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Facts
The assessee filed an application for final registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961. The CIT(E) issued notices seeking clarification on various aspects, including donations and activities, but found discrepancies. The assessee failed to provide satisfactory explanations or comply with the notices.
Held
The Tribunal held that the CIT(E) did not grant adequate opportunity for hearing and that the matter should be restored to the file of the CIT(E) for fresh adjudication.
Key Issues
Whether the CIT(E) rejected the application for registration without affording adequate opportunity to the assessee and if the grounds for rejection were adequately addressed.
Sections Cited
12A, 12AB, 12A(1)(ac)(iii), 12AB(1)(b)(i), 17A(2)
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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
Nashik Manav Sewa Foundation, CIT (Exemption), Pune Shop No. 1, Sumangal Height, Sadhu Vasavani Road, Vs. Holaram Colony, Nashik-422001 PAN : AAHCN6766C अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Nikhil Mutha Department by : Shri Prashant Gadekar Date of hearing : 16-04-2025 Date of 30-04-2025 Pronouncement : आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 24.09.2024 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed on 08.03.2024 before him in Form No. 10AB u/s 12A(1)(ac)(iii) of the Income Tax Act, 1961 (the “Act”).
The assessee has raised the following grounds of appeal :-
1. Ground 1: Violation of principle of natural justice 1.1 In the facts and circumstances of the case and in law, the learned CIT (Exemption) erred in rejecting the application for final registration under section 12A of the Act without affording the Appellant adequate opportunity to present its case.
2. Ground 2: Challenging rejection of registration under section 12AB 2.1 In the facts and circumstances of the case and in law, the learned CIT(Exemption) erred in rejecting the application for final registration under section 12AB of the Act without appreciating that the alleged reasons for rejection were adequately addressed in the submissions forming part of the record. 2.2 In doing so the learned CIT(Exemption) erred in: a) Not appreciating that the details of Donations made by the Appellant Trust was forming part of Annexure 10 to submission dated 27/05/2024. b) Not appreciating that the details of activities carried out by the Appellant Trust in collaboration with hospitals or other charitable institutions have been explained in detail along with description of beneficiary and photos of such activities vide Annexure 12 to submission dated 27/05/2024. 2.3 The Appellant prays that the Learned CIT(E) erred in not appreciating the above facts on record and concluded the proceedings in undue haste especially considering that the Appellant complied with earlier Notice and all the procedure in a timely manner. The Appellant accordingly prays before your Honour that the order passed by the Learned CIT(E) should be set aside. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law.”
3. 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 10.05.2024 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(1)(b)(i) of the Act. The compliance was sought by 27.05.2024. 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 12.09.2024 duly served via e-portal/email, seeking compliance by 19.09.2024. The said discrepancies are reproduced below : "(i) As per the financial statements it is seen that you have donated funds to the tune of Rs 3.32 lakhs and Rs 20.06 lakhs for the F Y 2021- 22 and 2022- 23 respectively. However, it is not clear as to whom the donations are given nor any credible evidence such as acknowledgement letters / beneficiaries / objects of the trust to whom funds are transferred or given / whether objects are similar in nature to your trust as per trust deed if given to a trust or institute, the satisfaction about the genuineness of activities could not be arrived at. Kindly furnish your explanation with credible evidences."
3.1 The assessee was requested to show cause as to why the application should not be rejected and why the registration granted u/s 12AB of the Act should not be cancelled in the event of failure to comply by the due date i.e. 19.09.2024. 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 charitable activities of the assessee trust, the Ld. CIT(E) proceeded to pass the impugned order rejecting the application of the assessee and cancelling the provisional registration granted earlier to the assessee on 31.08.2021 u/s 12AB r.w.s. 12A(1)(ac)(vi) of the Act by observing as under : 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 .”
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that there was no intentional non-compliance before the Ld. CIT(E). He submitted that as can be seen from the order of the Ld. CIT(E), adequate opportunity of hearing was not granted to the assessee to present its case before him. The Ld. CIT(E) gave only one opportunity to respond to the discrepancies noted by him with a short time span of one week. 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). 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 one more opportunity of being heard to the assessee.
The Ld. DR conceded to the above proposition of the Ld. AR.
We have considered the rival submissions 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 certain details, he rejected the assessee’s 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 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. 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 any adjournment unless there is a reasonable 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 April, 2025.
Sd/- Sd/- (R.K. Panda) (Astha Chandra) JUDICIAL MEMBER VICE PRESIDENT पुणे / Pune; दिन ांक / Dated : 30th April, 2025. रदि आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, 4. पुणे / DR, ITAT, “A” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER,
िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune