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Facts
The assessee filed an application for registration under Section 12A of the Income Tax Act, 1961. The CIT(E) issued notices for clarification, but the assessee failed to comply with the same. Consequently, the CIT(E) rejected the application and cancelled the provisional registration.
Held
The Tribunal restored the issue to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to submit details and decide the issue afresh. The assessee was directed to submit details without adjournment.
Key Issues
Whether the CIT(E) was justified in rejecting the application for registration and cancelling the provisional registration due to non-compliance by the assessee, and whether the assessee should be granted another opportunity.
Sections Cited
12A, 12AB, 12A(1)(ac), 12AB(1)(b)(i), 17A(2)
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
ORDER PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the order dated 14.09.2024 of the Ld. CIT(Exemption), Pune rejecting the application for grant of registration u/s 12A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and cancelling the provisional registration granted earlier u/s 12AB of the Act.
2. Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 30.03.2024 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 24.05.2024 requesting the assessee to upload certain information / clarification. The assessee was also requested to submit the compliance by 10.06.2024. 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 and also cancelled the provisional registration granted earlier u/s 12AB by observing as under :- “5. 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 10/09/2024. 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.
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.
In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 28/05/2021 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.”
Aggrieved with such order of Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds :- “1. On facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be kindly held that the order passed by the Commissioner of Income Tax-Exemptions ['CIT(E)'], Pune, rejecting the Appellants application for seeking registration u/s 12AB of the Act is against the provisions of the Act. Accordingly, the order passed by the Ld. CIT(E) be held as not tenable in law and be set aside directing the Ld. CIT(E) to grant registration. The appellant be granted just and proper relief in this respect.
2. On facts and circumstances prevailing in the case and as per provisions & scheme of the Act it be kindly held that Appellant be kindly granted an opportunity to furnish relevant documents to proove/substantiate its charitable activities before Ld. CIT(E). Accordingly, the order passed by the Ld. CIT(E) be kindly set aside and Appellant be granted just and proper relief in this respect.
3. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal
at the time of hearing.”
4. The Ld. Counsel for the assessee submitted that due to preoccupation of the concerned Chartered Accountant, the details could not be filed. He submitted that given an opportunity the assessee is in a position to substantiate its case by filing all the relevant details for deciding the issue afresh. He accordingly submitted that the matter may be restored to the file of the Ld. CIT(E).
5. The Ld. DR on the other hand strongly objected to the arguments advanced by the Ld. Counsel for the assessee.
6. 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 due to non- compliance to the second notice issued by the Ld. CIT(E) asking for certain clarifications regarding the discrepancies pointed out by him, he rejected the application for grant of registration 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 details before the Ld. CIT(E). 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(E) 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(E) 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.