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Facts
The assessee's application for registration u/s 12A was rejected by the CIT(E) due to non-compliance with notices and failure to provide satisfactory details of its activities. The assessee appealed, citing a delay of 535 days and attributing it to the trustees' lack of knowledge of tax proceedings.
Held
The Tribunal condoned the delay in filing the appeal, citing Supreme Court decisions emphasizing substantial justice over technicalities. The Tribunal restored the issue to the CIT(E) to grant one final opportunity to the assessee to provide necessary details and decide the case on merits.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the assessee should be granted a final opportunity to submit details for registration u/s 12A.
Sections Cited
12A, 12AB, 11, 17A(2)(k), 12A(1)(ac)
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
This appeal filed by the assessee is directed against the order dated 29.09.2022 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 535 days in filing of this appeal before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. The Ld. Counsel for the assessee referring to the condonation application submitted that the trustees of the trust are senior citizens and had no knowledge of the income tax proceedings. They were dependent on the tax consultants. Only when the Assessing Officer passed the order for assessment year 2022-23 denying the benefit of exemption u/s 11 of the Act and raised the demand of Rs.2,81,640/- then the trust came to know that their application for grant of registration was rejected by the Ld. CIT(E). She further submitted that the trust was provisionally registered u/s 12A on 10.03.2022 and applied for final registration in Form 10AB on 28.03.2022. The Ld. CIT(E) rejected the application on 29.09.2022 which was not known to the assessee. Relying on the decisions of Hon'ble Supreme Court in the cases of Collector, Land Acquisition vs. Mst. Katiji & Ors. reported in 167 ITR 471 (SC) and Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339, she submitted that the delay in filing of the appeal should be condoned.
The Ld. DR on the other hand strongly opposed condonation application filed by the assessee and submitted that the reasons given by the Ld. Counsel for the assessee are not sufficient reasons so as to condone the delay. She accordingly submitted that the delay should not be condoned.
We have heard the rival contentions and perused the record. It is an admitted fact that there is a delay of 535 days in filing of the appeal before the Tribunal for which the assessee has filed condonation application along with an affidavit explaining the reasons for such delay.
We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra) has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
We find recently the Hon'ble Supreme Court in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339 has held as under: “14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.”
Considering the contents of the condonation application filed along with the affidavit explaining the reasons for the delay and respectfully following the above decisions of Hon'ble Supreme Court cited (supra) the delay in filing of the appeal by the assessee trust 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 28.03.2022 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 29.07.2022 requesting the assessee to upload certain information / clarification. The assessee was also requested to submit the compliance by 23.09.2022. 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: “3. It is seen that the assessee has not submitted the requisite details. Even on perusal of the application in form No.10AB, it is seen that the assessee has not submitted any satisfactory material including a note on activities before the undersigned. The assessee despite giving several opportunities has not submitted details of activities carried out. In fact the assessee reproduced its objects as note on activities. No specific details as to what actual activity is being carried out, submitted. The details above are very general in nature and no specific details as to what actual activity is being carried out, submitted. No credible evidence is submitted in support of the claim. 3.1 As per the provisions of Rule 17A(2)(k) of the Income Tax Rules, 1962, the application in Form No 10AB shall be accompanied by note on activities giving details of activities of the assessee. However, the assessee has failed to furnish the same. It is also seen from the data available on ITBA portal that the assessee has not uploaded these details despite giving ample opportunities as detailed above. In absence of any such tangible material in respect of details and proof of activities being carried out, it is not possible to ascertain as to whether the activities are in line with the objects of the trust / institution. Hence, the undersigned is unable to draw any satisfactory conclusion about genuineness of activities of the assessee.
4. In view of the above, the application filed by the assessee is hereby rejected.”
Aggrieved with such order of Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds:
1. The Ld. CIT Exemption erred in law and on facts in rejection of application for registration u/s 12A (1) (ac) without considering the facts and circumstances of the case.
2. The appellant prays for opportunity so as to explain its case
3. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.
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 two notices issued by the Ld. CIT(E), he rejected the application for grant of registration, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that the trustees of the trust are senior citizens and were not aware of the intricacies of the of the income tax proceedings. It is also her submission 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.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 5th May, 2025.
Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 5th May, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपीलार्थी / The Appellant; 1. 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune
S.No. Details Date Initials Designation 1 Draft dictated on 01.05.2025 Sr. PS/PS 2 Draft placed before author 05.05.2025 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order