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Facts
The assessee filed applications for registration under Section 12A and approval under Section 80G of the Income Tax Act, 1961. The CIT(Exemption) rejected both applications and cancelled provisional registration under Section 12AB due to the assessee's failure to respond to notices and provide requisite information for verifying its activities and compliance, despite multiple opportunities.
Held
The Tribunal condoned the delay in filing the appeals, acknowledging the assessee's claim of an employee's mistake for non-compliance. In the interest of justice, the case was remanded back to the CIT(Exemption) to grant one final opportunity to the assessee to submit the required details and substantiate its case for re-adjudication.
Key Issues
Whether the CIT(Exemption) was justified in rejecting the applications for Section 12A registration and Section 80G approval without providing adequate opportunity to the assessee to furnish compliance details.
Sections Cited
12A, 80G, 12AB, 12A(1)(ac), 12AB(1)(b)(i), 12A(1)(ac)(vi)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
The above two appeals filed by the assessee are directed against the separate orders dated 18.10.2024 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.
There is a delay of 48 days in filing of both the appeals before the Tribunal for which the assessee has filed separate condonation applications along with affidavits explaining the reasons for such delay. After considering the contents of the condonation applications filed along with the affidavits and after hearing the Ld. DR, the delay in filing of the appeals is condoned and the appeals are admitted for adjudication. the assessee has challenged the order of the CIT(Exemption) in rejecting the application for registration u/s 12A of the Act while relates to the order of the 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 29.06.2024 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 05.08.2024 requesting the assessee to upload certain information / clarification. The assessee was also requested to submit the compliance by 20.08.2024. 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 matter will be decided based on material available on record. 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: “4. The assessee was requested to submit compliance by 20/08/2024. The notice was duly served on the assessee through e-portal and email. Since the assessee did not furnish compliance to the said notice, another opportunity was given to the assessee vide notice dated 04/10/2024 requesting it 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 specifically informed that in the event of failure to comply to the said notice, its application shall be liable to be rejected and the registration /approval shall also be liable to be cancelled. The assessee was also given opportunity of being heard vide the said notice. However, the assessee neither submitted the above mentioned compliance nor availed the opportunity of being heard. The assessee was requested to submit compliance by 11/10/2024. The assessee was also given opportunity of being heard vide the said notice. The notice was duly served on the assessee through e-portal and email. However, the assessee neither furnished its compliance to the show cause notice nor availed the opportunity of being heard.
The information / details were called for under the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961. These are the basic details required to ascertain the overall nature of the activities of the assessee and are directly relevant to the present proceedings. However, the assessee has failed to comply despite giving sufficient opportunities as discussed above including an opportunity of being heard.
Thus, the assessee has failed to furnish the details called for under the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961 to verify the genuineness of activities of the trust / institution and to verify the 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.
In absence of the compliance to the above requirement, it is not possible to arrive at any conclusion about the genuineness of activities of the assessee and the compliance to the 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.
8. It is clear from the above that the assessee was given sufficient opportunity to comply, but it has not complied to the same. It seems that the assessee is not having any supporting documents / evidence to submit. The assessee has failed to comply with the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961. Hence, the undersigned is unable to draw any satisfactory conclusion about genuineness of activities of the assessee and the compliance to the 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. Therefore, the undersigned has left no alternative but to reject the application.
9. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 31/12/2021 under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act, 1961 is hereby cancelled.”
5. 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.
6. Aggrieved with such order of CIT(Exemption), the assessee is in appeal before the Tribunal by raising the following grounds:
1. The Learned CIT(E) erred in rejecting the application under Section 12A solely on limitation grounds, disregarding the merits of the case.
2. The Learned CIT(E) failed to provide adequate opportunity for the appellant to present evidence demonstrating the genuineness of charitable activities and compliance with Section 12A provisions violating the principles of natural justice.
3. The Learned CIT(E) disregarded the welfare-oriented intent of the Income Tax Act, 1961, and the purpose of Section 12A, which is to promote charitable activities benefiting society.
4. The Learned CIT(E)'s decision conflicts with the Directive Principles of State Policy within the Constitution of India. These principles highlight the legislative intent to support charitable trusts for the public good.
5. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc in the interest of natural justice.
7. Similar grounds have been raised in which read as under:
1. 1. The Learned CIT(E) erred in rejecting the application under Section 80G solely on limitation grounds, disregarding the merits of the case.
2. The Learned CIT(E) failed to provide adequate opportunity for the appellant to present evidence demonstrating the genuineness of charitable activities and compliance with Section 80G provisions violating the principles of natural justice.
3. The Learned CIT(E) disregarded the welfare-oriented intent of the Income Tax Act, 1961, and the purpose of Section 80G, which is to promote charitable activities benefiting society.
4. The Learned CIT(E)'s decision conflicts with the Directive Principles of State Policy within the Constitution of India. These principles highlight the legislative intent to support charitable trusts for the public good.
5. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc in the interest of natural justice.
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 on 10th June, 2025.