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Facts
The assessee's application for registration u/s 12A was rejected and provisional registration u/s 12AB was cancelled by the CIT(E) for alleged discrepancies and lack of compliance. The assessee's appeal to the Tribunal was filed with a significant delay.
Held
The Tribunal condoned the delay and admitted the appeal. Considering that the assessee claims an opportunity of being heard was not adequately granted, the Tribunal restored the issue to the CIT(E) for a final opportunity to the assessee to present its case.
Key Issues
Whether the CIT(E) erred in rejecting the registration application without affording a proper opportunity of being heard to the assessee.
Sections Cited
12A, 12AB, 12A(1)(ac), 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 31.03.2023 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 346 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. After considering the contents of the condonation application filed along with the affidavit and after hearing the Ld. DR, the delay in filing of the appeal 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 30.09.2022 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 20.12.2022 requesting the assessee to upload certain information / clarification. From the various details furnished by the assessee, he noticed certain discrepancies. He, therefore, issued another notice asking the assessee to show cause as to why the application filed for registration u/s 12A(1)(ac)(vi) of the Act be not rejected and why the registration granted earlier be cancelled. Since there was no compliance from the side of the assessee, the Ld. CIT(E) rejected the application filed by the assessee and also cancelled the provisional registration granted earlier by observing as under: “2.3 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 24/03/2023. The notice was duly served on the assessee through e-portal and email 3. The assessee has not dealt with the issue of 'Specific Community in its response and has remained silent. Also, the activity is not supported by any valid evidence. So, the genuineness is also questionable.
In view of these shortcomings with respect to various aspects of being eligible for registration under section 12AB of the Act, especially with respect to genuineness and alignment with the objects of the trust/institution, the said application filed by the assessee is hereby rejected and the provisional registration granted on 27/05/2021 under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act, 1961 is hereby cancelled.”
4. Aggrieved with such order of CIT(Exemption), the assessee is in appeal before the Tribunal by raising the following grounds:
1 The learned CIT (Exemption), Pune has erred in rejecting application for registration/renewal of Assessee by passing order under clause (ii) of section 12A(1)(ac) r. w. s. 12AB of the Income Tax Act, 1961.
2. Without considering the facts and circumstances of the case and the law the Ld CIT (Exemption) has erred in rejecting assessee's application for registration/renewal.
3. The order of rejection has been passed without considering submission and explanation filed by the assessee and thus suffers from infirmity. 4 The Learned CIT has erred in concluding that the assessee trust is dealing with and serving specific community and that its object clause with respect to particular community defeats the very concept of charity making it ineligible.
5. The Learned CIT has also erred in concluding that assessee trust's activity is not supported by valid evidence.
6. The Ld. CIT was incorrect in doubting genuineness of activities while passing the rejection order.
7. The CIT E erred in not following provisions of law and rules while rejecting application. The rejection on the issue of specific community clause is beyond his powers and thus the order of rejection is bad in law. 8 The assessee craves leave to add, alter, amend, modify, delete any of the grounds of appeal.
The Ld. Counsel for the assessee submitted that the application filed for grant of registration u/s 12A of the Act was rejected by the Ld. CIT(E) without affording a reasonable opportunity of being heard to the assessee. He submitted that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details to the satisfaction of the Ld. CIT(E).
The Ld. DR on the other hand strongly supported the order of the CIT(Exemption).
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 on the basis of various details furnished by the assessee, Ld. CIT(E) noticed certain discrepancies for which he issued another notice to the assessee calling for certain clarifications. However, the assessee failed to respond to the said notice for which the Ld. CIT(E) rejected the application for grant of registration u/s 12A of the Act and cancelled the provisional registration granted earlier, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that adequate opportunity was not granted to the assessee by the Ld. CIT(E). 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.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 27th February, 2025.