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Facts
The assessee's application for registration under section 12A(1)(ac)(iii) was rejected by the CIT(E) for non-compliance and failure to provide clarification regarding loans from trustees and the genuineness of its charitable activities. The assessee claimed the non-compliance was unintentional due to unavoidable circumstances.
Held
The Tribunal restored the matter to the CIT(E) for fresh adjudication. The assessee was granted one more opportunity to submit all relevant documents and evidence to substantiate its case, after which the CIT(E) is to decide the application on merits.
Key Issues
Whether the CIT(E) rightly rejected the registration application for non-compliance, and if the assessee should be granted another opportunity to present its case with full documentation.
Sections Cited
12A(1)(ac), 12AB, 36A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 12.12.2024 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed before him on 30.06.2024 in Form No. 10AB under clause (iii) of section 12A(1)(ac) of the Income Tax Act, 1961 (the “Act”).
The assessee has raised the following grounds of appeal : “1. The Ld. CIT Exemption erred in not granting the Registration u/s 12AB of the ITR.
2. The Ld. CIT Exemption erred in denying the approval of registration u/s 12AB merely on the ground that no permission from charity commissioner was granted for loan taken by the trust. He failed to appreciate the fact that loan were utilize towards charity object only.
3. The appellant craves its right to add to or alter the Grounds of Appeal at any time before or during the course of hearing of the case.”
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)(iii) 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 22.08.2024 through ITBA portal 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 04.09.2024. 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 29.11.2024 duly served upon the assessee via e- portal/email. The said discrepancies are reproduced below :
“(i) It is seen from the balance sheet that you have raised loans/ advances from the trustees/Others. However, the permission under section 36A of the Maharashtra Public Trust Act, 1950 from the Charity Commissioner is not furnished. You were requested vide the initial notice itself to furnish proof of compliance in respect of the any other Law applicable for achievement of objectives but you have failed to comply. Kindly furnish the same.”
3.1 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 Act should not be cancelled in the event of failure to comply by the due date i.e. 06.12.2024. However, the assessee neither submitted explanation to the show cause notice nor availed the opportunity of being heard. Since, the assessee did not furnish any explanation to the discrepancies communicated to it, the Ld. CIT(E) presumed that the assessee has nothing to say in the matter. Having 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 and also cancelling the provisional registration earlier granted to the assessee on 09.12.2022.
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that the Ld. CIT(E) non-compliance to the show cause notice was not intentional but occurred on account of certain unavoidable circumstances beyond the control of the assessee. He submitted that given an opportunity the assessee is in a position to submit all the requisite details/documentary evidence before the Ld. CIT(E) in support of its application and respond to the discrepancies noticed by the Ld. CIT(E), to his satisfaction. He, therefore, prayed that 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 had no objection the above request of the Ld. AR.
We have heard the Ld. Representatives of the parties and perused the records. It is an admitted fact that due to non-compliance to the second notice issued by the Ld. CIT(E) asking for clarification/document as per the discrepancy noted by the Ld. CIT(E) in relation to the loans/advances raised by the assessee from trustees/other and also lack of supporting evidence regarding genuineness of the charitable activities of the assessee trust not furnished by the assessee, the Ld. CIT(E) rejected the assessee’s application for grant of registration u/s 12A of the Act and also cancelled the provisional registration granted earlier. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case by filing all the relevant supporting details/documents/ evidence before the Ld. CIT(E). Considering the totality of the facts and in the circumstances of the assessee’s case, 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 for registration u/s 12A(1)(ac)(iii) of the Act afresh and decide the matter on merits, in accordance with facts and law after allowing one more 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 for sufficient cause, failing which the Ld. CIT(E) shall be at liberty to pass appropriate order as per law. We order accordingly.
In the result, the appeal of assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 30th June, 2025.