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Facts
The assessee, Nisa Foundation, filed applications for registration under Section 12A and approval under Section 80G. The CIT(E) rejected both applications, citing non-compliance with conditions and lack of corroborative evidence for registration, and the absence of 12A registration as a prerequisite for 80G approval.
Held
The Tribunal found that the CIT(E) did not provide sufficient opportunity and set aside the matter for both appeals. The assessee is directed to provide necessary documentation and explanations to the CIT(E) to re-adjudicate the applications.
Key Issues
Whether the CIT(E) erred in rejecting the Section 12A registration and Section 80G approval applications without proper consideration of evidence and opportunity, and whether the delay in filing appeals should be condoned.
Sections Cited
12A, 80G, 12A(1)(ac)(vi)(B), 80G(5)(iv)(B), 10(23C), 11, 12, 12AB
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
These two appeals are filed by the assessee against the orders of the Commissioner of Income Tax (Exemption), Ahmedabad, (in short ‘the CIT(E)’) dated 24.07.2024 in the matter of rejection of registration under Section 12A of the Income Tax Act, 1961 (in short ‘the Act’) and dated 25.07.2024 against the rejection of registration u/s.80G of the Act.
2. There was a delay of 2 days in filing of these appeals. The assessee has filed an affidavit explaining the reason for this & 1705/Ahd/2024 [Nisa Foundation vs. CIT(E) ] - 2 – delay. Considering the explanation of the assessee, the delay in filing of the two appeals is condoned.
As the issue involved in two appeals are inter-connected, they were heard together and are being disposed vide this common order.
The brief facts of the case are that the assessee is a trust and had filed an application in Form 10AB for registration of the trust u/s.12A(1)(ac)(vi)(B) of the Act, which was rejected by the Ld. CIT(E). Further, the assessee had also filed an application for approval of the trust u/s. 80G of the Act, which was also rejected for the reason that a valid registration certificate u/s.12A of the Act was a mandatory condition for according approval u/s.80G of the Act.
Aggrieved with the orders of the Ld. CIT(E), the assessee has filed these appeals. The grounds taken in these two appeals are as under:
“1. On the basis of facts and circumstances of the case and in law, the Commissioner of Income Tax (Exemptions) (hereinafter referred to as 'CIT(Exemptions)') has erred in rejecting the application for registration filed under section 12A(1)(ac)(vi-B) of the Income-tax Act, 1961.
2. The CIT(Exemptions) has erred in law and on facts by rejecting the application for registration without considering the facts of the case and the documents available on record.
3. The CIT(Exemptions) has erred in law and on facts by considering one- off donations made by the Appellant in FY 2020-21, FY 2021-22 and FY 2022-23 as an event of commencement of activities and rejecting the application for registration on the grounds of it being time barred.
& 1705/Ahd/2024 [Nisa Foundation vs. CIT(E) ] - 3 – 4. The CIT(Exemptions) has erred in law and on facts by passing the order without providing sufficient opportunity of being heard and an opportunity of filing of submission to the Appellant thereby, violating the principles of natural justice.
5. The Appellant craves leave to add, alter and/or withdraw any ground or grounds of appeal either before or at the time of passing of order in the matter.”
“1. On the basis of facts and circumstances of the case and in law, the Commissioner of income Tax (Exemptions) (hereinafter referred to as 'CIT(Exemptions)'] has erred in rejecting the application for approval filed under section 80G(5) (iv) (B) of the Income-tax Act, 1961.
The CIT(Exemptions) has erred in law and on facts by rejecting the application for approval without considering the facts of the case and the documents available on record.
3. The CIT(Exemptions) has erred in law and on facts by summarily rejecting the Appellant's application for approval without providing any cogent reasons for rejection of application.
4. The CIT(Exemptions) has erred in law and on facts by passing the order without providing sufficient opportunity of being heard and an opportunity of filing of submission to the Appellant thereby, violating the principles of natural justice.
5. The Appellant craves leave to add, alter and/or withdraw any ground or grounds of appeal either before or at the time of passing of order in the matter.”
Shri Tushar Hemani, Ld. Sr. Advocate appearing for the assessee submitted that the Ld. CIT(E) had rejected the application for registration u/s.12A of the Act for the reason that certain corroborative evidences as called for were not submitted by the assessee. He explained that the assessee had already filed a letter dated 15.05.2024 enclosing therewith the income tax returns for the A.Ys. 2021-22, 2022-23 & 2023-24 which & 1705/Ahd/2024 [Nisa Foundation vs. CIT(E) ] - 4 – satisfied the queries raised by the Ld. CIT(E). He further submitted that all the necessary details and documents essential for according the approval u/s.12A of the Act were duly furnished by the assessee and, therefore, the Ld. CIT(E) was not justified in rejecting the application for registration u/s.12A of the Act.
