SOULFUL JOY TRUST,AHMEDABAD vs. CIT(EXEMPTION), AHMEDABAD

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ITA 1981/AHD/2024Status: DisposedITAT Ahmedabad14 February 2025Bench: MS. SUCHITRA KAMBLE (Judicial Member), SHRI MAKARAND V. MAHADEOKAR (Accountant Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the rejection order by the CIT(E) suffered from procedural infirmities and a failure to adhere to the principles of natural justice. The rejection was considered mechanical, as the CIT(E) did not properly verify the submitted documents and failed to provide a final opportunity to be heard.

What were the facts?

The assessee, a public charitable trust, applied for conversion of its provisional registration under Section 12AB and approval under Section 80G of the Income Tax Act. The CIT(E) rejected these applications, citing non-submission of details and non-compliance with notices. The assessee argued that the rejection was arbitrary and a violation of natural justice.

What were the issues?

Whether the CIT(E) acted arbitrarily and in violation of natural justice by rejecting the applications for registration and approval without proper verification and opportunity to be heard.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G,Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR

For Appellant: Shri Rahul Pujara, CA
Hearing: 13/02/2025Pronounced: 14/02/2025

आयकर अपीलीय अिधकरण, अहमदाबाद "ायपीठ “बी“, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD सु"ी सुिच"ा का"ले, "ाियक सद" एवं "ी मकरंद वसंत महादेवकर, लेखा सद" के सम"। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA Nos.1953/Ahd/2024 & 1981/Ahd/2024 िनधा"रण वष" /Assessment Year : - Soulful Joy Trust CIT (Exemption) बनाम/ 9, Snehsrusti Complex Prahladnagar Road v/s. Sambhav Press Road Ahmedabad – 380 015 Bodakdev Ahmedabad – 380 015 "थायी लेखा सं./PAN: ABDTS 0567 N अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) Assessee by : Shri Rahul Pujara, CA Revenue by : Shri V. Nandakumar, CIT-DR सुनवाई की तारीख/Date of Hearing : 13/02/2025 घोषणा की तारीख /Date of Pronouncement: 14/02/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM:

These two appeals have been filed by the assessee against the separate orders both dated 21/09/2024 of the Commissioner of Income Tax (Exemptions) [hereinafter referred to as "CIT(E)"] rejecting the assessee’s applications for registration under Section 12AB of the income Tax Act, 1961 (hereinafter referred to as “the Act”) and approval under Section 80G of the Act, 1961. Since the issues involved in both appeals are interrelated, they are disposed of by this common order.

Facts of the Case: & 1981/Ahd/2024 Soulful Joy Trust vs. CIT (Exemption) Asst. Year : -

2.

The assessee, Soulful Joy Trust, is a public charitable trust incorporated and registered under the Bombay Public Trust Act, 1950. The assessee was provisionally registered under Section 12A(1)(ac)(vi) of the Act via Form 10AC dated 29/03/2022 and Section 80G under Clause (iv) of the first proviso to sub-section (5) of Section 80G of the Act via Form 10AC dated 29/03/2022. The assessee applied for conversion of its provisional registration into regular registration under Section 12AB of the Act and approval under Section 80G of the Act, on 30/03/2024.

3.

The CIT(E) issued notices on 04/07/2024 and 06/07/2024 asking for further details. The assessee sought an adjournment due to its authorized representative being preoccupied with ITR filing. The CIT(E) issued a fresh notice on 08/08/2024 directing the assessee to submit documents. The administrative head of the trust was out of India (from 25/07/2024 to 29/08/2024), leading to non-compliance with the notice. The CIT(E), without affording any further opportunity, rejected the applications for both Section 12AB of the Act registration and Section 80G of the Act approval.

4.

Aggrieved by the orders of the CIT(E), the assessee preferred appeals before us with following grounds of appeal(s):

In case of 1.1) The Ld. CIT (E) has dismissed the application only on the ground of non submission of note on the activities of the applicant.

1.2) The Ld. CIT(E) has not verified the application as well as documents submitted along with the application. & 1981/Ahd/2024 Soulful Joy Trust vs. CIT (Exemption) Asst. Year : - 3 1.3) The Ld. CIT (E ) has acted mechanically without verifying and assessing the material available on record.

