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Facts
The assessee, Shree Ayappa Seva Samajam Trust, applied for registration under Section 12A(1)(ac) of the Income Tax Act, 1961. The CIT(E) issued notices seeking clarifications regarding genuineness of activities, but the assessee failed to comply or make any submission, leading the CIT(E) to reject the application and cancel the provisional registration granted earlier under Section 12AB. The assessee filed an appeal with a 117-day delay, which was condoned by the Tribunal, arguing that non-compliance was due to the Chartered Accountant's preoccupation.
Held
The Tribunal acknowledged the assessee's non-compliance but, in the interest of justice and considering the request for an opportunity to substantiate its case, decided to restore the matter to the file of the CIT(E). The CIT(E) is directed to grant the assessee one final opportunity to submit all requisite details and then decide the issue on merits, with a warning that failure to comply would allow the CIT(E) to pass an appropriate order as per law.
Key Issues
Whether the CIT(E) was justified in rejecting the application for registration and cancelling provisional registration due to non-compliance, and whether the assessee should be granted a final opportunity to submit the required information.
Sections Cited
12A, 12AB, 12A(1)(ac), 12AB(1)(b)(i), Rule 17A(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
This appeal filed by the assessee is directed against the order dated 05.09.2024 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.
There is a delay of 117 days in filing of the appeal before the Tribunal for which the assessee has filed condonation application along with affidavit explaining the reasons for such delay. After considering the contents of the condonation application filed along with the affidavit and after hearing the Ld. DR, the delay in filing of the appeal is condoned and the appeal is admitted for adjudication.
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 12.03.2024 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 15.05.2024 requesting the assessee to upload certain information / clarification. The assessee was also requested to submit the compliance by 30.05.2024. 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 26/08/2024. 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.
6. 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.
7. 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.
8. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 10/03/2022 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, cancelled 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. The learned CIT (Exemption), Pune has erred in rejecting application for registration/renewal filed by Assessee by passing order under clause (ii) of section 124(1)(ac) r.w.s. 12AB of the Income Tax Act, 1961.
2. Without considering the facts and circumstances of the case and the law, the ld. CIT Exemption has erred in rejecting Assessee's application for registration/renewal
3. The order of rejection has been passed without considering submission and explanation filed by the assessee and thus suffers from infirmity.
4. The Order passed by the CIT Exemption, Pune rejecting the Assessee's application is not in keeping with provisions of law, is bad in law and thus the same needs to be set aside
5. The learned CIT erred in passing the order without affording adequate opportunity of being heard to the assessee.
6. The Ld. CIT has erred in withdrawing provisional registration granted to the assessee without following due process of law.
7 The Assessee prays for any other relief may be allowed to the Assessee under provisions of income tax law. 8. The assessee craves leave to add, alter, amend, modify, delete any of the grounds of appeal.
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).
The Ld. DR on the other hand strongly objected to the arguments advanced 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 due to non-compliance to the 2nd 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 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 CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the 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.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 12th June, 2025.