SHREE DIGMBER JAIN TRUST WAGHOLI,PUNE vs. CIT(EXEMPTION), PUNE, PUNE

There is a delay of 121 days in filing of this appeal before the Tribunal for which the assessee has filed an affidavit explaining the reasons for such delay. On perusal of the same, we are satisfied that the delay in filing of appeal is not intentional or deliberate but has occurred for the reasons mentioned in the affidavit. After hearing both the sides, we are of the view that the delay is attributable to the sufficient cause. 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. 3. In ITA No.2511/PUN/2025, the assessee has challenged the order of the Ld. CIT(E) in rejecting the application for registration u/s 12A of the Act while ITA No.2510/PUN/2025 relates to the order of the Ld. CIT(E) in denying the approval u/s 80G of the Act.

Facts of the case in ITA No. 2511/PUN/2025, in brief, are that the assessee filed an application in Form No.10AB on 24.10.2024 for registration of the trust under clause (iii) of section 12A(1)(ac) of the Act. 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 by the trust/institution as are material for the purpose of achieving its objects, a notice was issued and duly served upon the assessee through ITBA portal on 26.11.2024 requesting the assessee to upload certain information/clarification contained therein by 13.12.2024. The Ld. CIT(E) while going through these details submitted by the assessee in response to the said notice and documents filed along with the application, found various discrepancies for which he issued another notice/show cause notice on 06.03.2025 asking the assessee for necessary compliance by 13.03.2025. The said discrepancies recorded by the Ld. CIT(E) in para 4 of the impugned order is reproduced below: “4. … "(i) The compliance to the initial notice is not complete. A point wise reply to the notice has not be furnished. More specifically, the date of commencement of activities, the details of religious objectives, details of business undertaking, if any etc. are not furnished. Kindly furnish the same. (ii) Note on activity has not been furnished by you. Furnish activity note giving details viz. dates and places of each activities carried out by your trust, details of beneficiaries, how they were identified, etc. (iii) It is seen from the trust deed that most of the objects are religious related to Jain samaj only. In view of the above it is seems that the you are working for particular cast. Please Explain. (iv) Furnish annual financial statement for last 3 years / since inception along with schedules / annexures. (v) Kindly furnish the supporting credible evidences viz. photographs, documentary evidences of activities done by you, copies of bills/ invoices, etc of expenses done on your activities. (vi) Furnish copy of bank statement for last 3 years/since inception whichever is later.”

1 In response to the above show cause notice dated 06.03.2025, the assessee furnished its partial compliance on 13.03.2025 which the Ld. CIT(E) has recorded in para 5.1 of his impugned order. The Ld. CIT(E) thereafter issued another notice/show cause notice on 18.03.2025 listing out the below discrepancies and sought compliance by 25.03.2025. “7 "(i) It is seen from your submissions that the date of commencement of your activities is 14/09/2023. Further, as per the copy of order of provisional registration under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act, 1961 submitted by you, the date of provisional registration is 03/09/2023. As per the provisions of section 12A(1)(ac)(iii) of the Act, where a trust or institution has been provisionally registered under section 12AB of the Act, the application for regular registration under section 12AB is required to be filed within 6 months from the date of commencement of activities. Since, your activities were already commenced as on the date of provisional registration, you were required to file the present application within 6 months from the date of provisional registration i.e. on or before 02/03/2024. However, the present application filed by you is on 24/10/2024 i.e. after the expiry of period allowed under section 12A(1)(ac)(iii) of the Act. The extended due date for filing of such application was 30/06/2024 as per CBDT, Circular no 7/2024, dated 25/04/2024. Thus, it is seen that you have not filed the present application within the time limit allowed under section 12A(1)(ac) (iii) of the Income Tax Act, 1961. You are therefore, requested to show-cause as to why your application should not be rejected and the registration granted should not be cancelled."

