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Facts
The assessee filed an application in Form No. 10AB for registration under Section 12A(1)(ac)(vi)-ITEM(B) of the Income Tax Act, 1961. The CIT(E) rejected the application stating that the activities of the trust were not verified and appeared premature.
Held
The Tribunal found that the CIT(E) rejected the application without considering the submissions and evidence provided by the assessee. The matter was restored to the CIT(E) for fresh consideration.
Key Issues
Whether the CIT(E) erred in rejecting the application for registration under Section 12AB without properly verifying the submitted documents and submissions of the assessee?
Sections Cited
12A(1)(ac)(vi)-ITEM(B), 12AB, 139(4A), 139(1), 139(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आयकर अपील सं. / Akhil Sagar Vanshiyjiremali Samaj CIT(Exemption), Pune Dharmadaynyas Pandharpur, C/O Rajendra Bajirao Bhagat Vs. Chandrabhaga Niwas Adva Phata, Sinnar, Nashik – 422103 PAN : AAETA7405M अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri R.P. Daware Department by : Shri Ramnath P. Murkunde Date of hearing : 02-07-2025 Date of 29-07-2025 Pronouncement : आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 28.01.2025 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed before him on 02.08.2024 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 (Exemption) Pune erred in law and on facts in not granting registration u/s 12 AB of ITA, 1961.
2. The learned CIT (Exemption) Pune erred in law and on facts in not verifying the submission given properly.
3. The appellant craves leave to add, alter, clarify, explain, modify, delete any of the grounds of appeal, and to seek any just and fair relief.”
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 19.10.2024 through ITBA portal 2 which was duly served on the assessee requesting the assessee to upload certain information/clarification such as date of commencement of activity, date of expiry of provisional registration, details of any other law applicable for achievement of objectives and the proof of compliance of said law, proof of identity of main trustees/managing trustees/directors/trustees/secretary, list of donors, note on activities carried out in the last three years/inception etc. under the provisions of section 12AB of the Act. The compliance was sought by 05.11.2024. As the assessee did not respond, another opportunity was given to the assessee vide notice dated 19.11.2024 seeking compliance by 26.11.2024. On verification of the details/documents filed by the assessee to the said notice, the Ld. CIT(E) pointed out various discrepancies, listed below, which were duly communicated to the assessee vide issue of notice dated 01.01.2025. "(i) It is seen from the financial statement that a very meagre / no expenditure is shown on charitable objects as compared to expenditure on establishment, the satisfaction about the genuineness of activities could not be arrived at. Kindly furnish your explanation with credible evidences. (ii) Kindly furnish evidences claiming expenses on charitable activities such as bills/vouchers/invoices alongwith photographs of charitable activities actually carried out by your trust. (iii) You have not submitted details of donation in the requisite format. You were specifically requested to furnish year-wise list of all donations received (including corpus donations etc.) during the last 3 years / since inception, whichever is later 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 directions from the donors, if any. Please furnish the same. (iv) Note on activities actually carried out, with details of date and place of each activity, details of beneficiaries, how they were identified, other relevant information has not been furnished. (v) It is seen from the financial statements that the trust has not made any expenses on charitable activities. Kindly furnish your explanation with credible evidences. (vi) It is seen that the trust has not furnished the ITRs for the relevant financial years. As per the provisions of sec. 12A(b) and 12A(ba), the assessee was required to furnish the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under [sub-section (1) or sub-section (4) of] that section. Kindly submit your explanation with credible evidences. (vii) In application, the trust is stated to be a charitable trust. However, number of objects in the trust deed provide for religious activities. No clarification, with supporting evidence, is submitted on the same."
3.1 The assessee filed its reply to the aforesaid notice and after verifying the details/ documents submitted thereto, the Ld. CIT(E) rejected the application of the assessee vide his impugned order by observing as under:
3 “6. On verification of the details / documents furnished by the assessee in response to the said notice, it observed that no activities have been carried out by the trust since its inception till the filing of the present application. Further, the assessee has admitted that the trust is in the process of getting registration and permission for operating a school. Therefore, the application appears to be pre- mature.
7. 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 the assessee submitted all the details / documents called upon by the Ld. CIT(A). However, he failed to take the cognizance of the same. Referring to pages 16 to 73 of the Paper Book, the Ld. AR submitted that the assessee filed its response to notice dated 01.01.2025 providing the information/ documents sought for. He submitted that the Ld. CIT(A) has rejected the application on the ground that the same is premature as the assessee has not started its activities. He submitted that the activities have already been carried out by the assessee trust, in support of which the assessee had filed the details of the expenses incurred by the trust. Further, the Ld. CIT(E) has mentioned in the impugned order that the assessee trust is running a school which is also not correct as the assessee is not engaged in any such activity. He therefore prayed that the matter may be set aside to the file of the Ld. CIT(E) with a direction to re-examine the issue and decide it afresh after verifying the details already submitted by the assessee before him.
The Ld. DR had no objection the above request of the Ld. AR.
We have heard Ld. Representatives of the parties, perused the material available on record and the paper book filed by the Ld. AR on behalf of the assessee. It is an admitted fact that the assessee failed to respond to the initial notice issued by the Ld. CIT(E). However, the assessee filed its detailed reply in response to the subsequent notice(s) issued by the Ld. CIT(E) along with various details/documentary evidence in support of its claim. WE find that the Ld. CIT(E) has rejected the application of the assessee for the reasons reproduced in the preceding paragraph, without taking into cognizance the submission of the assessee. 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 in light of the submission of the assessee already on record before him 4 and such other details/ documents as may be required or called upon by him 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.