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Facts
The assessee filed an application for registration under section 12A of the Income Tax Act, which was rejected by the CIT(E) due to non-compliance with notices and failure to provide necessary documents. The appeal was filed with a significant delay, which the assessee attributed to a family member's medical emergency.
Held
The Tribunal condoned the delay in filing the appeal after considering the explanation provided by the assessee. The Tribunal decided to restore the matter back to the CIT(E) to grant the assessee one more opportunity to present its case and substantiate its application with requisite documents.
Key Issues
Whether the assessee's application for registration should be rejected due to non-compliance with notices, and if the delay in filing the appeal was justifiable.
Sections Cited
12A, 12A(1)(ac), 12AB, 12AB(1)(b)(i)
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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 01.02.2024 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed before him on 11.09.2023 in Form No. 10AB under clause (iii) of section 12A(1)(ac) of the Income Tax Act, 1961 (the “Act”).
The appeal is filed with a delay of 382 days. The assessee has filed an affidavit along with application explaining the reasons for such delay which reads as under : “3. The appeal was due to filing on 01.04.2024, but family member of the main trustee, who looks after the administrative and compliance matters of the Trust, was suffering from severe medical issues during the relevant period. 4. Due to this unforeseen hardship, the trustee was unable to devote adequate attention to the compliance requirements, which has led to the delay.”
2.1 On perusal of the above and after hearing both the sides, we are satisfied that the delay in filing of appeal is not intentional or deliberate. There was a sufficient cause which led to the delay in filing the appeal. We, therefore, in light of the decisions of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339, condone the said delay and proceed to decide the appeal.
The assessee has raised the following grounds of appeal :
1. The Learned CIT(E) erred in rejecting the application under Section 12AA solely on limitation grounds, disregarding the merits of the case.
2. The Learned CIT(E) failed to provide adequate opportunity for the appellant to present evidence demonstrating the genuineness of charitable activities and compliance with Section 12A provisions violating the principles of natural justice.
3. The Learned CIT(E) disregarded the welfare-oriented intent of the Income Tax Act, 1961, and the purpose of Section 12A, which is to promote charitable activities benefiting society.
4. The Learned CIT(E)'s decision conflicts with the Directive Principles of State Policy within the Constitution of India. These principles highlight the legislative intent to support charitable trusts for the public good.
5. The Learned CIT(E) issued notice on 12-12-2023 requesting the appellant to file explanation to the discrepancies pointed out in the above notice, on or before 20-12-2023. Undisputedly, the time given to the appellant for compliance is only a week, which is against the Standard Operative Procedure ('SOP') issued by the CBDT dated 19.11.2020, wherein, minimum period of 15 days is required to be given to the assessee to comply with notices from the date of issue of the notice. Recently, the Hon'ble Delhi High Court in the case of Dauphin Travel Marketing Private Limited vs. ITO in W.P.(C) 8870/2023 & CM Nos.33516-17/2023 dated 05.07.2023 taking note of this SOP held that the grant of insufficient time to respond the notice violates the principles of natural justice and, therefore, set-aside the assessment. Thus, it is clear that the appellant was given unreasonably very short period of time to respond to the notice, which is against the principles of natural justice.
6. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc in the interest of natural justice.”
4. Briefly stated, the facts of the case are that on receipt of the assessee’s application filed in Form No. 10AB u/s 12A(1)(ac)(iii) of the Act along with annexures thereto, with a view to verify the genuineness of the activities of the assessee and compliance to requirements of any other law for the time being in force, the Ld. CIT(E) issued notice on 06.11.2023 through ITBA portal/email which was duly served on the assessee requesting the assessee to upload certain information/clarification contained therein by 21.11.2023. Since the assessee failed to comply to the said notice, another show cause notice dated 12.12.2023 was issued seeking compliance by 20.12.02023. Since there was no response from the side of the assessee despite sufficient opportunities granted, the Ld. CIT(E) rejected the application and also cancelled the provisional registration granted earlier by observing as under:
“5. The information / details were called for under the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961. These are the basic details required to ascertain the overall nature of the activities of the assessee and are directly relevant to the present proceedings. However, the assessee has failed to comply despite giving sufficient opportunities as discussed above including an opportunity of being heard. 5.1 Thus, the assessee has failed to furnish the details called for under the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961 to verify the genuineness of activities of the trust / institution and to verify the compliance to requirements of any other law for the time being in force by the trust/institution as are material for the purpose of achieving its objects. 5.2 In absence of the compliance to the above requirement, it is not possible to arrive at any conclusion about the genuineness of activities of the assessee and the compliance to the requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects. 5.3 It is clear from the above that the assessee was given sufficient opportunity to comply, but it has not complied to the same. It seems that the assessee is not having any supporting documents / evidence to submit. The assessee has failed to comply with the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961. Hence, the undersigned is unable to draw any satisfactory conclusion about genuineness of activities of the assessee and the compliance to the requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects. Therefore, the undersigned has left no alternative but to reject the application.
In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 23/09/2021 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.”
Aggrieved, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
6. The Ld. AR, at the outset submitted that the Ld. CIT(E) has rejected the assessee’s application for registration under section 12A of the Act on account of non-compliance of the notice(s) issued by him. However, the non- compliance before the Ld. CIT(E) was not intentional but it was owing to the mistake on the part of the employee of the trust. He therefore prayed that in the interest of justice, the assessee may be provided with an opportunity to present and substantiate its case before the Ld. CIT(E) by filing all the requisite details/ documents to his satisfaction and requested that the matter may be restored back to his file for fresh adjudication on merits.
The Ld. DR had no objection the above request of the Ld. AR.
We have heard the Ld. Representatives of the parties and perused the records. It is an admitted fact that due to non-compliance to the notices issued by the Ld. CIT(E) and unavailability of the supporting evidence/ documents in support of the information/details sought, the Ld. CIT(E) rejected the assessee’s application for grant of registration u/s 12A of the Act and also cancelled the provisional registration granted earlier. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case by filing all the relevant supporting details/documents/evidence before the Ld. CIT(E) to his satisfaction. Considering the totality of the facts and in the circumstances of the assessee’s case, we are of the view that it would be judicially expedient and in the interest of justice and fair play, if the matter is restored back to the file of Ld. CIT(E) to consider the assessee’s application for registration afresh and decide the same on merits, in accordance with fact and law after allowing one more opportunity of hearing to the assessee to present and substantiate its case. Needless to say, the assessee shall provide the requisite support to the Ld. CIT(E) in terms of submitting the relevant details/documentary evidence as may be required/called upon on the appointed date without seeking adjournment under any pretext unless for required for sufficient cause, failing which the Ld. CIT(E) shall be at liberty to pass appropriate order as per law. We order accordingly. The grounds raised by the assessee are thus allowed for statistical purposes.
In the result, the appeal of assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 17th December, 2025.