2 In light of the submissions of the assessee and facts on record, the Ld. CIT(E) proceeded to pass the impugned order rejecting the application of the assessee and also cancelling the provisional registration granted earlier by observing as under : “9. On perusal of the assessee's submission and in light of the facts available on record, it is observed that the note furnished by the assessee in response to the specific request to provide details of activities 'actually carried out is still general, and does not have any specific particulars that could substantiate the conduct of charitable activities. Although the assessee has reiterated the objects of the trust as recorded in the trust deed i.e. education, relief to the poor, medical assistance, and advancement of other objects, it has failed to provide any verifiable or cogent evidence to demonstrate that any such objects have been pursued in practice. The description of activities provided by the assessee is more in the nature of aims or future intentions rather than actions undertaken during the relevant period. For instance, the assessee claimed to be promoting literary works and organizing academic seminars under the object of education, providing essentials like food and clothing under the object of relief to the poor, and further expressed commitment to environmental conservation and social reforms under the head of advancement of other objects. However, nowhere in the submission has the assessee specified any actual event, program, or initiative undertaken. There is an absence of crucial information such as the dates and places of such activities, number of beneficiaries served, how such beneficiaries were identified, the quantum and nature of assistance provided, or the agencies or individuals engaged in the execution of these claimed activities. Moreover, an examination of the assessee's financial statements for at least the last three financial years reveals that no expenditure has been recorded towards any of the stated charitable objects. On the contrary, all reported expenditure pertains only to establishment or administrative expenses. This directly contradicts the assessee's claim of having actively pursued its charitable objectives. Further, despite a specific request, the assessee has not furnished any documentary evidence in support of its claim, except for a few invoices. There is no clarification or reconciliation provided as to how these object they pertain to.

On the issue of the delay the assessee has contended that it commenced activities in FY 2024. It is, however, seen from the bank statement and the submission made by the assessee that it has started receiving income by way of donations from 03.09.2023. Therefore, the assessee's contention is not found to be correct. Further, as per the copy of order of provisional registration under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act, 1961 submitted by the assessee, the date of provisional registration is 03/09/2023. As per the provisions of section 12A(1)(ac) (iii) of the Act, where a trust or institution has been provisionally registered under section 12AB of the Act, the application for regular registration under section 12AB is required to be filed within 6 months from the date of commencement of activities. Since, the assessee's activities were commenced after the date of provisional registration, the assessee was required to file the present application within 6 months from the date of commencement of activities i.e. on or before 13/03/2024. The extended due date for filing of such application was 30/06/2024 as per CBDT, Circular no 7/2024, dated 25/04/2024. However, the present application filed by the assessee is on 24/10/2024 i.e. after the expiry of period allowed under section 12A(1)(ac) (iii) of the Act. Thus, it is seen that the assessee did not filed the present application within the time limit allowed under section 12A(1)(ac) (iii) of the Income Tax Act, 1961. 11. Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961 as well as the provisions of Rule 17A(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is not satisfied about the charitable nature and the genuineness of activities of the assessee and compliance of requirements of any other law for the time being in force by the assessee as are material for the purpose of achieving its objects.

In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 03/09/2023 under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act, 1961 is hereby cancelled.”

Aggrieved with such order of the Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds: “1. That the order dated 07.04.2025 passed by the learned CIT (Exemption), Pune rejecting the application and cancelling the provisional registration u/s 12AB is bad in law, arbitrary, and contrary to the provisions of the Income Tax Act, 1961. 2. That the learned CIT (Exemption) erred in law and on facts in holding that the application in Form 10AB was time-barred under section 12A(1)(ac) (iii), without appreciating that the delay was unintentional, procedural, and occurred during the transitional compliance period following issuance of CBDT Circular No. 7/2024 dated 25.04.2024. 3. That the learned CIT (Exemption) erred in concluding that the genuineness of activities was not established, ignoring the financial statements, bank statements, Form 10 accumulation, invoices, and other material evidence filed during the proceedings. 4. That the learned CIT (Exemption) erred in holding that the trust is working for a particular caste/community (Jain Samaj) and hence not eligible for registration, overlooking that the reference to 'Jain' in the trust name or philosophy does not restrict benefits to members of a particular caste or religion, and judicial precedents support this view (CIT v. Dawoodi Bohra Jamat, 364 ITR 31 (SC)). 5. That the learned CIT (Exemption) erred in rejecting the application solely based on minor procedural non-compliance, despite the appellant having made substantial and bona fide compliance, thereby violating the principles of natural justice. 6. That the learned CIT (Exemption) failed to provide adequate opportunity of being heard and passed the order in undue haste, despite the appellant's request for adjournment to furnish remaining documents. 7. That the order is otherwise unjust, excessive, and deserves to be quashed. 8. The Appellate craves the right to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.”

