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Facts
The assessee trust, formed in 2017 with charitable objectives, applied for final registration under Section 12AB of the Income Tax Act. The CIT(Exemptions) rejected the application, observing that the trust's activities had not commenced and necessary documents were not submitted. The assessee appealed this rejection.
Held
The Tribunal found that the CIT(E) rejected the application without providing adequate opportunity of being heard and without seeking additional data or issuing a proper show cause notice. Therefore, the Tribunal remitted the issue back to the CIT(E) to decide afresh after giving the assessee an opportunity to be heard.
Key Issues
Whether the CIT(Exemptions) erred in rejecting the application for registration under Section 12AB and approval under Section 80G without providing adequate opportunity of being heard and proper reasons, violating principles of natural justice.
Sections Cited
12AB, 80G, 12A(1)(ac)(iii), 80G(5)
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Income Tax Appellate Tribunal, “A’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
These appeals at the instance of the assessee are directed against the orders of the ld. CIT(Exemption)Bangalore both dated 28.11.2024 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024- 25/1070732921(1) rejecting the registration u/s 12AB of the Income Tax Act, 1961 (in short “The Act) and vide DIN & Notice No. ITBA/EXM/F/F/EXM45/2024-25/1070733000(1) rejecting the approval u/s 80G of the Act.
First, we take up the for adjudication. In this appeal, the assessee has raised the following grounds of appeal:
Brief facts of the case are that the assessee trust is formed as a public charitable trust vide trust deed dated 06.01.2017 with the objective of establishing schools, colleges, eradicate hunger, poverty and malnutrition, provide aid to hospitals, nursing institutions etc. An addendum to the trust deed was made on 03.02.2024 with regards to the administration of new members to the trust. Further, the assessee trust had obtained the provisional registration u/s 12AB of the Act on 4.4.2022. The assessee trust applied for the final registration u/s 12AB of the Act on 8.5.2024 i.e. within 6 months from the commencement of the activity of the trust as per section 12A (1)(ac)(iii) of the Act. During the course of proceedings before the ld. CIT(E), the assessee had provided the details like bank statement, memorandum of understanding between the trust and the landlord for the construction of building, images of the place where the construction of the said building are being carried on. However, the ld. CIT(E) observed that the activity of the trust have not yet commenced and therefore, no financials have been prepared and submitted. Further, the ld. CIT(E) is of the opinion that the assessee is required to submit necessary documents to prove the genuineness of the activity of the trust or institution and also the compliance of such requirements of any other law as are material for the purpose of achieving its objects. Since in the present case, the assessee has not submitted all the necessary details as required for registration u/s 12AB of the Act and hence the ld. CIT(E) rejected the application filed in form 10AB and cancelled the registration.
Aggrieved by the order of ld. CIT(E), the assessee has filed the present appeal before this Tribunal.
Before us, ld. A.R. of the assessee vehemently submitted that the ld. CIT(E) erred in not providing the adequate opportunity of being heard which is a gross violation of principles of natural justice. Further, the ld. CIT(E) without seeking any additional data and without issuing show cause notice rejected the application for registration which is illegal and bad in law and accordingly prayed that one more opportunity may be granted before the ld. CIT(E) to represent its case.
Ld. D.R. on the other hand relied on the order of ld. CIT(E).
We have heard the rival submissions and perused the materials available on record. On going through the order of ld. CIT(E), we find that as the assessee had not submitted all the necessary details as required for registration u/s 12AB of the Act, and accordingly, the ld. CIT(E) rejected the application in form 10AB dated 8.5.2024 filed for registration u/s 12AB of the Act. On going through the extract of HDFC bank as well as the note on activities as reproduced by the ld. CIT(E) in her order , it cannot be said that activity of the trust have not commenced yet. Before us, ld. A.R. of the assessee vehemently submitted that the ld. CIT(E), without seeking any additional data, without issuing the final show cause notice proposing to reject the application and without granting adequate opportunity of being heard in violation of principles of natural justice rejected the application of the assessee and accordingly prayed that one more opportunity may be granted before the ld. CIT(E) to represent its case. This being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we deem it fit & proper to remit the entire issue in dispute to the file of ld. CIT(E) to decide afresh in accordance with law after giving opportunity of being heard to the assessee. The & 123/Bang/2025 ASG Trust, Bangalore Page 6 of 9 assessee is also directed to produce all the documents/records/information/financials/reports in support of its claim or as required by ld. CIT(E) for proper adjudication. It is ordered accordingly.
In the result, appeal filed by the assessee in is partly allowed for statistical purposes.
Since we have remitted the entire issue of registration u/s 12AB of the Act to the file of ld. CIT(E), we also deem it fit & proper to remit this issue of approval u/s 80G of the Act to the file of ld. CIT(E) to decide afresh in accordance with law as the assessee has also not submitted all the necessary documents to prove the genuineness of the activities of the trust and fulfillment of all the conditions laid down in clause (i) to (v) of Section 80G of the Act.