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Facts
The assessee trust applied for registration under section 12AB of the Income-tax Act, 1961, but the CIT(E) rejected it for non-compliance. The assessee claimed the trustee managing activities had a health issue, preventing timely submission of proof of activity. Similarly, the 80G approval was rejected due to the 12AB rejection.
Held
The Tribunal found merit in the assessee's explanation regarding the trustee's health issue as a cause for non-compliance. It held that restoring the matter for fresh adjudication would serve the interest of substantial justice.
Key Issues
Whether the CIT(E) was justified in rejecting the application for registration under section 12AB and consequential 80G approval without considering the explanation of the trustee's health issue?
Sections Cited
12AB, 11, 80G, 80G(5)(i), 10
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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
This appeal by the assessee is directed against order dated 29.12.2024 passed by the Ld. Commissioner of Income-tax (Exemptions), Mumbai [in short ‘the Ld. CIT(E)’] in respect of registration u/s 12AB of the Income-tax Act, 1961 (in short ‘the
Om Chaitanya Shree Bhanudasaya Street Heet 2 Vardhini Trust & 1336/MUM/2025 Act’). The relevant grounds raised by the assessee are reproduced as under:
On the facts and in the circumstances the case, CIT(Exemption)has eared in Law and on facts, in rejecting the application in form 10AB U/S 12AB of the Income-tax Act, 1961,without considering tangible material submitted during proceeding under section 12AB &available as appellant had filed audited account and income Tax Return for last three years and in the past also appellant was claiming exemption under section 11 and also granted 80G Certificate. Therefore based on principal of natural justice the matter be restore to the file CIT Exemption) for fresh adjudication.
On the facts and in the circumstances of the case and also in law, that the appellant could not file proof of activity of trust due to circumstances beyond control as the trustee who manage the trust activity was having health issue and therefore, she could not take step to coordinate with school of rural area for submitting proof of activity Due to aforesaid reasons beyond the control, the appellant fail to provide proof of activity and there is gross violation of principal of natural justice and opportunity should be given to represent fact before the CIT(A) . 2. The assessee trust had applied for regular registration u/s 12AB of the Act. Consequently, the Ld. CIT(E) issued notice to the assessee for filing proof of the activity of the trust. The assessee requested for further time in filing the said information which was granted till 12.12.2024 and thereafter, the Ld. CIT(E) passed the order observing as under:
“4. The applicant has made no compliance to the terms of the above show cause notice. 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. In the absence of necessary compliance by the Applicant, the undersigned is unable to arrive at a satisfactory conclusion on these parameters. As such, in Om Chaitanya Shree Bhanudasaya Street Heet 3 Vardhini Trust & 1336/MUM/2025 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.
5. In conclusion, this application for grant of registration stands rejected”
Before us, the Ld. counsel for the assessee submitted that the activity of the trust were being managed by Ms. Shradha Parab who were having health issue from 01.12.2024 till January 02, 2025. Since all the activity were being carried out Ms. Shradha Parab in remote rural area and therefore due to her health, she could not manage to obtain proof of said activity on time and therefore, assessee trust failed to submit proof of activity on time during the course of proceedings u/s 12AB of the Act. It is submitted that now the assessee trust is having details of expenses incurred alongwith proof of activity undertaken. A copy of such evidence was filed before us also.
We have heard rival submissions of the parties and perused the relevant materials on record. In view of sufficient cause for non- compliance of the notice issued by the Ld. CIT(E) and in the interest of substantial justice, we feel it appropriate to restore the matter back to the file of the Ld. CIT(E) with the direction to assessee to file all the necessary documentary evidence in support of charitable activity of the trust. The Ld. CIT(E) accordingly shall decide the issue in accordance with law. The grounds of appeal of the assessee are accordingly allowed for statistical purposes.
Om Chaitanya Shree Bhanudasaya Street Heet 4 Vardhini Trust & 1336/MUM/2025 the Ld. CIT(A) has rejected the approval u/s 80G mainly for the reason that application for registration u/s 12AB of the Act was rejected by him. The relevant paragraph of the impugned order is reproduced as under:
3. The provision of section 80G(5)(i) of the Act stipulates the condition that the provision of this section is only available for institution or fund for which section 11,12 or clause 23AA or clause 23C of section 10 of the Act applies. The applicant fails to fulfil any of the above criteria in view of the rejection of its application for registration u/s 12AB of the Act. Thus, its application for approval u/s 80G of the act becomes untenable.
We have heard rival submissions of the parties and perused the relevant materials on record. In the case of assessee, registration u/s 80G of the Act has been cancelled consequent to the cancellation of registration u/s 12AB of the Act. Since the appeal of the assessee against cancellation of registration u/s 12AB of the Act has been restored back to the file of the Ld. CIT(E), the impugned order of the Ld. CIT(E) in this appeal is also set aside and matter is restored back to him for deciding afresh along with application for registration of u/s 12AB of the Act. The grounds of appeal of the assessee are accordingly allowed for statistical purposes.
5. In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 16/04/2025.
Om Chaitanya Shree Bhanudasaya Street Heet 5 Vardhini Trust & 1336/MUM/2025