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Facts
The assessee filed applications for registration under Section 12A and approval under Section 80G. The CIT(Exemption) rejected these applications and cancelled the provisional registration due to the assessee's failure to respond to a second notice, which the assessee attributed to an employee's mistake.
Held
The Tribunal restored the issue to the file of the CIT(Exemption) and granted one final opportunity to the assessee to submit the required details and substantiate its case.
Key Issues
Whether the assessee should be granted a final opportunity to furnish details for 12A and 80G registration/approval after failing to respond to a show-cause notice due to an employee's error.
Sections Cited
12A, 80G, 12AB, 12A(1)(ac), 12AB(1)(b)(1), 17A(2), 80G(5)
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 13.12.2024 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. 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 26.06.2024 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 24.07.2024 requesting the assessee to upload certain information / clarification. In response to the same, the assessee filed certain details. The CIT(Exemption) while going through those details found certain discrepancies in the submissions filed by the assessee for which he issued another notice to clarify on those issues. However, in absence of any response from the side of the assessee trust, the CIT(Exemption) 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 of the Act 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 05/12/2024. 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)(1) 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 03/08/2022 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.”
Since he has 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.
Aggrieved with such order of CIT(Exemption), 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) (iii) and cancelling provisional registration u/s 12A(1)(ac)(vi) granted on 03.08.2022 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
6. Similar grounds have been raised in which read as under:
1. 1. The ld CIT Exemption erred in law and on facts in rejection of application for Registration under clause (iii) of first proviso u/s 80G(5) 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.
7 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. She 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 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 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 her 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 16th April, 2025.