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Facts
The assessee trust applied for approval under Section 80G, but the CIT(E) rejected it ex-parte due to non-compliance with notices and procedural lapses. The assessee appealed, citing internal miscommunication as the reason for the delay and non-compliance.
Held
The Tribunal condoned the delay in filing the appeal and set aside the CIT(E)'s ex-parte order, restoring the matter for fresh adjudication. The assessee was given an opportunity to present its case, subject to payment of costs.
Key Issues
Whether the CIT(E) was justified in rejecting the application ex-parte without affording a reasonable opportunity to the assessee and whether the delay in filing the appeal should be condoned.
Sections Cited
80G, 80G(5)(iv)(B), 10(23C), 11, 12, 12A(1)(ac)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
This appeal filed by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”] under section 80G(5)(iv)(B) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”], dated 15.07.2024, whereby the application filed by the assessee in Form No. 10AB seeking approval under section 80G was rejected.
Condonation of delay
The Registry has noted that the present appeal was filed with a delay of 116 days beyond the prescribed limitation period. The assessee has filed an application for condonation of delay along with an affidavit dated 23.01.2025 sworn by Shri Lilesh Rupchandbhai Chaudhary, trustee of the assessee trust, explaining the reasons for the delay. The affidavit states that the delay occurred on account of internal miscommunication and procedural lapses between the accountant and the Chartered Accountant engaged for exemption matters. It was explained that the accountant failed to forward the notices issued by the CIT(E) to the concerned counsel, resulting in non-compliance with the notices issued and the consequent ex parte rejection of the application. The delay in filing the appeal before the Tribunal is attributed to this sequence of events, compounded by internal disputes and administrative confusion. The learned Departmental Representative was heard on the issue of delay and did not raise any objection to the condonation. Considering the facts stated in the affidavit and in the interest of substantial justice, we find that there is sufficient cause for the delay. Accordingly, the delay of 116 days in filing the present appeal is condoned.
Facts of the Case
The assessee is a registered charitable and is stated to be engaged in educational, medical, and public welfare activities since its formation in the year 2013. The trust had earlier been granted registration under section 12A(1)(ac)(iii) of the Act by the CIT(E), Ahmedabad vide order dated 30.12.2022, and the said registration is valid up to Assessment Year 2027– 28. Subsequently, the assessee filed an application in Form No. 10AB under clause (B) of sub-section (iv) of the first proviso to section 80G(5), seeking approval under section 80G, to enable donors to claim deduction in respect of donations made to the trust. The application was e-filed on 05.01.2024. The CIT(E) issued notices dated 30.04.2024 and 06.06.2024 calling upon the assessee to furnish details and documents in support of the application including details of exemption, if any, claimed under section 10(23C), 11, or 12 in past years, clarification on whether the activities of the trust had commenced and whether any income had been excluded from total income on account of provisions of Chapter III or sections 11–12, copies of financial statements, registration certificates, and other statutory documents. The CIT(E) also sought clarification regarding certain religious objects found in the trust deed. The assessee, however, did not file any response or submission to the notices issued by the CIT(E). Consequently, the CIT(E) passed an ex-parte order rejecting the application.
Aggrieved by the rejection of the application, the assessee filed the present appeal before us raising following grounds of appeal:
1. The learned CIT(Exemption), Ahmedabad erred in not granting the adequate opportunity being heard / giving submission, such opportunity is requested to be deleted.
2. The learned CIT (Exemption), Ahmedabad erred in rejecting the Application seeking the exemption under section 80G of the Income Tax Act, 1961, such rejection is requested to be deleted.
5. During the course of hearing, the learned Authorised Representative (AR) of the assessee reiterated the facts stated in the affidavit sworn by Shri Lilesh Rupchandbhai Chaudhary, trustee of the assessee trust, explaining the reasons for the procedural default in responding to the statutory notices issued by the CIT(E). The AR submitted that the non-compliance was neither wilful nor deliberate but arose on account of a bona fide internal communication lapse between the accountant and the Chartered Accountant handling the trust’s compliance matters. The AR further submitted that the trust has been engaged in charitable activities since 2013 and had filed the application for approval under section 80G in good faith. It was urged that the assessee may be granted one final opportunity to appear before the CIT(Exemption), Ahmedabad and present its case on merits, including submission of all relevant documents and clarifications as may be required.
The learned DR did not object to the request for restoration, provided the assessee is directed to comply with notices and cooperate with the proceedings before the CIT(Exemption).
We have perused the material on record and considered the rival submissions. It is an undisputed fact that the application filed by the assessee in Form No. 10AB seeking approval under section 80G(5) of the Act was rejected by the Ld. CIT(E) on multiple grounds, including the assessee’s failure to respond to notices dated 30.04.2024 and 06.06.2024, non-filing of any submission or documentary evidence in support of the conditions prescribed under section 80G(5)(iv)(B), and the presence of an allegedly religious object in the trust deed. It was further held that the assessee’s eligibility under clause (B) of section 80G(5)(iv) was not verifiable. It is also evident from the record that the impugned rejection order was passed ex parte due to procedural lapses on the part of the assessee, as later explained in the affidavit placed on record. Given the serious consequence of such rejection on the assessee’s ability to raise funds and continue charitable activities, we are of the considered view that the assessee ought to have been given a final and effective opportunity to satisfy the statutory conditions and submit the required information in support of its claim. In these circumstances, and in the interest of justice, we consider it appropriate to set aside the impugned order and restore the matter to the file of the Ld. CIT(E), with a direction to decide the application for approval under section 80G(5) afresh, after granting the assessee a reasonable and effective opportunity of being heard and to furnish all necessary documents in support of its claim. The assessee is also directed to ensure full compliance with the notices issued and attend to the proceedings without any further lapse, failing which the CIT(E) shall be at liberty to decide the matter in accordance with law.
Having regard to the facts and circumstances of the case and the avoidable delay and non-compliance by the assessee which led to an ex parte adjudication by the CIT(E), we consider it appropriate to impose a nominal cost of Rs.5,000/- (Rupees Five Thousand only) on the assessee trust. The said amount shall be paid to the credit of the Income Tax Department, Government of India within 30 days from the date of receipt of this order, and proof of such payment shall be filed before the CIT(Exemption), Ahmedabad at the time of rehearing. This cost is levied as a deterrent to discourage procedural default and to promote responsibility in complying with statutory notices and directions issued by the Department.
The impugned order is set aside, and the matter is restored to the file of the CIT(Exemption), Ahmedabad for de novo adjudication on merits after affording adequate opportunity of being heard, subject to the compliance of cost as above.
In the result, the appeal is allowed for statistical purposes.