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Facts
The assessee filed an application for registration under Section 12A of the Income Tax Act, 1961. Despite multiple notices and opportunities, the assessee failed to provide the required information and compliance. Consequently, the CIT(Exemption) rejected the application and cancelled the provisional registration.
Held
The Tribunal held that the assessee had failed to comply with the notices and provide necessary details, leading to the rejection of the registration application and cancellation of provisional registration by the CIT(E). However, in the interest of justice, the matter was restored to the CIT(E) to grant one final opportunity to the assessee.
Key Issues
Whether the CIT(E) was justified in rejecting the registration application and cancelling provisional registration due to non-compliance, and whether a final opportunity should be granted to the assessee.
Sections Cited
12A, 12AB, 12A(1)(ac), 12AB(1)(b)(i), 12A(1)(ac)(vi)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & Ms. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order dated 31.01.2024 of the Ld. CIT(Exemption), Pune rejecting the application for grant of registration u/s 12A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and cancelling the provisional registration granted earlier u/s 12AB of the Act.
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 30.09.2023 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 through ITBA portal on 28.11.2023 requesting the assessee to upload certain information / clarification. The assessee was also requested to submit the compliance by 13.12.2023. Since the assessee did not comply to the said notice, another opportunity was granted by the Ld. CIT(E) vide notice dated 09.01.2024 asking the assessee to explain as to why the application for registration u/s 12A should not be rejected and why the provisional registration granted earlier u/s 12AB should not be cancelled. Further, the assessee was specifically informed that in the event of failure to comply by the due date, the application shall be liable to be rejected and the registration shall also be liable to be cancelled.
However, the assessee did not make any submission. The Ld. CIT(E) therefore, rejected the application for grant of registration u/s 12A of the Act and also cancelled the provisional registration granted earlier u/s 12AB by observing as under: “4 The assessee was requested to submit compliance by 13/12/2023. The notice was duly served on the assessee through e-portal and email. Since the assessee did not furnish compliance to the said notice, another opportunity was given to the assessee vide notice dated 09/01/2024 requesting it to show cause as to why the application should not be rejected and why the registration granted under section 12AB of the Income Tax Act, 1961 should not be cancelled. The assessee was specifically informed that in the event of failure to comply to the said notice, its application shall be liable to be rejected and the registration/approval shall also be liable to be cancelled. The assessee was also given opportunity of being heard vide the said notice. However, the assessee neither submitted the above mentioned compliance nor availed the opportunity of being heard. The assessee was requested to submit compliance by 17/01/2024. The assessee was also given opportunity of being heard vide the said notice. The notice was duly served on the assessee through e-portal and email. However, the assessee neither furnished its compliance to the show cause notice nor availed the opportunity of being heard.
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)(1) 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.
6. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 27/05/2021 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled."
4. Aggrieved with such order of Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds:
1. The learned CIT(E) erred in rejecting the application filed in Form 10AB under clause (iii) of Section 12A(1)(ac) of the Income Tax Act for permanent approval under Section 12AB of the Income tax Act.
2. The learned CIT(E) erred in cancelling the provisional approval granted under Section 12AB with Section 12A(1)(ac)(vi) of the Income tax Act.
3. The learned CIT(E) erred in observing that the appellant failed to furnish the details called for under the provisions of Section 12AB(1)(b)(i) of the Income Tax Act to verify the genuineness of activities of the trust 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.
Each one of the above grounds of appeal is without prejudice to the above.
5. The appellant reserves the right to add, alter or amend to the above grounds of appeal.
The Ld. Counsel for the assessee submitted that due to preoccupation of the concerned Chartered Accountant, the details could not be filed. He submitted that given an opportunity the assessee is in a position to substantiate its case by filing all the relevant details for deciding the issue afresh. He accordingly submitted that in the interest of justice the matter may be restored to the file of the Ld. CIT(E) for adjudication of the issue afresh.
The Ld. DR on the other hand strongly objected to the arguments advanced by the Ld. Counsel for the assessee.
We have heard the rival arguments made by both the sides, perused the order of the Ld. CIT(E) and the paper book filed on behalf of the assessee. It is an admitted fact that due to non-compliance to the 2nd notice issued by the Ld. CIT(E), he rejected the application for grant of registration 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 details before the Ld. CIT(E). Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details to his satisfaction and decide the issue as per fact and law. The assessee is also hereby directed to submit the details as called for by the CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the CIT(E) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 24th October, 2025.