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Facts
The assessee, a Section 8 company engaged in charitable activities, applied for registration under Section 12AB and Section 80G of the Income Tax Act, 1961, subsequent to provisional registration under Section 12A. The ld. CIT(E) rejected both applications, citing the assessee's non-compliance with a show cause notice requesting details on foreign expenditure, activities, and expenses, despite the assessee claiming to have submitted the required information via email.
Held
The Tribunal found that the ld. CIT(E) had rejected the applications solely on grounds of alleged non-compliance without addressing the merits. It was noted that the assessee had indeed complied with the show cause notice. Therefore, the Tribunal remitted the matter back to the ld. CIT(E), directing them to grant the assessee a fresh opportunity to submit all supporting documents and to decide the applications for Section 12AB registration and Section 80G approval on merits.
Key Issues
Whether the ld. CIT(E) was justified in rejecting the applications for Section 12AB registration and Section 80G approval solely on grounds of alleged non-compliance, without considering the applications on their merits.
Sections Cited
12AB, 80G, 12A
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: AND SHRI. GIRISH AGARWAL, AM
O R D E R Per Kavitha Rajagopal, J M: These captioned appeals have been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Exemption), Mumbai (‘ld. CIT(A)’ for short), order dated 25.10.2024, for rejecting the application filed by the assessee u/s. 12AB of the Income Tax Act, 1961 (‘the Act') and Section 80G registration for A.Y. 2023-24. 2. As the facts are identical, we hereby pass a consolidated order by taking as a lead case. (A.Y.: 2023-24) 3. The assessee has raised the following grounds of appeal:
1. & 6036 (A.Y. 2023-24) Saraswatividya Gurukulam Foundation “Ld. CIT(Exemptions) erred in law and facts while rejecting appellant's application under section 80G of the Act without considering that the activities of the appellant are purely for educational and charitable purposes and eligible for receiving registration under section 80G of the Income-tax Act, 1961. Ld. CIT(Exemptions) erred in law and facts while rejecting appellant's application under section 80G of the Act without considering that the application und section 12AB of the Income-tax Act, 1961 was wrongly rejected and has been appealed against.”
Brief facts of the case are that the assessee foundation is registered u/s. 8 of the Companies Act, 2013 and is engaged in charitable activities with the aim to provide educational aid for students at pre-primary, primary and secondary levels along with working for animal welfare, since 2023. The assessee applied for registration u/s. 12AB of the Act in form 10AB, dated 23.03.2024, subsequent to the provisional registration u/s. 12A, dated 16.03.2024 in form 10AC before the ld. CIT(E) who then called for various details from the assessee. The ld. CIT(E) then vide order dated 25.09.2024 rejected the application seeking registration u/s. 12AB of the Act, for the reason that the assessee has not made compliance to the show cause notice dated 13.09.2024. The ld. CIT(E) also rejected the application requesting the approval u/s. 80G of the Act, for the reason that Section 12AB application was rejected.
Aggrieved the assessee is in appeal before us, challenging the order of the ld. CIT(E).
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the reasons stated by the ld. CIT(E) in the impugned order is not justifiable for the reason that the assessee has very much complied with all the statutory notice issued by the ld. CIT(E) including the show cause notice dated 13.09.2024. The ld. AR further stated that the assessee had submitted the relevant details vide a mail communication & 6036 (A.Y. 2023-24) Saraswatividya Gurukulam Foundation along with the details sought for by the ld. CIT(E) and brought our attention to the copy of the mail sent to the ld. CIT(E) dated 19.09.2024, enclosed at page no. 13 and 14 of the paperbook filed by the assessee. The ld. AR vehemently argued that the assessee is genuinely into the activity of charitable purpose in the field of education and prayed that the assessee’s registration u/s. 12AB and 80G be granted.
The learned Departmental Representative (‘ld. DR’ for short) on the other hand controverted the said fact and stated that the assessee has not complied with the show cause notice dated 13.09.2024 and even otherwise, assuming that it has been complied with, the assessee has only furnished the provisional financials which cannot be placed reliance for granting registration u/s. 12AB of the Act. The ld. DR reiterated that the ld. CIT(E) has rightly rejected the assessee’s application and prayed that the order of ld. CIT(E) be upheld.
We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has obtained a provisional registration u/s. 12A dated 16.03.2024 and had applied for registration u/s. 12AB of the Act in form 10AB, dated 23.03.2024. The ld. CIT(E) found the same to be not complete with all required documents. Notices dated 05.07.2024, 29.08.2024 and 13.09.2024 were issued and served upon the assessee in which the ld. CIT(E) claims that the assessee has partly submitted details in response to notice dated 29.08.2024 on 09.09.2024. The ld. CIT(E) further stated that the assessee was given time till 19.09.2024, seeking details pertaining to foreign expenditure of the trust, proof of activities and expenses made towards the activities of the trust. In the absence of the said details, the ld. CIT(E) rejected the & 6036 (A.Y. 2023-24) Saraswatividya Gurukulam Foundation application for registration u/s. 12AB vide the impugned order. On perusal of the email communication dated 19.09.2024 along with the submission letter dated 19.09.2024, the provisional financials and the activity photo pdf enclosed along with the mail, we deem fit that the assessee has complied with the show cause notice dated 13.09.2024 and the same was not considered by the ld. CIT(E) who rejected the registration u/s. 12AB for noncompliance of the terms of the said show cause notice.
It is pertinent to point out that the ld. CIT(E) has not decided the merits of the application and has merely rejected the same on the ground of non-compliance.
On the above factual matrix of the case, we deem it fit to provide the assessee with one more opportunity to present its application for registration u/s. 12AB and Section 80G approval in the prescribed form along with all supporting documentary evidence before the ld. CIT(E) and the ld. CIT(E) is also directed to decide the application on the merits of the submission of the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purpose.