1.4) The Ld. CIT(E ) has erred in law as well as in facts by rejecting the application without providing a valid and reasonable opportunity of being heard.

1.5) The Ld. CIT(E ) has rejected the application for missing out on a single notice. Which was due to the administrative head of the trust being out of India.

The appellant craves leave to add. amend, alter, edit, delete, modify or change all or any grounds of appeal at the time of or before the hearing of the appeal.

In case of 1.1) The Ld. CIT (E) has dismissed the application only on the ground that the trust doesn’t hold a valid order for registration under section 12A of the Income Tax Act, 1961. However, your appellant is obliged to inform you that an appeal against an order rejecting application u/s 12A has been already filed on 15-11-2024 vide acknowledgement no. 1800001867 before Hon’ble ITAT and such an order is still under question before Hon’ble ITAT. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any grounds of appeal at the time of or before the hearing of the appeal.

5.

During the course of hearing before us, the Authorized Representative (AR) of the assessee contended that the rejection of the applications under Sections 12AB and 80G of the Act by the CIT(E) was arbitrary and in violation of the principles of natural justice. It was argued that the CIT(E) mechanically rejected the application without properly verifying the documents already submitted along with the application. The AR also placed on record the written submission in case of both the appeals. Considering the facts, the Departmental Representative (DR) suggested to restore the matter back to the file of CIT(E) for fresh adjudication.

6.

We have carefully considered the submissions of the assessee, the contentions of the Authorized Representative (AR), and the suggestion of the & 1981/Ahd/2024 Soulful Joy Trust vs. CIT (Exemption) Asst. Year : - DR along with the orders of the CIT(E). It is evident from the records that the assessee, Soulful Joy Trust, had duly applied for conversion of provisional registration into regular registration under Section 12AB of the Act and approval under Section 80G of the Act. The primary ground for rejection by the CIT(E) was non-submission of a note on activities and alleged non- compliance with the notices issued. However, upon examination, we find that the rejection suffers from procedural infirmities and a failure to adhere to the principles of natural justice.

6.1. The assessee had submitted its financial statements for Financial Years (FYs) 2021-22 and 2022-23, an instrument creating the trust, and a registration certificate with the Charity Commissioner, forming part of its application. It is evident that some material relevant to the case was already on record, yet the CIT(E) failed to consider the same before passing the rejection order. Further, the assessee was issued notices on 06/07/2024 (for Section 80G of the Act) and 04/07/2024 (for Section 12AB of the Act), and in response, the authorized representative applied for an adjournment due to preoccupation with ITR filing. Subsequently, a fresh notice was issued on 10/08/2024, directing the assessee to furnish documents. However, the administrative head of the trust, who was the sole person with access to the registered email and phone number, was out of India from 25/07/2024 to 29/08/2024. Consequently, the assessee was unable to respond to the final notice, leading to a summary rejection without affording any further opportunity of being heard.

6.2. The rejection order, in our view, is mechanical and lacks proper appreciation of the circumstances under which the assessee could not comply & 1981/Ahd/2024 Soulful Joy Trust vs. CIT (Exemption) Asst. Year : - 5 with the notice. The CIT(E) failed to provide a final opportunity before rejecting the applications, which constitutes a violation of the principles of natural justice. Moreover, the rejection of Section 80G of the Act approval was solely dependent on the non-grant of Section 12AB of the Act registration. Since the validity of the Section 80G of the Act application is contingent upon the Section 12AB of the Act registration, the rejection of the 80G of the Act application is premature and unjustified.

6.3. Considering the above facts and in the interest of justice, we set aside the orders of the CIT(E) rejecting Section 12AB of the Act registration and Section 80G of the Act approval and restore the matters to his file for fresh adjudication. The CIT(E) is directed to provide the assessee a reasonable opportunity to furnish the required details and decide the applications afresh after considering the submissions and documents on record. At the same time, the assessee is also directed to cooperate in the proceedings and ensure that all necessary documents are furnished within the time allowed.

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