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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The above two appeals filed by the assessee are directed against the separate orders both dated 18.03.2024 of the Ld. Commissioner of Income Tax (Exemption), Pune (“CIT(E)”) rejecting the application(s) for grant of registration u/s 12A and approval u/s 80G of the Income Tax Act, 1961 (the “Act”) filed on 29.09.2023 and 30.09.2023 respectively. For the sake of convenience, both these appeals were heard together and are being disposed of by this common order.
Both the appeals have been filed with a delay of 293 days 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.
the assessee has challenged the order of the Ld. CIT(E) in rejecting the application for registration u/s 12A of the Act while Ld. CIT(E) in denying the approval u/s 80G of the Act. in brief, are that the assessee filed an application in Form No.10AB on 29.09.2023 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 23.11.2023 requesting the assessee to upload certain information/ details contained therein by 08.12.2023. In response thereto, the assessee filed the requisite details. The Ld. CIT(E) while going through those details and documents, found various discrepancies for which he issued another notice on 07.01.2024 seeking compliance by 24.01.2024. The said discrepancies recorded by the Ld. CIT(E) in para 3 of the impugned order is reproduced below: "(i) It is seen that you have furnished incomplete trust deed wherein the objects of the trust were missing. You ought to be submit the copy of instrument creating the trust or establishing the institution /document evidencing the creation of the trust or establishment of the institution (trust deed / MOA) The trust deed/MOA were required to be submitted alongwith the application itself. However, it is seen that you have not furnished the same. You have failed to comply the provisions of Rule 17A(2)(a)/17A(2)(b) of the Income Tax Rules, 1962. (ii) The donation list submitted by you are not synchronized with the financial statement. Please explain and furnished the details for last three years viz. full name, complete Postal address & PAN of donor, date & mode of donation, amount, receipt No. issued by trust / institute and copies of donation receipts and (in corpus donation) directions from the donors, if any. (iii) It is seen from the financial statement trust has taken large loans in F.Y.2022-23. Please furnish purpose of loan and its utilisation for trust object along with copy of permission under section 36A of the Maharashtra Public Trust Act, 1950 from the Charity Commissioner and other documentary evidence. Furnish authenticated copies of resolutions passed, if any, for raising loans by trustees. (iv) It is seen from the financial statements that you have shown "Zakaat- Girl's Orphanage" of Rs. 13.09 lacs as liability. Please furnish the details of the same, nature of transaction, purpose and utilization alongwith supporting evidences. (v) Please provide copies of bills/ invoices in respect of expenditure done on each of the activities as per the financial statement and activity note furnished by you.
(vi) As per the balance sheets for the last three years major part of your funds are invested in FDRs / bank accounts without its utilization on objectives and these funds are lying idle year-to-year whereas various objects have duly been provided in the trust deed for application of income. Amount of Rs.143.15 lacs out of total assets of Rs.229.70 lacs as on 31/03/2023 is lying idle in bank accounts / FDRs without its actual utilisation on objects of the trust. Thus, it is noticed that almost 62% of the total assets are invested in FDRs/Bank accounts. Similar is the case for the earlier two years also, In view of the decision of the Hon'ble ITAT Chandigarh in the case of I.K. Gujral University Vs. CIT(Exemptions) in appeal 2017, keeping of funds in bank accounts / FDRs cannot be considered to be any, application towards the charitable JAXD objects. Please explain with evidence as to why the said decision of the Hon'ble ITAT (supra), should not be applied in your case."
4.1 The reply filed by the assessee to the above notice was not found satisfactory by the Ld. CIT(E) and consequently, having been unable to draw any satisfactory conclusion about the genuineness of the activities of the trust, the Ld. CIT(E) proceeded to pass the impugned order rejecting the assessee’s application for regular approval and also cancelled the provisional registration granted earlier by observing as under : “5. The assessee in its submission contended that it has submitted the trust deed with objects. On verification of the same it is noticed that the assessee has once again furnished the copy of trust deed which was submitted in earlier submission wherein objects of the trust was missing and in show cause notice it is specifically mentioned that the trust deed were incomplete and object were missing. In absence of the same the charitable nature of objects of the trust / institution cannot be verified and whether the activities are in line with the objects of the trust / institution can also not be ascertained. The assessee has also furnished the details of donation stated that the amount are matching with financial statements. On verification of the same they are not found in synch with financial statements. Further in list of donations, complete address, PAN of donor & receipts number has not been provided for cash donation despite specific query to that effect. In respect of "Zakat" the assessee itself has admitted that this is received for specific purpose & has been reserved for the same. However, the details of specific purpose alongwith donors direction were not furnished for verification. Therefore, identity of such donors and consequential genuineness of donations remained doubtful. The assessee has furnished some light bills in different names. Except for these light bills, no other supporting document, evidence have been furnished by the assessee. It has also not clarified as to in what connection, said expenditure has been incurred. Therefore, the genuineness of these evidences remained questionable.
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.
7. 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.”
