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Facts
The assessee, a company incorporated on 22/04/2024 with objects related to food awareness and innovation, filed applications for permanent registration under section 12AB and approval under section 80G(5). The Ld.CIT(E) rejected these applications, citing the foundation's lack of activity, absence of bank details, and unestablished genuineness of receipts.
Held
The Tribunal held that the assessee was not granted a reasonable opportunity of being heard, and the Ld.CIT(E) failed to independently decide the issue, instead relying on subordinate recommendations. The Ld.CIT(E) also failed to grant a personal hearing. Therefore, the orders were set aside and remitted for denovo consideration.
Key Issues
Whether the Ld.CIT(E) denied a reasonable opportunity of being heard to the assessee before rejecting the applications for registration and approval? Whether the Ld.CIT(E) acted in accordance with law by relying on subordinate recommendations without independent application of mind?
Sections Cited
12AB, 80G(5)
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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
These appeals are filed by the assessee challenging the rejection orders of the Ld.CIT(E) dated 18/03/2025 in which the assessee’s application for registration u/s. 12AB as well as the application for approval u/s. 80G(5) were denied and raised the following grounds:
& 1122/Bang/2025 & 1122/Bang/2025 2. The brief facts of the case are that the assessee is a company registered u/s. 8 of the Companies Act, 2013 and incorporated on 22/04/2024. The assessee is also registered with Darpan portal of Niti Ayog. The assessee in its memorandum of association is having the following main objects. “(a) “To build a food awareness organisation working to transform the Indian food system by replacing 50% of animal products with plant based and cultivated foods. To engage, with all relevant stakeholders to create a food system where everyone chooses delicious and healthy food that is good for all humans, animals and our planet.” (b)”To support and connect innovators, startups, companies, and investors globally in advancing plant- based and cultivated food innovation, to work with governmental agencies and non-profit organisations to create sustainable food policies and practices, and to create global synergies by empowering and supporting mission-aligned non-profit organisations and alliances.””
The assessee got provisional registration on 29/05/2024 and also provisional approval u/s. 80G(5) of the Act. The said registration and approval were for the A.Ys. 2025-26 to 2027-28.
The assessee to get the permanent registration and the approval, had filed an application in form 10AB on 23/09/2024. The Ld.CIT(E) sought for the report from both i.e. Range Head and Jurisdictional Assessing Officer and the authorities had communicated their report to the Ld.CIT(E) and in the said report they had not recommended for granting the registration as well as for the renewal of the 80G. The Ld.CIT(E) without furnishing the report of the authorities to the assessee had simply extracted the recommendation and held that the foundation has not started any activity till the date of its inception. Further, the Ld.CIT(E) had observed that no bank account details were furnished and the genuineness of the receipts are also not established and therefore the exact nature of activities would not be ascertained. The Ld.CIT(E) further observed that the application is premature at this stage and rejected for non-commencement of activities.
& 1122/Bang/2025 5. As against the said orders of the Ld.CIT(E), the assessee is in appeals before this Tribunal.
At the time of hearing, the Ld.AR submitted that the assessee is a section 8 company which means that the profits of the company could not be distributed by way of dividend to anyone and the said profits should be utilised only for the purpose of achieving the objects. The Ld.AR filed a paper book and also the written arguments in the said paper book. The Ld.AR also filed an application under Rule 29 of the Income Tax Appellate Tribunal Rules and sought for the leave of this Tribunal to accept the additional evidences. The Ld.AR also filed a compendium of case laws in support of his argument and submitted that the Ld.CIT(E) had not granted proper opportunity before passing the impugned order.
The Ld.DR relied on the order of the Ld.CIT(E).
We have heard the arguments of both sides and perused the materials available on record.
We have perused the application filed under Rule 29 of the ITAT Rules, 1963 in which the assessee sought for accepting the additional evidences i.e. form 10BE issued to Ahimsa Trust and one Mr. Nowshir Hoshang Mirza. The assessee also enclosed provisional unaudited financial statements for the period ending 31/03/2025 and the HDFC bank statement. The assessee submitted that the donor details were not sought for by the authorities even though form 10BE issued to the two donors were available with the assessee and therefore prayed that the documents may be admitted for due consideration. The assessee also furnished the bank statement to show that the expenses were incurred after the date of the cancellation of the registration and it could not be produced before the Ld.CIT(E) since the said documents are related to the periods subsequent to the proceeding made by the Ld.CIT(E).
& 1122/Bang/2025 10. We have considered the said application and the additional documents and we are of the view that the said documents are not new documents but only forms part of the documents maintained by the assessee and since the said documents were not called for by the authorities, the assessee had not submitted the same before them. To find out the real position, we deem it fit that the said documents are necessary and therefore we are admitting the said documents and proceeded to decide the appeal.
As seen from the impugned order, the Ld.CIT(E) had mainly relied on the recommendations given by his subordinates and based on the recommendations given by his subordinates, the Ld.CIT(E) had straightaway rejected the application for registration and for approval. The said report of the subordinates were also not furnished to the assessee before rejecting the said applications. From the records, we found that there are no opportunity granted to the assessee before passing the impugned orders. Further, the assessee was not asked to produce the documents such as the list of the donors and their financial statements to show that the assessee had incurred expenditure towards the object of the trust. Anyhow the said documents were now made available to us by the assessee but the said documents were not perused by the Ld.CIT(E).
Considering the totality of the circumstances, we are of the view that the assessee was not granted a reasonable opportunity of being heard and also the Ld.CIT(E) had not independently decided the issue rather than following the recommendations given by his subordinates which in our view is not correct. The Ld.CIT(E), being a quasi judicial authority ought to have independently considered the issue in detail rather than following the recommendations given by the subordinate officers. Further, it is mandatory on the part of the Ld.CIT(E) to grant personal hearing before passing the impugned order which the Ld.CIT(E) had failed to grant to the assessee. Therefore we are inclined to set aside the orders of the Ld.CIT(E) and remit this issue to the file of the Ld.CIT(E) for denovo consideration, & 1122/Bang/2025 after hearing the assessee in person. Needless to mention that the assessee is at liberty to prove their case before the Ld.CIT(E) by adducing sufficient details and documents before the Ld.CIT(E) at the time of hearing of the appeal.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 31st July, 2025.