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Facts
The assessee trust, which was granted provisional registration, applied for final registration. The application was rejected by the Ld. CIT(E) for failure to furnish required documents and respond to notices. The assessee claimed non-receipt of notices and stated they only became aware of the pending request when checking the tax portal.
Held
The Tribunal noted that the assessee failed to represent its case before the lower authorities and the Tribunal. However, a written submission indicated the assessee did not receive notices and only filed a reply after checking the portal. The CIT(E) order did not consider this reply.
Key Issues
Whether the registration under Section 12AB can be cancelled solely on the grounds of non-submission of documents without providing a reasonable opportunity, especially when the assessee claims non-receipt of notices?
Sections Cited
12AB, 12AA
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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
ORDER
PER KESHAV DUBEY, JUDICIAL MEMBER
This appeal at the instance of the assessee is directed against the order of Ld.CIT(E),Bangalore dated 15/11/2024 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-25/1070392172(1) cancelling the registration u/s. 12AB of the Income Tax Act (in short “the Act”).
Page 2 of 7 ITA No. 2373/Bang/2024
The assessee has raised the following grounds of appeal:
1. The Order of the learned assessing officer passed under section 12AB(1)(b)(ii) of the Income Tax Act, 1961 in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.
2. The Appellant denies the registration cancellation based on the facts and the circumstances of the case.
3. It has mentioned in the impugned order that the letters sent through post returned by the postal authorities without any remarks. It is the fault of the Postal Authorities and Income Tax officers for not ensuring the delivery of the post to the Appellant.
4. Whereas, the Appellant has received the order of rejection via registered post for the same address mentioned in registration form. Hence it is proved that, IT Authorities has failed to send the above mentioned letters to trust's address but has successfully sent the rejection order.
5. The learned AO erred in law and facts in cancelling the registration of the Appellant just on the basis of non- submission of documents. The rejection should have been based on substantial issues related to trust's activates or objectives, rather than merely technically of missing documents.
6. The reason for non-submission of documents as stated above in the facts was non-receipt of notice. The failure to receive the notice was due to an error or fault on the part of Income Tax Authorities.
7. IT Authorities was responsible for failure to send or deliver the notice properly, which in turn lead to non- submission of the documents.
8. Thus, the fault of IT authorities should not penalise the appellant. It is unreasonable to reject the registration for the failure that was attributable to the authority's error, particularly when the appellant did not receive the required notice due to no fault on their own error.
9. This implies that it is unfair to hold the appellant accountable for something outside their control,
Page 3 of 7 particularly when the responsibility lies with the Income Tax Department.
Appellant also wishes to mention that, here with this appeal they are attaching all the documents called upon in the above mentioned letters for your reference and marked as Annexure-3.
Further in addition to the above, we are herewith producing the case laws supporting our submissions: a. CIT vs. Shree Gajanan Maharaj Sansthan (2021) 431 ITR 495 (Bombay High Court): In this case, the Bombay High Court ruled that mere non-submission of certain documents should not automatically result in the rejection of the application for registration under Section 12AA. The court emphasized that the assessing authority should allow the applicant reasonable time to submit documents and rectify any deficiencies before rejecting the application. The court also stated that the refusal to grant registration should be based on substantial grounds related to the genuineness of the trust or its activities, not merely procedural lapses. b. Pune Municipal Corporation vs. CIT (2016) 383 ITR 452 (Bombay High Court):- The Bombay High Court observed that a procedural lapse, such as non-submission of documents or minor delays, should not automatically result in the rejection of the registration of a trust. The court emphasized that the authorities should give the applicant a chance to explain and submit the required documents. The judgment reaffirmed that registration should only be denied if there are valid grounds regarding the genuineness of the trust's activities or compliance with the relevant provisions. c. Pr. CIT vs. Shri R.V. Doshi Charitable Trust (2019) 103 taxmann.com 433 (Gujarat High Court):- The Gujarat High Court ruled that non-submission of documents should not lead to a blanket rejection of registration under Section 12AA of the Income Tax Act. The Court highlighted the principle of natural justice, stating that the trust or institution should be given an opportunity to cure deficiencies in its application before a final decision is made regarding registration. The case emphasized that procedural issues, like missing documents, should not override the substance of the application.
