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Facts
The assessee filed applications for registration u/s 12A and approval u/s 80G. The CIT(Exemption) rejected these applications due to the assessee's failure to respond to a second notice, citing discrepancies and non-compliance. The assessee claimed the failure was due to an employee's mistake and sought an opportunity to present their case.
Held
The Tribunal noted that the assessee did not respond to the second notice. However, in the interest of justice and considering the employee's mistake, the issue was restored to the CIT(Exemption) for a final opportunity to the assessee to present details.
Key Issues
Whether the rejection of applications for registration u/s 12A and approval u/s 80G was justified, or if the assessee should be granted a final opportunity to provide details due to a procedural error.
Sections Cited
12A, 80G, 12AB, 12A(1)(ac), 17A(2), 80G(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
The above two appeals filed by the assessee are directed against the separate orders dated 12.12.2023 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.
2. These appeals were earlier heard by the Tribunal on 30.09.2024 and inadvertently the unsigned order of the Tribunal was uploaded on 01.10.2024. When this mistake was noted that the unsigned order has been uploaded, the case was again fixed for hearing after withdrawing the order from the portal. Therefore, no cognizance of the unsigned order which has been uploaded by the Tribunal be taken. the assessee has challenged the order of the CIT(Exemption) in rejecting the application for 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 22.08.2023 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 25.10.2023 requesting the assessee to upload certain information / clarification. The assessee was also requested to submit the compliance by 10.11.2023. 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 the assessee to explain on account of those discrepancies. Since the assessee did not comply to 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. 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:
“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 27/11/2023. 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.
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.
4. 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 27/05/2021 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. Ground 1: Violation of principle of natural justice In the facts and circumstances of the case and in law, the learned CIT(E) erred in rejecting the application for final registration under section 12A of the Act drawing a presumption that the Appellant has nothing to say in the matter without providing further opportunity to file submission and without providing an opportunity for hearing.
2. Ground 2: Challenging rejection of registration under section 12AB In the facts and circumstances of the case and in law, the learned CIT(E) erred in rejecting the application for final registration under section 12AB of the Act without appreciating that all the alleged reasons forrejection were adequately addressed in the first response itself filed by the Appellant along with relevant back-up evidences In doing so, the learned CIT(E) erred in: (a) Not appreciating that the Trust has been recently set-up, acquired land and had started construction of the building required for dissemination of teachings& knowledge regarding Vipassana Meditation and the said fact was evident from the note on activity and back-up photos filed in response to the first submission. (b) Not appreciating that the Trust had incurred substantial expenditure from its Corpus Building Fund accounted as part of balance sheet and hence, profit & loss account did not show incurrence of significant expenditure.
(c) Not appreciating that the mismatch in figures of Corpus Building Fund between earlier and subsequent year's balance sheet was only on account of change in presentation and the same was evident from the audited financial statements placed on record as part of the first submission. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law.
1.1 In the facts and circumstances of the case, the learned CIT(E) erred in rejecting the application u/s 80G(5) filed on 22/08/2023 as time barred without appreciating that the date of 31/03/2021 was merely the date of purchase of land for Building the Centre for its stated objective of providing teachings of Vipassana Meditation and not the date of commencement of charitable activities. 1.2 The learned CIT(E) ought to have appreciated that the Appellant started conducting teaching sessions in allied locations (pending construction of the Building) only after August, 2023 which was evident from the submission and photos of activities provided as part of the first submission filed by the Appellant. 1.3 The learned CIT(E) ought to have appreciated that in the facts of the present case, the application filed on 22/08/2023 was considering the first limb i.e. atleast six months prior to the expiry of provisional approval of clause (iii) of first proviso to section 80G(5) of the Act since the Appellant's provisional registration under section 124 was due to expire on 31 March 2024. 1.4 The learned CIT(E) grossly erred in not providing any opportunity to file the submission in relation to the assertion that the application is time barred and directly concluded on the same without appreciating the aforesaid facts and merits of the case.
Ground 2: Without prejudice, challenging the conclusion that the application as 80G(3) is time barred basis the principles laid down by various judicial precedents in identical contest 2.1 Without prejudice to the above, assuming the date of commencement of activities is considered is be 31/03/2021, the Appellant submits that the application filed is valid considering the following grounds , which are without prejudice and independent to each other: a) That the Hon'ble Madras High Court to the case of Sri Nrisimba Priya Charitable Trust v. CBDT (W. P No 27030 of 2023 dated
2. April 2024) held that the CBDT Circular 6/2023 extending the time limit for final registration under section 12A ought to be considered as having also extended the time limit for filing application for final registration order section 80C(5) of the Act, which ratio has been subsequently followed in various decisions including the recent decision of the Hon'ble Co- ordinate Bench of Chennai in case of Hosur Integrated Development Society (ITA 217 CHY/2024 dated
17. April 2024). b) That the Hon'ble Tribunal has power to condone the delay in filing the application the final registration under section 80G(5) of the Act having regard to various Judicial precedents including the decision of the Hon'ble Delhi High Court in the case of Vishwa Jagriti Mission (213 Tasman 65) and the decisions of the various Hon'ble Tribunal following the ratio decidendi laid down by the Hon'ble High Court.
3. Ground 3: Violation of principle of natural justice qua merits of the case In the facts and circumstances of the case and in law, the learned CIT(E) erred in rejecting the application for final registration under section 80G(5) of the Act as a consequence to rejection of final registration under section 12A (challenged in a separate appeal) drawing a presumption that the Appellant has nothing to say in the matter on merits without providing further opportunity to file submission and without providing an opportunity for hearing.
4. Ground 4: Challenging rejection of registration under section 80G(5) on merits In the facts and circumstances of the case and in law, the learned CIT(E) erred in rejecting the application for final registration under section 80G(5) / 12A of the Act without appreciating that all the alleged reasons for rejection were adequately addressed in the first response itself filed by the Appellant along with relevant back-up evidences. In doing so, the learned CIT(E) erred in: (a) Not appreciating that the Trust has been recently set-up, acquired land and had started construction of the building required for dissemination of teachings& knowledge regarding Vipassana Meditation and the said fact was evident from the note on activity and back-up photos filed in response to the first submission. (b) Not appreciating that the Trust had incurred substantial expenditure from its Corpus Building Fund accounted as part of balance sheet and hence, profit & loss account did not show incurrence of significant expenditure.
(c) Not appreciating that the mismatch in figures of Corpus Building Fund between earlier and subsequent year's balance sheet was only on account of change in presentation and the same was evident from the audited financial statements placed on record as part of the first submission The Appellant craves leave to add alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law.
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 1st July, 2025.