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Facts
The assessee filed an application for registration u/s 12A of the Income Tax Act, 1961, and for cancellation of provisional registration u/s 12AB. The CIT(E) rejected the application and cancelled the provisional registration due to the assessee's failure to respond to notices and provide clarifications on discrepancies.
Held
The Tribunal condoned the delay in filing the appeal and restored the issue to the CIT(E) for a final opportunity to the assessee to submit requisite details and substantiate its case. The appeal was allowed for statistical purposes.
Key Issues
Whether the CIT(E) erred in rejecting the registration application without granting sufficient opportunity to the assessee to explain discrepancies. Whether the matter should be decided on merits rather than hyper-technical grounds.
Sections Cited
12A, 12AB, 12A(1)(ac), 12AB(1)(b)(i), 17A(2)
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
This appeal filed by the assessee is directed against the order dated 11.03.2024 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..
There is a delay of 343 days in filing of this appeal before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. After considering the contents of the condonation application filed along with the affidavit and after hearing the Ld. DR, the delay in filing of the appeal is condoned and the appeal is admitted for adjudication.
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 19.09.2023 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 05.12.2023 requesting the assessee to upload certain information / clarification. The assessee in response to the notice issued by the Ld. CIT(E) filed certain details. On verification of the details submitted by the assessee, the Ld. CIT(E) noticed various discrepancies for which another notice was issued to the assessee asking it to explain on account of those discrepancies. However, in absence of any submission made by the assessee to the notice issued by the Ld. CIT(E) pointing out the discrepancies, he rejected the application for grant of registration u/s 12A of the Act by observing as under: “2.3 The assessee was requested 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 also given opportunity of being heard vide the said notice. 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. The compliance to the said notice was due on 05/03/2024. The notice was duly served on the assessee through e-portal and email. However, the assessee neither submitted explanation to the show cause notice till date nor availed the opportunity of being heard 3. 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
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.
5. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 19/01/2023 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 (Exemption) Pune erred in law and on facts in not granting registration u/s 12A of ITA, 1961, and rejecting the Application for the same. 2) The Ld. CIT Exemption Pune is not considering the submission made on 19/09/2023, which has explained and submitted with the form No. 10AB of the Income Tax Act. 3) The application was filed on 19/09/23, The Notice for hearing was given on 27/02/2024 for compliance of on or before 05/03/2024. Thus the learned CIT (Exemption) Pune given very short notice to compliance of queries raised in the notice. Hence the learned CIT (Exemption) Pune erred in law and on facts in not granting sufficient opportunity to the appellant to submit the details/ information thereby violating the principles of natural justice. 4) The appellant contends that learned CIT(E) ought to have decided the matters on merits i.e., on the tests of bona fide objects, genuine educational activity, etc. instead of the hyper-technical aspect of section/sub-section opted during the filing of application vide form 10AB for registration u/s 12A of ITA, 1961. 5) The appellant craves leave before Hon'ble ITAT to add, alter, clarify, explain, modify, or delete any of the grounds of appeal, set aside, and to seek any just and fair relief.
The Ld. Counsel for the assessee submitted that due to mis-communication, the second notice could not be replied for which all these unfortunate events happened. She submitted that in the interest of justice, the assessee should be given an opportunity to substantiate its case by filing the requisite details.
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) asking for certain clarifications regarding the discrepancies pointed out by him, 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 26th August, 2025.
Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 26th August, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपीलार्थी / The Appellant; 1. 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune
S.No. Details Date Initials Designation 1 Draft dictated on 20.08.2025 Sr. PS/PS 2 Draft placed before author 26.08.2025 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order