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Facts
The assessee trust applied for registration u/s 12A and approval u/s 80G. The CIT(Exemption) rejected the applications after issuing notices due to non-compliance and perceived lack of genuineness of activities. The assessee contended that non-compliance was due to an employee's mistake.
Held
The Tribunal held that in the interest of justice, a final opportunity should be given to the assessee to submit the required details before the CIT(Exemption) for both the u/s 12A registration and u/s 80G approval.
Key Issues
Whether the CIT(Exemption) was justified in rejecting the application for registration and approval without granting a final opportunity to the assessee to provide clarifications on discrepancies.
Sections Cited
12A, 80G, 12AB, 10(23C), 17A(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
The above two appeals filed by the assessee are directed against the separate orders dated 14.01.2025 of the Ld. CIT(Exemption), Pune rejecting the application seeking 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.
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 12.07.2024 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 02.09.2024 requesting the assessee to upload certain information / clarification. In response to the same, the assessee filed certain details. While going through the said details, the Ld. CIT(E) noticed certain discrepancies for which he issued another notice to the assessee asking it to clarify on those issues. However, in absence of any response from the side of the assessee, the Ld. CIT(E) rejected the application for grant of registration u/s 12A of the Act and cancelled the provisional registration granted earlier u/s 12AB of the Act by observing as under: “5.2 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 09/01/2025. The notice was duly served on the assessee through e-portal and email.
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.
7. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 04/10/2023 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.”
Similarly, in absence of any registration u/s 12A or 12AB or approval u/s 10(23C) of the Act and in absence of any submission filed by the assessee in response to the notice issued, he rejected the application for approval u/s 80G of the Act.
Aggrieved with such order of Ld. CIT(Exemption), the assessee is in appeal before the Tribunal.
The Ld. Counsel for the assessee submitted that the assessee has filed all the relevant details in response to the first notice issued by the Ld. CIT(Exemption). He submitted that inadvertently the second notice could not be complied with due to the mistake on the part of the employee of the assessee trust. He submitted that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Ld. CIT(E). 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).
6. The Ld. DR on the other hand heavily relied on the order of Ld. CIT(E).
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 after assessee filed certain details in response to the notice issued by the Ld. CIT(E) for grant of registration u/s 12A, the Ld. CIT(E) noticed certain discrepancies for which he issued another notice to the assessee asking it to explain those discrepancies. However, the assessee failed to submit any details for which the Ld. CIT(E) rejected the application for grant of registration u/s 12A and also cancelled the provisional registration granted earlier. It is the submission of the Ld. Counsel for the assessee that due to the mistake of the employee of the trust, those details could not be filed. 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 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 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 CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the 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.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(E) in rejecting the application for grant of approval u/s 80G of the Act.
After hearing both sides, we find the Ld. CIT(E) rejected the application for grant of approval u/s 80G of the Act on the ground that the assessee did not respond to the show cause notice issued by him pointing out the discrepancies noticed. Further, the assessee is neither registered u/s 12AB r.w.s. 12A(1)(ac)(i) / 12A(1)(ac)(iii) nor approved u/s 10(23C) read with clause (i) / (iii) of first proviso to the said section and the case is not covered under the exclusions provided vide proviso to clause (i) of section 80G(5) of the Act. Since 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 the relevant details and since we have restored the issue of grant of registration u/s 12A to the file of the Ld. CIT(E) for fresh adjudication, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue of grant of approval u/s 80G also to his file for fresh adjudication. Needless to say, the CIT(Exemption) shall grant an opportunity of being heard to the assessee and decide the issue as per fact and 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 21st March, 2025.