Page 4 of 7 d. Rural Development Charitable Trust vs. CIT (2022) 437 ITR 67 (Madras High Court):- The Madras High Court in this case reiterated that a trust or institution seeking registration under Section 12AA/ 12AB must be given an opportunity to submit the necessary documents before a rejection can be made. The Court ruled that merely missing documents or failure to submit them on time should not automatically result in the rejection of the application. Instead, the concerned authorities should issue a notice for the rectification of the deficiency and allow the applicant to comply. e. CIT vs. Rajasthan State Cricket Association (2014) 368 ITR 305 (Raj):-The Rajasthan High Court held that the mere fact of non-submission of certain documents should not be a sufficient ground for rejecting the trust's application for registration under Section 12AA. The Court stressed that the authorities should assess the substance of the application and the genuineness of the activities of the trust, rather than focusing solely on procedural lapses. Based on the above cited case laws, it was clear that non- submission of documents was a procedural lapse and it should not be a reason or ground for rejecting the registration application.
The Appellant wishes to submit that, mere non- submission of documents should not result in automatic rejection. The authorities should provide a reasonable opportunity for the trust to rectify the deficiencies, and the denial should be based on substantial grounds, such as non-genuineness of activities or failure to meet the requirements of the law.
The Appellant craves leave to add, alter, amend, substitute or delete any or all of the grounds of appeal
urged above.
14. The Appellant wishes to be heard in person before passing any order in this regard.
15. For the above and other grounds to be urged during the course of the hearing of the appeal the appellant prays that the appeal be allowed in the interest of equity and justice.”
Page 5 of 7 ITA No. 2373/Bang/2024
The brief facts of the case are that the assessee trust is created by way of trust deed dated 17/06/2022 with the object of establishing and running a play home, nursery, LKG, UKG, Primary & High Schools, PUC, Graduation and Post Graduation colleges, Technical Institutions, Adult Education, Commerce Education, Computer Education Institutions and Job Oriented Course Institutions and to establish libraries, hostels, boarding houses free or otherwise to facilitate the promotion of the student community. The assessee trust has been granted provisional registration by the Ld. PCIT/CIT on 08/04/2024. Thereafter the assessee trust immediately applied for the final registration on 25/05/2024 in form no. 10AB. On receipt of the application for registration u/s. 12AB of the Act, the Ld.CIT(E) assigned the case to jurisdictional assessing officer (JAO) for verification. However, the assessee had not responded to any of the letter/Notices/reminder letter issued to the assessee and failed to furnish the required details and accordingly, the ld. CIT(E) observed that the assessee is required to submit necessary documents to prove the genuineness of the activity of the trust and also the compliance of such requirement of any other law as or material for the purpose of achieving its object. In the present case, as assessee has not responded to any of the notices issued and failed to appear before the Ld.CIT(E) and submit all the necessary documents / details as required for registration u/s. 12AB of the Act and accordingly, the application in form no. 10AB dated 25/05/2024 was rejected and registration was cancelled.
Aggrieved by the order of the Ld.CIT(E), the assessee has filed the present appeal before this Tribunal.
Even, before us, none appeared on behalf of the assessee.
The Ld. DR on the other hand supported the order of the Ld.CIT (E) and submitted that the assessee is very callous in its approach in pursuing
Page 6 of 7 its case and further requested to dismiss the case of the assessee for non prosecution.
We have heard the rival submissions and perused the materials available on record. It is undisputed fact that assessee could neither represent its case before the jurisdictional assessing officer nor before the Ld.CIT(E). Even, before us, none appeared on behalf of the assessee. However, the assessee by way of written submission filed before us, stated that the assessee trust did not receive any of the letters/notices dated 25/09/2024 and 07/10/2024 either by registered email address or its registered office address through post. Further, it is submitted that when the assessee logged into their I. Tax Portal to check the status of registration application, they noticed that the letter was already issued calling for the documents. Thereafter the assessee trust immediately filed reply on 12/11/2024 along with the copies of various documents before the office of the Ld.CIT(E). The acknowledgment copy of which is placed at pages 24-28 of the appeal set. We also take a note of the fact that the Ld.CIT(E) while passing order on 15/11/2024 has not taken into consideration the detailed reply submitted by the assessee trust on 12/11/2024. This being so, in the interest of justice and fair play, we remit the entire issue in dispute to the file of the Ld.CIT(E) to decide the issue afresh in accordance with law.
7.2 Needless to say reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce/submit all the necessary details/documents/records/ financials/reports etc in support of its claim or as may be required by the ld. CIT (Exemptions) for granting registration u/s 12AB of the Act. We make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly
Page 7 of 7 ITA No. 2373/Bang/2024
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 30th June, 2025.