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Facts
Apna Charitable Trust, provisionally registered, applied for renewal of registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii) of the Income Tax Act. Despite timely submission of all required documents by the assessee on 21.08.2024 in response to questionnaires, the CIT(E) rejected both applications citing non-compliance, allegedly without considering the submissions.
Held
The Tribunal found that the CIT(E) ignored the timely submissions, violating principles of natural justice, and rejected the applications on incorrect factual grounds. Both rejection orders were set aside, and the matters were restored to the CIT(E) for fresh adjudication, with directions to duly consider the assessee's submissions and provide an opportunity of hearing.
Key Issues
Whether the CIT(E) erred in rejecting the applications for renewal of registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii) despite timely submission of documents, thereby violating principles of natural justice.
Sections Cited
12A(1)(ac)(iii), 12A, 80G(5)(iii), 80G(5), 80G
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Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR
O R D E R PER MAKARAND V. MAHADEOKAR, AM: These two appeals by the assessee are directed against the orders of the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as "CIT(E)"], rejecting the applications filed by the assessee for (i) renewal of registration under Section 12A(1)(ac) (iii) and (ii) approval under Section 80G(5)(iii) of the Income Tax Act, 1961 [hereinafter referred to as "the Act"]. Since both the appeals involve similar facts and legal issues, they are being disposed of by this consolidated order. & 1900/Ahd/2024 Apna Charitable Trust vs. The CIT(E)
2 Facts of the Case:
The assessee, Apna Charitable Trust, is a public charitable trust engaged in providing medical treatment and concessional medicines through its hospital and pharmacy units. The trust was granted provisional registration under Section 12A(1) of the Act from 07.04.2022 to A.Y. 2024-25 and, subsequently, applied for renewal of registration under Section 12A(1)(ac)(iii) of the Act through Form 10AB. Additionally, the assessee also applied for approval under Section 80G(5)(iii) of the Act by filing another Form 10AB.
2.1. In response to the renewal application under Section 12A(1)(ac)(iii) of the Act, the CIT(E) issued a questionnaire on 03.07.2024, seeking certain details. The assessee sought adjournment, and subsequently, a fresh notice dated 06.08.2024 was issued by the CIT(E), directing the assessee to furnish the required documents on or before 21.08.2024. Similarly, for the application under Section 80G(5) (iii) of the Act, the CIT(E) issued a questionnaire on 06.07.2024, followed by a final notice on 09.08.2024, requiring compliance by 21.08.2024.
The assessee, in compliance with the notices issued, submitted all the required information and documents on 21.08.2024 for both applications. The submissions included a detailed note on the activities of the trust, a copy of the trust deed, financial statements for Financial Years (FYs) 2020-21, 2021-22, and 2022-23, audit reports in Form 10B, details of donations received, bank statements, and proof of identity of trustees. These documents were filed to & 1900/Ahd/2024 Apna Charitable Trust vs. The CIT(E) demonstrate the genuineness of activities and the fulfilment of conditions under Section 12A and 80G of the Act.
3.1. However, despite timely compliance, the CIT(E) rejected both applications on grounds of non-compliance. The order dated 02.09.2024 rejected the renewal application under Section 12A(1)(ac) (iii) of the Act, alleging that the assessee failed to furnish the requisite details, even though the submission was made on 21.08.2024. Likewise, the order dated 03.09.2024 rejected the application under Section 80G(5)(iii) of the Act on similar grounds, stating that the assessee had failed to satisfy the genuineness of activities, and the conditions prescribed under Section 80G(5)(i) to (v) of the Act.
Aggrieved by these rejections, the assessee has filed the present appeals before us, contending that the CIT(E) has completely ignored the submissions filed on 21.08.2024, leading to an erroneous rejection order. The assessee has raised the following grounds in both the appeals:-
In “1. CIT(Exemption) Ahmedabad erred in law and on facts in renewal application for approval under section 12A(1)(ac) (iii) of The Income Tax Act, 1961 on ground of non-compliance
2. The appellant says and submit that provisional approval U/s 12A(1) of the Act was granted to the trust from 07.04.2022 to A.Y. 2024-25. In response to filed renewal application in Form 10AB Online, a questionnaire dated 03.07.2024 was issued by the office of CIT (Exemption). The appellant sought adjournment. Again Notice dated 06.08.2024 was issued fixing date 21.08.2024 requiring certain information. The appellant submitted all the required information vide letter dated 21.08.2024. The learned CIT(Exemption) has without considering submission filed the on 21.08.2024, rejected the application for renewal of Exemption U/s 12A(1)(ac)(iii) of the IT Act on ground of non-compliance vide order dt. 02.09.2024" & 1900/Ahd/2024 Apna Charitable Trust vs. The CIT(E)
4 In “1. CIT(Exemption) Ahmedabad erred in law and on facts in renewal application for approval under section 80G(5)(iii) of The Income Tax Act, 1961 on ground of non- compliance.
2. The appellant says and submit that provisional approval U/s 80G(5) of the Act was granted to the trust from 07.04.2022 to A.Y. 2024-25. In response to filed renewal application in Form 10AB Online, a questionnaire dated 06.07.2024 was issued by the office of CIT (Exemption). The appellant sought adjournment. Again Notice dated 09.08.2024 was issued fixing date 21.08.2024 requiring certain information. The appellant submitted all the required information vide letter dated 21.08.2024. The learned CIT(Exemption) has without considering submission filed the on 21.08.2024, rejected the application for renewal of Exemption U/s 80G(5)(iii) of the IT Act on ground of non-compliance vide order dt. 03.09.2024"
5 During the course of hearing before us, the Authorized Representative (AR) submitted that in reply to notice relating to renewal under Section 12A(1)(ac)(iii) of the Act, the assessee had fully complied with the notice dated 06.08.2024 by submitting all required documents on 21.08.2024. In case of approval under Section 80G(5) (iii) of the Act also the AR submitted that a detailed reply along with all supporting documents was filed on 21.08.2024, in response to the notice dated 09.08.2024. 5.1. The AR further stated that the CIT(E) ignored this submission and passed orders citing non-compliance, despite the fact that the submission was duly acknowledged by the department. The AR requested to restore the matter back to the file of CIT(E). The Departmental Representative (DR) did not object to restoring both matters for fresh adjudication.
It is evident from the record that the assessee filed its response on 21.08.2024, within the due date mentioned in the CIT(E)'s notice. The CIT(E) ignored this submission and erroneously rejected the application citing non- & 1900/Ahd/2024 Apna Charitable Trust vs. The CIT(E)
5 compliance. Such an approach violates natural justice, as the assessee's submission should have been duly considered before passing an adverse order. In case of approval under Section 80G(5)(iii) of the Act also the assessee filed a detailed submission on 21.08.2024, complying with the notice dated 09.08.2024. The CIT(E), however, did not examine the documents submitted and rejected the application on incorrect factual grounds. Given that the documents were submitted, the rejection was without proper verification. Considering the facts, we set aside the orders of the CIT(E) and restore both matters back to his file with the direction that the CIT(E) shall duly consider the assessee's submission filed on 21.08.2024 and decide the matter afresh after granting an opportunity of hearing to the assessee.
Both the orders under appeals in and ITA No. 1900/Ahd/2024 are set aside and the issues are restored to CIT(E) for fresh adjudication.
In the result, both the appeals of the assessee are allowed for statistical purposes.