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Facts
The assessee filed an application in Form No. 10AB for registration under Section 12A of the Income Tax Act. The CIT(E) rejected the application and cancelled the provisional registration due to non-compliance with a show-cause notice and failure to provide explanations for discrepancies.
Held
The Tribunal found that the non-compliance was due to an employee's mistake and that the assessee should be given a final opportunity to present its case. The impugned order of the CIT(E) was set aside, and the matter was restored to the CIT(E)'s file for fresh adjudication.
Key Issues
Whether the CIT(E) was justified in rejecting the registration application and cancelling provisional registration due to non-compliance, and whether the assessee should be granted another opportunity to present its case.
Sections Cited
12A(1)(ac), 12AB, 12A
AI-generated summary — verify with the full judgment below
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 10.12.2024 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed before him on 29.06.2024 in Form No. 10AB under clause (iii) of section 12A(1)(ac) of the Income Tax Act, 1961 (the “Act”).
The assessee has raised the following grounds of appeal :
1. On the facts and in the circumstances of the case and in law, the learned CIT (E) erred in rejecting the application made by the assessee under clause (iii) of section 12A (1) (ac) for registration of the trust and cancelling provisional registration granted on 03/08/2022 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961.
2. On the facts and in the circumstances of the case and in law, the learned CIT (E) is not justified in passing cancellation order observing that the assessee has not furnished any explanation the discrepancies communicated to it, it is presumed that the assessee has nothing to say in the matter your appellant prays for an opportunity for submitting the documents and also for granting the registration u/s 12A of IT Act.
3. On the facts and in the circumstances of the case and in law, the learned CIT (E) erred in holding that he is unable to draw any satisfactory conclusion about 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 and in view of this the application is rejected.
4. On the facts and in the circumstances of the case and in law, The learned CIT (E) failed to appreciate that the assessee had commenced its charitable activities and had submitted various evidences to prove that the activities were carried out in accordance with the objects of the trust and hence, there was no reason to reject the application for approval u/s 12AA of the Act.
5. On the facts and in the circumstances of the case and in law, the assessee requests for the adducing additional evidences in order to support its case regarding various charitable activities carried out by it and accordingly, submits that the activities carried out are genuine and the learned CIT (E) has erred in rejecting the application for approval under clause (iii) of section 12A(1)(ac).
6. The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal.”
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 06.08.2024 through ITBA portal which was duly served on the assessee requesting the assessee to upload certain information/clarification contained therein under the provisions of section 12AB(1)(b)(i) of the Act. On verification of the details filed by the assessee in response to the above notice, the Ld. CIT(E) observed various discrepancies which were communicated to the assessee vide show cause notice dated 29.11.2024 seeking compliance by 05.12.2024. The said discrepancies pointed out by the Ld. CIT(E) are reproduced below : "(i) 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. (ii) You have not furnish any supporting credible evidences in respect of the activities. Kindly furnish the same. In absence of any such tangible material in respect of proof of activities being carried out it is not possible to arrive at any conclusion about the genuineness of activities and also to ascertain as to whether the activities are in line with the objects of the trust/institution. (iii) Furnish annual financial statement of FY 2021-22 and 2023-24 along with schedules/annexures. (iv) Also from your financial statements, it is seen that you have income from 'Sale of products'. It is purely commercial in nature. (v) From the financial statement of FY 2022-23, no expenditure on the objects of the trust is apparently found to be reflected. Please explain. (vi) Furnish copies of bill/invoices of expenses done on activities as shown in your financial statement."
3.1 As the assessee failed to submit any explanation to the above discrepancies, the Ld. CIT(E) presumed that the assessee has nothing to say in the matter and hence having been unable to draw any satisfactory conclusion about the genuineness of the activities of the assessee trust, 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 : “6. Since, the assessee has not furnished any explanation to the discrepancies communicated to it, it is presumed that the assessee has nothing to say in the matter.
7. 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 unable to draw any satisfactory conclusion about 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.
8. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 03/08/2022 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.”
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
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 show cause notice wherein certain discrepancies were pointed out by the Ld. CIT(E). He submitted that 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 the matter may be restored back to his file for fresh adjudication on merits.
The Ld. DR, on the other hand, supported the order of the Ld. CIT(E) but had no objection if the matter is restored to the file of the Ld. CIT(E) for adjudication of assessee’s application afresh.
We have heard the heard the Ld. Representatives of the parties and perused the material available on record. We observe that the Ld. CIT(E) has rejected the assessee’s application and also cancelled the provisional registration granted earlier on the ground of non-compliance of the second notice/show cause notice. Admittedly, there was a non-compliance on the part of the assessee owing to the mistake of the employee of the trust. The Ld. Counsel for the assessee has requested for setting aside the matter to the file of the Ld. CIT(E) for fresh adjudication on merits after affording an opportunity of hearing to the assessee to explain and substantiate its case. Considering the totality of the facts and in the circumstances of the case, we deem it fit and proper, in the interest of justice, to set aside the impugned order of the Ld. CIT(E) and restore the matter to his file with a direction to decide the assessee’s application for grant of approval under section 12A of the Act afresh as per fact and law after affording one final opportunity of hearing to the assessee. The assessee is also hereby directed to remain vigilant and 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 as per law. We hold and direct accordingly. The grounds of appeal raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 30th September, 2025.
Sd/- Sd/- (R.K. Panda) (Astha Chandra) JUDICIAL MEMBER VICE PRESIDENT पुणे / Pune; दिन ांक / Dated : 30th September, 2025. रदि आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, 4. पुणे / DR, ITAT, “A” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER,
िररष्ठदनजीसदचि/ Sr. Private Secretary आयकरअपीलीयअदिकरण ,पुणे/ ITAT, Pune