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Facts
The assessee filed an application for registration under Section 12A and sought to verify the genuineness of its activities. The CIT(Exemption) issued notices for information, but the assessee failed to comply despite multiple opportunities. Consequently, the CIT(E) rejected the application and cancelled the provisional registration.
Held
The Tribunal held that while the assessee's non-compliance was persistent, considering the totality of facts and in the interest of justice, the issue should be restored to the file of the CIT(E). The assessee was granted one final opportunity to submit the required details.
Key Issues
Whether the CIT(E) was justified in rejecting the registration application and cancelling provisional registration due to non-compliance, and if the assessee should be granted a final opportunity to present its case.
Sections Cited
12A, 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
This appeal filed by the assessee is directed against the order dated 03.09.2024 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.
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 26.03.2024 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 20.05.2024 requesting the assessee to upload certain information / clarification. The assessee was also requested to submit the compliance by 04.06.2024. Since the assessee did not comply to the said notice, another opportunity was granted by the Ld. CIT(E) vide letter dated 11.07.2024 asking the assessee to explain as to why the application for registration u/s 12A should not be rejected and why the provisional registration granted earlier u/s 12AB should not be cancelled. Despite this letter there was no compliance from the side of the assessee for which the Ld. CIT(E) granted one more opportunity to the assessee. However, due to consistent non-compliance to the statutory notices, the Ld. CIT(E) 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 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.
6. 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.
7. 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.
In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 24/09/2021 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 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. Whether on the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income (Exemption), Pune has erred by not giving the appellant the sufficient opportunity to present the documents which is against the Principle of Natural Justice.
2. Whether on the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income (Exemption), Pune has erred by not paying any heed to the request by the Trustee for reopening the window for submission.
3. Whether on the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income (Exemption), Pune erred in not deciding the matter on merit in spite of the fact that the Trust regularly complies with all the provisions of Income Tax Act, 1961 within stipulated time since its' incorporation.
4. The assessee craves liberty to add, alter or amend any ground/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 and submitted that the Secretary of the foundation is a Chartered Accountant. Therefore, he cannot say that the assessee was not aware of the requirements as per law. He submitted that the Ld. CIT(E) has passed a detailed order rejecting the application for grant of registration and also cancelling the provisional registration granted earlier due to the non- compliance. Therefore, the same should be upheld and the appeal filed by the assessee be dismissed. He also submitted that heavy cost should be imposed on the assessee for such non-compliance.
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 notice issued by the Ld. CIT(E) asking for certain details, 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 see from the Affidavit filed by the Secretary of the trust that he is a Chartered Accountant who supposed to know the law. Therefore, considering the totality of the facts of the case and considering the fact that there was persistent non-compliance from the side of the assessee trust, we impose a cost of Rs.2,500/- on the assessee which is to be deposited within 30 days from the receipt of this order. 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 11th April, 2025.