Admittedly, the facts of the case in ITA No.2510/PUN/2025 are similar to that of ITA No.2511/PUN/2025 narrated above. Similar grounds have been raised in ITA No. 2510/PUN/2025 which read as under: “1. That the order dated 07.04.2025 passed by the learned CIT (Exemption), Pune, rejecting and cancelling the approval u/s 80G(5) of the Income Tax Act, 1961, is bad in law, void ab initio, arbitrary, and contrary to the facts and legal provisions. 2. That the learned CIT (Exemption) erred in law and on facts in holding that the application in Form 10AB was time-barred under section 80G(5)(illi), without appreciating that the delay was inadvertent and procedural, occurring during a transitional phase, and covered by CBDT Circular No. 7/2024 which extended timelines up to 30.06.2024. 3. That the learned CIT (Exemption) erred in concluding that the genuineness of charitable activities was not established, ignoring documentary evidence such as invoices, financial statements, Form 10 acknowledgment, and bank statements that clearly reflect charitable expenditure and accumulation for specified purposes. 4. That the learned CIT (Exemption) failed to appreciate that at the stage of approval under section 80G(5), the requirement is only to verify the charitable nature and genuineness of activities on a prima facie basis, not to assess the quantum or scale of activities, as upheld by judicial precedents including CIT v. R.B. Shree Ram Educational Society [ITA No. 166/2017 (Del HC)]. 5. That the learned CIT (Exemption) erred in holding that the trust's activities are confined to members of Jain community, ignoring that the Trust's objects are for public benefit and not limited to any particular caste or religion. Reference to Jain philosophy does not make the Trust religious in nature as held in CIT v. Dawoodi Bohra Jamat (364 ITR 31) (SC). 6. That the learned CIT (Exemption) erred in rejecting approval u/s 80G solely because the registration u/s 12AB was cancelled, without appreciating that both provisions operate independently and that the appellant has already challenged the cancellation of 12AB registration before the appropriate appellate authority. 7. That the learned CIT (Exemption) violated principles of natural justice by rejecting the application despite the appellant's request for adjournment and by not affording adequate opportunity to submit further documents. 8. That the impugned order is otherwise unjust, excessive, and deserves to be quashed in the interest of equity and justice. 9. The Appellate craves the right to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.”

It is the submission of the Ld. AR that since the Ld. CIT(E) has rejected the grant of registration u/s 12A of the Act and cancelled the provisional registration granted earlier, he refused to grant approval u/s 80G of the Act.

The Ld. AR submitted that the Ld. CIT(E) has rejected the assessee’s application for registration under section 12A of the Act on account of (i) delay in filing the application within the stipulated time; (ii) assessee’s failure to substantiate the charitable object/activities, expenditure incurred towards charitable object with cogent documentary evidence and (iii) activities of the trust being carried out for particular community i.e. Jain Samaj. He submitted that the findings of the Ld. CIT(E) are not based on the correct appreciation of facts and that given an opportunity the assessee is in a position to present and substantiate its case before the Ld. CIT(E) by filing all the requisite details/ documents to his satisfaction. He therefore prayed that in the interest of justice the matter may be restored back to the file of the Ld. CIT(E) for fresh adjudication on merits.

The Ld. DR, on the other hand, supported the order of the Ld CIT(E). He, however, had no serious objection to the above request of the assessee for remanding the matter back to the file of the Ld. CIT(E).

We have heard Ld. Representatives of the parties, perused the material available on record. It is an admitted fact that the assessee duly filed some response to the various notice(s) issued by the Ld. CIT(E), however, the same were not to the satisfaction of the Ld. CIT(E). The Ld. CIT(E) therefore rejected the application of the assessee u/s 12A for the reasons reproduced in the preceding paragraph. The assessee’s application for grant of approval u/s 80G has also been rejected by the Ld. CIT(E) on the similar grounds. Further, since the application for grant of registration u/s 12A of the Act was rejected and the provisional registration granted earlier was cancelled, he also rejected the application for grant of approval u/s 80G of the Act. Before us, the Ld. Counsel for the assessee has humbly requested for grant of an opportunity to the assessee to substantiate its claim before the Ld. CIT(E) by filing the requisite details/documents as desired by him.

Considering the totality of the facts and in the circumstances of the case enumerated above and in the interest of justice, we deem it proper, to set aside the impugned order(s) of the Ld. CIT(E) and restore the issue(s) to his file with a direction to grant one final opportunity to the assessee to explain and substantiate its case to his satisfaction by filing the requisite details/documentary evidence and decide both the applications of the assessee under section 12A and 80G of the Act afresh as per fact and law. The assessee is also hereby directed to make his submissions on the appointed date without seeking any adjournment under any pretext unless required for the sufficient cause, failing which the Ld. CIT(E) shall be at liberty to pass appropriate order(s) as per law. We hold and direct accordingly. The grounds raised by the assessee in both the appeals are accordingly allowed for statistical purposes.

In the result, both the appeals in ITA Nos.1035 & 1034/PUN/2025 filed by the assessee are allowed for statistical purposes.

अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “बी” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 5. ग र्ड फ़ इल / Guard File.