not be rejected and why the registration granted under section 12AB of the Income Tax Act, 1961 should not be cancelled. The assessee was specifically informed that in the event of failure to comply to the said notice, its application shall be liable to be rejected and the registration /approval shall also be liable to be cancelled. The assessee was also given opportunity of being heard vide the said notice. However, the assessee neither submitted the above mentioned compliance nor availed the opportunity of being heard. The assessee was requested to submit compliance by 30/12/2024. The assessee was also given opportunity of being heard vide the said notice. The notice was duly served on the assessee through e-portal and email. However, the assessee neither furnished its compliance to the show cause notice nor availed the opportunity of being heard.
5. The information / details were called for under the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961. These are the basic details required to ascertain the overall nature of the activities of the assessee and & 1746/Mum/2025 Tarapur Education Society are directly relevant to the present proceedings. However, the assessee has failed to comply despite giving sufficient opportunities as discussed above including an opportunity of being heard.
6. Thus, the assessee has failed to furnish the details called for under the provisions of section 12AB (1)(b)(i) of the Income Tax Act, 1961 to verify the genuineness of activities of the trust / institution and to verify the compliance to requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects.
7. In absence of the compliance to the above requirement, it is not possible to arrive at any conclusion about the genuineness of activities of the assessee and the compliance to the requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects.
8. It is clear from the above that the assessee was given sufficient opportunity to comply, but it has not complied to the same. It seems that the assessee is not having any supporting documents / evidence to submit. The assessee has failed to comply with the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961. Hence, the undersigned is unable to draw any satisfactory conclusion about genuineness of activities of the assessee and the compliance to the requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects. Therefore, the undersigned has left no alternative but to reject the application.
9. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 09/01/2024 under Item (A) of sub-clause (vi) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961 is hereby cancelled.
& 1746/Mum/2025 Tarapur Education Society 8. Further, Ld. CIT(E) in another order dated 15.01.2025 (ITA No. 1746/Mum/2025) has rejected the application of assessee for approval under clause (iii) of section 80G of the Act on the ground that assessee has failed to furnish the details as called for. The operative portion of the impugned order is extracted below:-
The information / details were called for under the provisions of sub- clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961. These are the basic details required to ascertain the overall nature of the activities of the assessee and are directly relevant to the present proceedings.
The assessee was requested to submit compliance by 21/11/2024. The notice was duly served on the assessee through e-portal and email. Since the assessee did not furnish compliance to the said notice, another opportunity was given to the assessee vide notice dated 19/12/2024 requesting it to show cause as to why the application should not be rejected and why the approval granted under section 80G(5) of the Income Tax Act, 1961 should not be cancelled. The assessee was requested to submit compliance by 30/12/2024. The assessee was also given opportunity of being heard vide the said notice. The notice was duly served on the assessee through e-portal and email. However, the assessee neither furnished compliance to the show cause notice nor availed the opportunity of being heard.
5. The information / details were called for under the provisions of sub- clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961. These are the basic details required to ascertain the overall nature of the activities of the assessee and are directly relevant to the & 1746/Mum/2025 Tarapur Education Society present proceedings. However, the assessee has failed to comply despite giving sufficient opportunities as discussed above, including an opportunity of being heard.
Thus, the assessee has failed to furnish the details called for under the provisions of sub-clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 to verify the genuineness of activities of the trust or institution and fulfilment of conditions laid down in clauses (i) to (v) of Section 80G(5) of the Act.
7. In absence of the compliance to the above requirement, it is not possible to arrive at any conclusion about the genuineness of activities of the assessee and fulfilment of conditions laid down in clauses (i) to (v) of Section 80G(5) of the Act.
It is clear from the above that the assessee was given sufficient opportunity to comply, but it has not complied to the same. It seems that the assessee is not having any supporting documents / evidence to submit. The assessee has failed to comply with the provisions of sub-clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 and hence, the undersigned is unable to draw any satisfactory conclusion about genuineness of activities of the assessee and fulfilment of conditions laid down in clauses (i) to (v) of Section 80G(5) of the Act and has left no alternative but to reject the application.
On perusal of the impugned orders, it is evident that assessee has not been given proper and effective opportunity of hearing to substantiate his case and Ld. CIT(E) has rejected the application by passing an ex- parte order. Therefore, we are of the considered view that the ends of & 1746/Mum/2025 Tarapur Education Society justice would met if one more opportunity is given to the assessee to represent its case before Ld. CIT(E).
For the above reasons, the impugned orders of the Ld. CIT(E) are not legally sustainable in the eyes of law and accordingly, we set aside the impugned orders 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 registration u/s 12A(1)(ac)(iii) of the Act and approval u/s 80G(5)(iii) of the Act after being satisfied by the documents brought on record by the assessee and decide the matter afresh as per law. The appellant/assessee shall present its case before the Ld. CIT(E) within 90 days of this order.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 15.05.2024