Loading judgment…
Facts
The assessee, a charitable trust provisionally registered under Section 12A(1)(ac)(vi), applied for regular registration under Section 12A(1)(ac)(iii). The CIT(Exemption) rejected the application and cancelled the provisional registration because the assessee failed to respond to notices seeking further details. The assessee contended that notices were not received and the rejection was without proper opportunity.
Held
The Tribunal acknowledged the assessee's non-compliance in responding to notices but found that the CIT(Exemption) had not examined the application on merits. Therefore, the order of rejection was set aside, and the matter was remanded to the CIT(Exemption) for fresh adjudication on merits with an opportunity for the assessee to be heard. A cost of Rs. 5,000/- was imposed on the assessee for non-compliance.
Key Issues
Whether the CIT(Exemption) was justified in rejecting the application for regular registration and cancelling provisional registration due to the assessee's non-compliance with notices, and whether the CIT(Exemption) should have examined the application on its merits before passing the order.
Sections Cited
12A(1)(ac)(iii), 12A(1)(ac)(vi), 12AB(1)(b)(ii), 12A(1)(ac), 12AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
O R D E R आदेश आदेश आदेश PER MAKARAND V.MAHADEOKAR, AM: This appeal has been filed by the assessee against the order passed by the Commissioner of Income Tax (Exemption), Ahmedabad [herein after referred to as “CIT(Exemption)”], dated 22.10.2024, rejecting the application filed by the assessee for registration under section 12A(1)(ac)(iii) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) and cancelling the provisional registration granted under section 12A(1)(ac)(vi). Brief Facts of the Case 2. The assessee is a charitable trust, registered with the office of the Charity Commissioner since 22.02.1967, as submitted by the AR 2 in the written submission. The trust is stated to be engaged in activities aligned with its charitable and religious objects as stated in the trust deed. The assessee was granted provisional registration under section 12A(1)(ac)(vi) of the Act by the CIT(Exemption), Ahmedabad on 24.09.2021 vide Form No. 10AC, which was valid for the assessment years 2022–23 to 2024–25. In order to seek regular registration, the assessee filed an application in Form No. 10AB on the IT portal in accordance with section 12A(1)(ac)(iii) of the Act. The CIT(Exemption) issued two notices dated 23.07.2024 and 23.08.2024 seeking further documents and details in support of the application. However, since the assessee did not respond to either of the notices, the CIT(Exemption) rejected the application and also cancelled the provisional registration.
Aggrieved by the order of CIT(E), the assessee is in appeal before us raising following grounds:
1. The order passed under section 12AB(1)(b)(ii) of the Act is bad in law.
The learned CIT(Exemption) has erred in law as well as on facts in rejecting the application for registration under section 12A(1)(ac) of the Act and cancelling existing provisional registration.
The learned Authorised Representative (AR) for the assessee submitted that the assessee trust is duly registered with the Charity Commissioner and has been engaged in religious and charitable activities since 1967. The assessee filed its return of income for A.Y. 2024–25 and also uploaded the audit report in Form 10BB online. The Form 10B audit report for A.Y. 2023–24 was filed on 05.10.2024, evidencing that the trust was actively engaged in its stated activities. The AR submitted that the notices issued by the CIT(Exemption) were not received by the assessee and therefore, no compliance could be made. It was further argued that the application was rejected without 3 granting sufficient and effective opportunity of hearing, in violation of the principles of natural justice. It was therefore prayed that the matter may be restored to the CIT(Exemption) for fresh adjudication on merits, after affording reasonable opportunity. The assessee expressed readiness to comply with any direction issued in the remand proceedings.
The learned Departmental Representative (DR) relied on the order of the CIT(Exemption) and supported the rejection, pointing to the assessee’s failure to respond to multiple statutory notices. However, the DR raised no objection to the matter being remanded to the CIT(Exemption) for a fresh decision on merits.
We have carefully considered the rival contentions and perused the material on record. It is undisputed that the assessee is an existing trust, engaged in religious and charitable activities, as evident from the filing of audit report in Form 10B for A.Y. 2023–24 on 05.10.2024.
It is also a matter of record that the assessee filed the appeal before us within the prescribed time, which reflects continuing engagement with statutory proceedings. Hence, the contention of the AR that no notices were received by the assessee is not found to be convincing or logical. The CIT(Exemption) issued two notices and it was incumbent upon the assessee to ensure proper communication.
That said, it is equally evident that the CIT(Exemption) did not examine the application on merits. The order merely states procedural non-compliance and proceeds to reject the application and cancel the provisional registration. No examination of objects, activities, financial 4 statements, or documents already filed was undertaken to determine the eligibility for registration under section 12AB.
In light of the above, we are of the considered view that one more opportunity should be granted to the assessee to present its case before the CIT(Exemption), who shall pass a speaking order on merits, after considering the documents and affording reasonable opportunity of hearing.
However, to deter non-compliance in such statutory proceedings, we consider it appropriate to impose a cost of Rs. 5,000/- on the assessee, to be paid to the credit of the Income Tax Department before the next hearing before the CIT(Exemption). Such cost shall not prejudice the merits of the application.
The order dated by the CIT(Exemption) is set aside. The matter is restored to the file of the CIT(Exemption) for fresh adjudication on merits after granting effective opportunity of being heard.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Court on 24th July, 2025 at Ahmedabad.