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Facts
The assessee filed an application for registration under Section 12A(1)(ac)(vi) of the Income Tax Act, 1961. The CIT(E) rejected the application due to non-compliance with notices seeking clarification and evidence regarding the genuineness of charitable activities.
Held
The Tribunal held that although the assessee failed to comply with the notices, it was not intentional, and an opportunity should be granted to present the case. The matter was restored to the CIT(E) for fresh adjudication.
Key Issues
Whether the rejection of the application under Section 12A by the CIT(E) solely on grounds of non-compliance and limitation, without considering the merits, is justified, and whether the assessee should be granted another opportunity to present its case.
Sections Cited
12A(1)(ac)(vi), 12AB(1)(b)(i)
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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / MTW Mission 2K34 Foundation, CIT (Exemption), Pune S. No. 554/2, PL 18A, FL 402, Nancy Palace, Gidney Park, Vs. Gultekadi, Market Yard, Pune-411037 PAN : AAPCM7688C अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Jasraj Sutar Department by : Shri Amol Khairnar Date of hearing : 29-07-2025 Date of 31-07-2025 Pronouncement : आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 26.03.2025 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed before him on 16.11.2024 in Form No. 10AB under section 12A(1)(ac)(vi)-ITEM(B) of the Income Tax Act, 1961 (the “Act”).
The assessee has raised the following grounds of appeal : “1. The Learned CIT(E) erred in rejecting the application under Section 12A solely on limitation grounds, disregarding the merits of the case.
2. The Learned CIT(E) failed to provide adequate opportunity for the appellant to present evidence demonstrating the genuineness of charitable activities and compliance with Section 12A provisions violating the principles of natural justice.
3. The Learned CIT(E) disregarded the welfare-oriented intent of the Income Tax Act, 1961, and the purpose of Section 12A, which is to promote charitable activities benefiting society.
4. The Learned CIT(E)'s decision conflicts with the Directive Principles of State Policy within the Constitution of India. These principles highlight the legislative intent to support charitable trusts for the public good.
5. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc in the interest of natural justice.”
2 3. 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)(vi)-ITEM(B) 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 03.01.2025 through ITBA portal which was duly served on the assessee requesting the assessee to upload certain information/clarification contained therein by 20.01.2025. On verification of the details/documents filed by the assessee, the Ld. CIT(E) noticed various discrepancies which were communicated vide issue of another notice dated 14.03.2025 duly served upon the assessee via e-portal/email, seeking compliance by 21.03.2025. The said discrepancies are reproduced below : "(i) It is seen from your note on activity that you have you have only done some "felicitation programs / ceremonies" and have not done any charitable activity for people at large. Kindly furnish explanation along with credible evidences. (ii) Furnish the copies of bills/invoices of expenses done on each activities."
3.1 As the assessee failed to comply to the above show cause notice and not furnished any explanation to the discrepancies communicated to it, the Ld. CIT(E) presumed that the assessee has nothing to say in the matter and no supporting documents/ evidence to submit. 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 by observing as under : “7. 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.
8. Thus, the assessee has failed to furnish the details called for under the provisions of section 12AB(1)(b)(i) 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.
9. 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.
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 3 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.
In view of the above, the application filed by the assessee under section 12A(1)(ac)(vi)-ITEM(B) of the Income Tax Act, 1961 is hereby rejected.”
Aggrieved, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that most of the required documents were submitted in response to the initial notice issued by the Ld. CIT(E). Admittedly, there was non-compliance to the subsequent show cause notice issued by the Ld. CIT(E), however, it was not intentional but occurred because the principal officer of the assessee trust was not present in the town at the relevant time. He further argued that a short notice of only 7 days was provided by the Ld. CIT(E0 to furnish response to the show cause notice. 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). 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. In support thereof, the Ld. AR placed reliance on the decision(s) of the coordinate bench of the Pune Tribunal in the case of – i. Saibaba Bahuuddheshiya Sevabhavi Sanstha Vs CIT (Exemption), & 2274/PUN/2024; and ii. The Solapur Pyramid Spiritual Trust Vs. CIT (Exemption), Pune, ITA No. 1248/PUN/2024.
The Ld. DR had no objection the above request of the Ld. AR.
We have heard the Ld. Representatives of the parties and perused the records and the paper book filed by the Ld. AR on behalf of the assessee as well the judicial precedents relied upon by the Ld. AR. We find that the Ld. CIT(E) has rejected the application of the assessee due to non-compliance to the second notice/ show cause notice issued asking for certain clarification/documentary evidence as per the discrepancy noted by him including the lack of supporting credible evidence in respect of the charitable activities conducted by the assessee. Before us, the Ld. AR has submitted the such non-compliance was for the reason that the principal officer of the trust was not available at the relevant time. Further, in our view, 7 days time to respond to the notice considering the discrepancies (listed above) observed by the Ld. CIT(E), though is not a very short period as alleged by the Ld. AR, in the 4 interest of justice, we are of the view that an opportunity should be granted to the assessee to substantiate its case before the Ld. CIT(E) by filing all the requisite details/ documents as called upon by the Ld. CIT(E).
Considering the totality of the facts and in the circumstances of the case enumerated above, we are of the view that it would be judicially expedient and in the interest of justice and fair play, if the matter is restored back to the file of Ld. CIT(E) to consider the assessee’s application afresh and decide the same on merits, in accordance with fact and law after allowing one final opportunity of being heard to the assessee and present its case. Needless to say, the assessee shall provide the requisite support in terms of submitting the relevant details/documentary evidence as may be required/called upon on the appointed date without seeking adjournment under any pretext unless required for sufficient cause, failing which the Ld. CIT(E) shall be at liberty to pass appropriate order as per law. We direct and order accordingly.
In the result, the appeal of assessee is treated as allowed for statistical purposes.