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Facts
The assessee filed applications for registration under Section 12A and approval under Section 80G. The CIT(Exemption) rejected these applications after the assessee failed to respond to a second show-cause notice, citing a mistake by an employee.
Held
The Tribunal restored the issue to the file of the CIT(Exemption), granting the assessee one final opportunity to submit requisite details, to be decided on facts and law.
Key Issues
Whether the rejection of applications for registration and approval was justified without granting a further opportunity, especially when non-compliance was due to an employee's mistake.
Sections Cited
12A, 80G, 12A(1)(ac)(iii), 12AB, 17A(2), 80G(5)(iii)
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
The above two appeals filed by the assessee are directed against the separate orders dated 27.11.2024 of the Ld. CIT(Exemption), Pune rejecting the application for grant of registration u/s 12A and approval u/s 80G of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). For the sake of convenience, both these appeals were heard together and are being disposed of by this common order. the assessee has challenged the order of the CIT(Exemption) in rejecting the application for grant of registration u/s 12A of the Act while CIT(Exemption) in denying the approval u/s 80G of the Act.
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 03.06.2024 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 through ITBA portal on 13.07.2024 requesting the assessee to upload certain information / clarification. The assessee was also requested to submit the compliance by 29.07.2024. On verification of the details submitted by the assessee, the Ld. CIT(E) noted various discrepancies for which another notice was issued to the assessee asking it to explain on account of those discrepancies. 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 by observing as under:
“5. 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 22/11/2024. 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. 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 02/03/2023 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.”
Since he 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.
Aggrieved with such order of CIT(Exemption), the assessee is in appeal before the Tribunal by raising the following grounds:
1. On the facts and circumstances of the case and in law the learned CIT (Exemption) Pune erred in rejecting the Appellant's application for registration u/s 12A(1)(ac)(iii) of Income Tax Act, 1961.
2. On the facts and circumstances of the case and in law the learned CIT (Exemption) Pune erred in cancelling the provisional registration u/s 12AB under Income Tax Act, 1961 without providing any opportunity of being heard via video conferencing for the same.
3. On the facts and circumstances of the case and in law the learned CIT (Exemption) Pune erred in the learned CIT(Exemption) Pune has erred in providing effective five days to submit response to the notice.
4. On the facts and circumstances of the case and in law the learned CIT (Exemption) Pune erred in not considering the submission made on 09/09/2024, which has been explained and submitted with form No. 10AB of the Income Tax Act 1961.
5. The cancellation of registration under section 12A is in violation of principles of Natural Justice. The Appellant is a Charitable Trust engaged
in running a Gaushala wherein 350 cows mainly non fertile and old age cows are being taken care of. Because of cancellation of registration, the Appellant's ability to avail funds from Donar is impaired which has resulted in lack of funds for running a Gaushala. 6. 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.
7. The appellant request for admission of additional evidences if any requires in support of above grounds of appeal.
6. Similar grounds have been raised in 1. On the facts and circumstances of the case and in law the learned CIT (Exemption) Pune erred in rejecting the Appellant's application for registration u/s 80G(5) (iii) of Income Tax Act, 1961.
2. On the facts and circumstances of the case and in law the learned CIT (Exemption) Pune erred in cancelling the provisional registration u/s 80G under Income Tax Act. 1961 without providing any opportunity of being heard via video conferencing for the same.
3. On the facts and circumstances of the case and in law the learned CIT (Exemption) Pune erred in the learned CIT(Exemption) Pune has erred in providing effective five days to submit response to the notice.
4. On the facts and circumstances of the case and in taw the learned CIT(Exemption) Pune erred in not considering the submission made on 09/09/2024, which has been explained and submitted with form No. 10AB of the Income Tax Act 1961.
5. The cancellation of registration under section 80G is in violation of principles of Natural Justice. The Appellant is a Charitable Trust engaged in running a Gaushala wherein 350 cows mainly non fertile and old age cows are being taken care of. Because of cancellation of registration, the Appellant's ability to avail funds from Donar is impaired which has resulted in lack of funds for running a Gaushala 6. 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.
7. The appellant request for admission of additional evidences if any requires in support of above grounds of appeal.
The Ld. Counsel for the assessee submitted that the assessee in response to the first notice has filed the various details. However, the assessee could not respond to the second notice issued by the CIT(Exemption) on account of the mistake on the part of the employee of the trust. He accordingly submitted that in the interest of justice, the assessee should be given an opportunity to substantiate its case by filing the requisite details before the Ld. CIT(E).
The Ld. DR on the other hand strongly opposed the submissions made 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 the assessee did not respond to the second notice issued by the Ld. CIT(Exemption) in which he has asked for certain details on account of certain discrepancies found from the submissions made by the assessee earlier for which he rejected the application filed by the assessee for grant of registration u/s 12A of the Act and also cancelled the provisional registration granted earlier u/s 12AB. Since the application for grant of registration u/s 12A of the Act was rejected and the provisional registration granted earlier was cancelled, he rejected the application for approval u/s 80G of the Act. It is the submission of the Ld. Counsel for the assessee that due to the mistake on the part of the employee of the trust in not communicating the notice, the assessee could not respond to the second notice. It is also his submission that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Ld. CIT(E) to his satisfaction. 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 Ld. CIT(Exemption) 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 Ld. CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(Exemption) 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, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court at the conclusion of hearing itself i.e. on 31st July, 2025.