Per contra, Shri Abhay Thakur, the Ld. CIT. DR strongly supported the order of the Ld. CIT(E). He submitted that the details and documents as specifically called for by the Ld. CIT(E) was not filed by the assessee. Further that mere filing the copy of the income tax return did not satisfy the requirement of filing the evidence that the assessee had not claimed any exemption u/s.10(23C) or Section 11 or Section 12 of the Act for any of the previous years on or before the date of application.
We have carefully considered the rival submissions. The assessee had filed the application in Form 10AB on 05.01.2024 for registration u/s.12A(1)(ac)(vi)- Item B of the Act. The said Section is reproduced as under:
12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:— ………. (ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution,— ……… [(vi) in any other case, where activities of the trust or institution have— (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought; & 1705/Ahd/2024 [Nisa Foundation vs. CIT(E) ] - 5 – (B) commenced and no income or part thereof of the said trust or institution has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, or section 11 or section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities,] and such trust or institution is registered under section 12AB:
The Ld. CIT(E) found that the assessee had already commenced its activities prior to filing of the present application and, therefore, it was required to satisfy the condition as stipulated in sub-clause (B) above that no income was excluded on account of applicability of Section 10(23C) or Section 11 or Section 12 of the Act for any of the earlier previous years. Accordingly, the Ld. CIT(E) had issued a show cause notice dated 08.07.2024 in this regard, to which no reply was submitted and the details as called for were also not made available by the assessee. The Ld. CIT(E) had held that in the absence of any details/corroborative evidences, the fulfillment of condition as mentioned in Section 12(1)(ac)(vi)-Item B had remained unverified. Therefore, he had rejected the application for registration u/s.12A of the Act.
On the other hand, the assessee has submitted that a letter dated 15.05.2024 was already filed furnishing the copy of income tax returns for A.Ys. 2021-22, 2022-23 & 2023-24 from which it was evident that the condition as stipulated in Section 12(1)(ac)(vi)-Item B was duly satisfied. A copy of the said letter dated 15.05.2024 filed before the Ld. CIT(E) has been brought on record in the paper book. It is found there from that the assessee had merely submitted a copy of income tax returns for these three years but there was no mention of satisfaction of & 1705/Ahd/2024 [Nisa Foundation vs. CIT(E) ] - 6 – conditions u/s.12A(ac)(vi)-Item B of the Act in the said letter. The Ld. CIT(E) had raised this specific query after furnishing of these documents by the assessee, vide show cause notice dated 08.07.2024, to which no compliance was made by the assessee. Neither any submission was made by the assessee regarding satisfaction of these conditions. The Ld. CIT(E) also did not take any pain to verify the income tax returns for A.Ys. 2021-22, 2022-23 & 2023-24, already brought on record earlier by the assessee, to find out whether the assessee had claimed any deduction u/s.10(23) or Section 11 or Section 12 of the Act in these years.
In view of the above facts, we deem it proper to set aside the matter to the file of the Ld. CIT(E) with a direction to allow another opportunity of being heard to the assessee to explain the fulfillment of conditions as stipulated u/s.12A(1)(ac)(vi)-Item B of the Act. The assessee is also directed to make compliance before the Ld. CIT(E) and to submit the documents and details as required by him.
In the result, the appeal of the assessee is allowed for statistical purposes.
The Ld. CIT(E) had rejected the application for approval u/s. 80G(5)(iv)(B) of the Act for the reason that registration u/s.12A of the Act was a pre-requisite condition for grant of approval. Since, the matter regarding registration u/s.12A of the & 1705/Ahd/2024 [Nisa Foundation vs. CIT(E) ] - 7 – Act has been set aside to the file of the Ld. CIT(E), we deem it necessary to set aside the present matter as well to the file of the Ld. CIT(E), who will re-adjudicate the issue of approval u/s.80G of the Act after deciding the matter of registration u/s.12A of the Act.
In the result, the appeal of the assessee is allowed for statistical purposes.
In the combined result, both the appeals filed by the assessee are allowed for statistical purpose.
This Order pronounced on 17/01/2025 Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 17/01/2025 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. संबं�धत आयकर आयु�त / Concerned CIT 3. आयकर आयु�त(अपील) / The CIT(A)- 4. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,