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Facts
The assessee, a charitable trust, filed an application for registration in Form No. 10AB. The CIT(E) rejected the application due to the assessee's failure to furnish requisite information and documents to verify the genuineness of its activities and compliance with the law. The assessee also failed to respond to notices and requested an adjournment, which was denied.
Held
The Tribunal restored the matter to the file of the CIT(E), granting one final opportunity to the assessee to submit its case. The assessee was directed to cooperate and not seek further adjournments.
Key Issues
Whether the CIT(E) was justified in rejecting the application for registration due to non-compliance with notices and requests for adjournment, and whether the assessee was entitled to provisional registration.
Sections Cited
12A(1)(ac), 12AB(1)(b)(i), 12AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
The appeal filed by the assessee is directed against the order dated 21.03.2024 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed before him on 27.09.2023 in Form No. 10AB under clause (iii) of section 12A(1)(ac) of the Income Tax Act, 1961 (the “Act”).
The assessee has raised the following grounds of appeal :-
1. On the facts and in the circumstances of the case and in law the Ld. CIT- Exemption was not justified in rejecting the order for registration approval holding it "not applicable (Form No. 10AD). It be restored to this appellant to do complete justice to it.
2. On the facts and in the circumstances of the case and in law the assessee could not submit the details called for under the provisions of section 12AB(1)(b)(i) of the Act There was no doubt regarding the genuineness of the Trust. This appellant was regularly filing its Returns of income to the Department upto A. Y. 2023-24 along with statements of accounts. The appellant submitted required documents while applying in Form 10A vide ack no. 294393840140821 dt. 14.08.2021 and in Form 10AB vide ack no. 315355250270923 dt.27.09.2023 and also during the proceeding Vide ack No. 899973921130124 dt 13.01.2024 and on 07.03.2024 Vide ack No. 136834961070324 for adjournment, and through email dt 15.03.2024.
3. On the facts and in the circumstances of the case and in law the Ld. CIT- Exemption failed to take into account that the application was filed under Clause (iii) of S. 12A(1)(ac) of the Ac and the appellant was entitled to be provisionally registered for a period of five years as provided in Cl. (a) of S. 12AB of the Act. It be held accordingly.
4. The Ld CIT Exemption erred in law and on facts in cancelling the provisional registration granted on 24/09/2021 without following the due process of law and without affording opportunity of hearing to the appellant.
5. The Ld CIT Exemption erred in law and on facts in cancelling the provisional registration granted on 24/09/2021 in absence of any dissatisfaction about genuineness of the activities of the appellant.
6. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.”
3. Briefly stated, the facts of the case are that the assessee is a Charitable Trust. On receipt of application filed in Form No. 10AB u/s 12A(1)(ac)(iii) of the Act on 27.09.2023 along with annexures thereto, the Ld. CIT(E) with a view to verify the genuineness of activities of the assessee trust 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, issued a notice through ITBA portal on 05.12.2023 requesting the assessee to upload certain information/clarification stated therein. The notice was duly served upon the assessee through e-portal and email. The assessee was requested to submit its compliance by 20.12.2023. However, the assessee failed to respond. The Ld. CIT(E) therefore issued another notice on 08.01.2024 requesting the assessee to furnish the compliance by 16.01.2024. The said notice was also duly served on the assessee through e-portal and email and responded to. On verification of the details submitted by the assessee in response to the said notice, the Ld. CIT(E) observed various discrepancies which were communicated to the assessee vide notice dated 01.03.2024 deeking compliance by 08.03.2024. The said discrepancies as listed out in para 4 of the Ld. CIT(E) order are as under : "(i) Trust is stated to be a charitable trust. However, one of the objects provides for construction/ helping to construct temples which is not a charitable object. Further, trust deed does not contain irrevocability clause or the provisions regarding transfer of assets to other trust/organisation having similar objects and activities in the event of winding up of the assessee trust. (ii) Year-wise lists of donations for all FYs have not been furnished. In list of FY 2022-23, all details viz full name, complete address, PAN of donor, date & mode of donation, amount, receipt no. issued. (iii) Trust is engaged in education activities. However, all details called for vide Para 4 of notice dt. 08/01/2024 and supporting documents have not been furnished. (iv) As per the provisions of Rule 17A(2)(g) of the Income Tax Rules, 1962, the application in Form No. 10AB shall be accompanied by the self certified copies of annual accounts relating to earlier three years or since inception, whichever is later. Thus, the annual accounts, at least for F.Y. 2019-20, 2020-21 and 2021-22 were required to be submitted along with the application itself. However, it is seen that you have furnished the annual accounts for F.Y. 2021-22 & 2022-23 only. Thus, you have failed to comply with the provisions of Rule 17A(2)(g) of the Income Tax Rules, 1962. Furnish copies of FYs 2019-20, 2020-21.”
3.1 In view of the above, the assessee was requested to show cause as to why the application should not be rejected and why the provisional registration granted should not be cancelled. In response to the said show cause notice, the assessee could not furnish any clarification/documents called for by the Ld. CIT(E) and filed a letter dated 07.03.2024 requesting for adjournment of one month due to HSC & College examinations. The Ld. CIT(E) rejected the adjournment application of the assessee for the reason that the proceedings in respect of section 12A are required to be completed within the statutory time limits as provided in the Act which in the assessee’s case is 31.03.2024. He, therefore, proceeded to reject the assessee’s application for registration and cancelled the provisional registration granted on 24.09.2021 u/s 12AB r.w.s. 12A(1)(ac)(vi) of the Act holding that in the absence of any details/submission available before him, he is unable to draw any satisfactory conclusion about the genuineness of the activities of the assessee trust and the 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.
Aggrieved, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that non-compliance before the Ld. CIT(E) was not intentional. The assessee had duly filed response to the second notice issued by the Ld. CIT(E). However, subsequent notice issued could not be complied with owing to the reason that being an educational institution, the staff and trustees of the assessee trust were occupied with on-going HSC and college examinations because of which the assessee trust sought adjournment for a month before the Ld. CIT(E). However, the Ld. CIT(E) rejected the said adjournment application of the assessee and proceeded to pass the impugned order without providing opportunity of hearing to the assessee. The Ld. AR submitted that given an opportunity the assessee trust is in a position to file all the requisite details/documents to substantiate its case before the Ld. CIT(A) and therefore prayed that the matter may be restored to the file of the Ld. CIT(E) for fresh adjudication on merits after allowing due opportunity of hearing to the assessee.
The Ld. DR fairly conceded to the above request of the Ld. AR.
We have heard the Ld. Representative of the parties, perused the material on record. We observe that the assessee in response to the notice issued on 08.01.2024 by the Ld. CIT(E) filed the requisite details. After verification of assessee’s response, the Ld. CIT(E) issued another notice pointing out certain discrepancies. The assessee however failed to file compliance and sought adjournment for the reasons stated above, which has rejected by the Ld. CIT(E). Thus, in the absence of requisite information/documents/clarification filed by the assessee, the Ld. CIT(E) could not draw any satisfactory conclusion about the genuineness of the activities of the assessee trust and proceeded to pass the impugned order as the same was getting time barred on 31.03.2024. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the matter to the file of the Ld. CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing requisite details and decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to make its submissions if any before the Ld. CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(E) shall be 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, the appeal of assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 20th February, 2025.