Aggrieved with such order of the Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds:
“Erroneous Rejection of Application 1. On the facts and in the circumstances of the case, and on facts Hon'ble CIT(Exemption) Pune has erred in rejecting the application of the appellant trust for Final registration u/s 12A of the Act without properly appreciating the facts and circumstances and thus, the impugned rejection order may please be quashed and set aside, and registration under section 12A of the Act may be granted. Failure to Consider Compliance of the Trust 2. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application on the alleged ground of non-submission of certain documents, whereas the appellant trust had duly submitted all relevant documents and clarifications as sought by the department. Non-Consideration of Trust's Activities 3. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in not appreciating that the appellant trust is engaged in genuine charitable activities and has been carrying out its objectives in accordance with the law, and hence is eligible for registration under section 12A of the Act. Unjustified Reliance on Technical Deficiencies 4. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application merely on technical grounds such as missing documents or procedural aspects, whereas the substantive compliance and charitable nature of the trust were clearly established. Contravention of Judicial Precedents 5. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in not following established judicial precedents wherein courts and tribunals have held that minor procedural lapses should not be the basis for rejection of a genuine charitable trust's registration. Improper Interpretation of Section 12AB Requirements 6. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has misinterpreted the provisions of section 12AB of the Income Tax Act, 1961 and has erroneously concluded that the trust does not meet the requirements for registration. Denial of Natural Justice 7. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application without providing a reasonable and adequate opportunity to the appellant trust to rectify any alleged deficiencies, thereby violating the principles of natural justice. Other Ground 8. The Appellant craves leave to add, amend, alter, modify, vary, or withdraw all or any of grounds of appeal, in the interest of justice, if necessary, at the time of hearing of the appeal.
“Improper & invalid rejection order
1. On the facts and in the circumstances of the case, and on facts Hon'ble CIT(Exemption) Pune has erred in rejecting the application of the appellant trust for Final registration u/s 80G of the Act without properly appreciating the facts and circumstances and thus, the impugned rejection order may please be quashed and set aside, and registration under section 80G of the Act may be granted. Erroneous Rejection Based on Alleged Delay 2. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application for final registration under section 80G(5) on the ground of delay, without appreciating that the law permits filing of the application within six months before the expiry of provisional approval, particularly where activities had commenced prior to such approval and thus, the impugned rejection order may please be quashed and set aside, and registration under section 80G of the Act may be granted. Misinterpretation of Section 80G(5) Provisions 3. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in misinterpreting the provisions governing the timeline for filing the application, resulting in an unjust and unreasonable rejection. Failure to Consider the Genuineness of Activities 4. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application without duly considering the documentary evidence submitted in support of the genuineness of the trust's charitable activities. Denial of Natural Justice 5. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application without affording adequate opportunity of being heard and without ensuring proper service of notices in accordance with the law. Unjustified Cancellation of Provisional Approval 6. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in cancelling the validly granted provisional approval under section 80G(5), despite the appellant fulfilling allsubstantive conditions for final registration. Mechanical and Non-Speaking Order 7. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in passing a non-speaking order, without properly addressing the submissions, explanations, and documents furnished by the appellant. Failure to Exercise Discretion Judiciously 8. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has failed to exercise discretion judiciously by rejecting the application on technical grounds, despite the trust meeting all substantive requirements.
Invalid Rejection Due to Non-Grant of Section 12A Registration 9. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application for registration under section 80G(5) solely on the ground that the appellant does not have valid registration under section 12A, despite the fact that the Appellant has challenged the rejection order u/s 12A before Hon'ble Tribunal and further, the substantive conditions of section 80G(5) were otherwise fulfilled and thus, the impugned rejection order u/s 80G may please be quashed and set aside, and registration under section 80G of the Act may be granted. Other Ground 10. The Appellant craves leave to add, amend, alter, modify, vary, or withdraw all or any of grounds of appeal, in the interest of justice, if 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 assessee has furnished all the requisite details/documents in response to the initial notice as well as show cause notice listing out the various discrepancies, however, the Ld. CIT(E) having been dissatisfied by the assessee’s submissions, has rejected the application of the assessee. He therefore prayed that in the interest of justice an opportunity may be granted to the assessee to substantiate and present its case by furnishing all the detail/ documents sought for by the Ld. CIT(E) to his satisfaction. Accordingly, the matter may be set aside to the file of the Ld. CIT(E) to adjudicate the same afresh on merits after affording an opportunity of being heard to the assessee.
The Ld. DR, on the other hand, supported the order of the Ld. CIT(E) but had no objection if the matter is set aside to the file of Ld. CIT(E) for fresh adjudication as requested by the Ld. AR.
We have heard the Ld. Representatives of the parties and perused the material available on record. It is an admitted fact that the assessee duly responded and submitted certain details to both the notices issued by the Ld. CIT(E).The Ld. CIT(E) rejected the application of the assessee for regular registration u/s 12A and also called the provisional registration granted earlier for the reasons provided 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.
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 by filing the requisite details as may be required/ called upon and decide both the applications of the assessee under section 12A and 80G of the Act afresh on merits as per fact and law. 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(s) as per law. We direct and order accordingly. The grounds raised by the assessee in both the appeals are accordingly allowed for statistical purposes.
In the result, both the appeals in & 739/PUN/2025 filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 31st July, 2025.