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Facts
The assessee trust filed applications for registration under section 12A and approval under section 80G. These were rejected by the CIT(Exemption) for not complying with notices and being premature, respectively. The assessee appealed, citing the negligence of their consultant for the delay and non-compliance.
Held
The Tribunal condoned the delay in filing the appeals, noting the negligence of the assessee's consultant. The Tribunal restored both matters back to the CIT(Exemption) for fresh consideration on merits, finding the rejection for section 12A was due to non-response and the rejection for 80G was based on a misunderstanding of its premature nature.
Key Issues
Whether the CIT(Exemption) correctly rejected the applications for registration under section 12A and approval under section 80G without granting adequate opportunity, and whether the delay in filing the appeals should be condoned due to consultant's negligence.
Sections Cited
12A(1)(ac)(iii), 80G(5)(ii), 12A, 80G, 12AB(1)(b), 80G(vi)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW ‘B’ BENCH, LUCKNOW
Before: SH. KUL BHARAT & SH. NIKHIL CHOUDHARY
O R D E R PER NIKHIL CHOUDHARY, A.M.: These two appeals have been filed by the asessee against the orders of the ld. CIT(Exemption) in Form 10AD dated 3.02.2023 and 5.1.2023 rejecting the request for registration of the trust under section 12A(1)(ac)(iii) and approval under section 80G(5)(ii). For the sake of convenience, both the appeals are taken up for disposal together. The grounds of appeal are as under:-
1. “1. The Learned Commissioner of Income Tax (Exemptions) Lucknow has erred in rejecting the grant of registration u/s 12A of the Income Tax Act 1961 to the assessee with total disregard to the facts and circumstances of the case.
The assessee reserves its right to add, amend, alter or delete any ground of appeal at the time of hearing of appeal.” ITA No.391/LKW/2024
1. The Learned Commissioner of Income Tax (Exemptions) Lucknow has erred in rejecting the grant of registration u/s 80G of the Income Tax Act 1961 to the assessee with total disregard to the facts and circumstances of the case.
& 391/LKW/2024 A.Y. N.A. M/s Hindustan Seva Trust 2. The Id. Assessing officer has eared in facts while confirming the rejection of renewal application under section 80G(5)(ii), by considering the application under form 10AB as prematured. 3. The assessee reserves its right to add, amend, alter or delete any ground of appeal at the time of hearing of appeal.”
2. At the very outset, it is noticed that the appeal against the rejection of registration under section 12A is delayed by 433 days while the appeal against the denial of approval under section 80G(5) is delayed by 462 days. The assessee has filed condonation petitions for the delay, in which it has been submitted that the returns of the trust were being filed by one practitioner, Sh. Prabhjot Singh of Bareilly, who use to also advise on taxation matters. The communications with respect to the Trust were being sent on his email ID, as the assessee was not conversant and well versed with intricacies of the Income Tax Portal. All the communication relating to the matter were received on the email of the practitioner, Sh. Prabhjot Singh, being VICKYGAMBHIR6@GMAIL.COM. However, the assessee was not informed about the receipt of such notices and the ld. CIT(Exemption) passed an ex parte order, rejecting the application of the assessee. It was only recently that the said practitioner informed the assessee about the passing of such order and informed, that since he had not checked his emails for quite some time, the compliances could not be done. Thus, the assessee had suffered due to the negligence of the consultant. The practitioner consultant was of the view that the said order was rectifiable order and would be recalled, but upon consultation with another counsel Sh. Gurbachan Singh Chawla, the assessee was advised to file an appeal with a petition for condonation of delay. Accordingly, it was prayed that in view of the fact that the delay was entirely caused due to the negligence of the counsel, it was prayed that the same may be condoned. Reliance was placed on the decisions of the various Courts and Tribunals in the following cases; i. Jaysukh Savji Vaid, vs. ITO, 30(1)(5), Mumbai (ITA No.3273/MUM/2023) ii. Shakeel M. Shareef vs. ITO, 19(1)(4), Mumbai (ITA No.6185/MUM/2009)
& 391/LKW/2024 A.Y. N.A. M/s Hindustan Seva Trust iii. Nawany Corporation (I.) Pvt. Ltd., Mumbai vs. DCIT-13(1)(1), Mumbai (ITA No. 539/MUM/2022). iv. APMG India Certifications Pvt. Ltd. vs. DCIT (TDS) (ITA 3143/BANG/2018) V. Midas Polymer Compounds Pvt. Ltd. vs. ACIT, Kottayam (ITA 288/COCH/2017)
In view of the circumstances narrated and the judicial pronouncements cited, it was prayed that the delay in filing the appeal may kindly be condoned. We have duly considered the facts and circumstances of the matter and in view of the circumstances listed in the condonation petition and also the judicial precedents, the delay in filing of both appeals on account of ignorance of the passing of orders, is hereby condoned.
The facts of the case are, that the assessee filed an application dated 13.08.2022 for registration under section 12A(1)(ac)(iii) of the Income Tax Act, in Form 10AB. The ld. CIT(Exemption) noted, that Form 10AB was to be filed atleast six months prior to the expiry period of provisional registration or within six months of commencement of its activities, whichever is earlier. Accordingly, vide her letter dated 6.12.2022, she sought certain clarifications from the assessee, but no reply was filed. She issued two reminders, but these were not complied with either. The ld. CIT(Exemption) noted, that as the application had been submitted under sub clause (iii) of section 12A(1)(ac), the enquiry regarding verification of genuineness of the activities as well as charitable nature and commencement of activities, was required but in the absence of any reply, the charitable objects and genuineness of the charitable activities of the trust could not be proved. She, therefore, rejected the application filed by the assessee. However, she held that no adverse inference was being drawn. The provisional registration granted in Form 10AC by the CPC, if any, would remain valid.
With regard to the application under section 80G, which had also been filed on 13.08.2022, the ld. CIT(Exemption) noted, that the application had been filed under section 80G(5)(ii) of the Act and these provisions were applicable in respect of Trusts/Institutions registered under section 80G(5) of the Act for the period of & 391/LKW/2024 A.Y. N.A. M/s Hindustan Seva Trust five years and when the period of said registration was due to expire. She held that as the application was premature, it was non-maintainable and therefore, she sought certain clarifications from the assessee. However, no response was received to her letter. Therefore, holding the application to be non-maintainable, she dismissed the application of the assessee but pointed out that no adverse inference was being drawn and the registration granted in Form 10AC by the CPC, if any, would remain valid.
The assessee is aggrieved against such orders of the ld. CIT(Exemption) and has accordingly come in appeal before us. Sh. Rakesh Garg, Advocate (hereinafter referred to as the ld. AR) submitted that the provisional registration of the trust had been granted only after the consideration of material on record. It was also submitted that there was no change in the terms of the trust deed / Memorandum of Association since the granting of that provisional registration. Similarly, it was submitted that the registration was only liable to be cancelled if the Registering Authority was satisfied that the activities of the Trust were not genuine or not being carried out in accordance with the objects of the trust. Similarly, with regard to the order of the provisional registration under section 80G(5), it was submitted that the same was valid up till 31.03.2024 and because no finding had been given that the objects of the Trust were not charitable or that any activities had been carried out that were not charitable, or in accordance with the objects of the trust, the application was not liable to be rejected. He, therefore, prayed that the ld. CIT, who have passed the order, should have given adequate opportunity to the assessee trust to furnish the details and prayed that the matter may be restored back to the ld. CIT(Exemption), now that the period of provisional registration had expired, so that the ld. CIT(Exemption) could consider the application of the assessee trust for permanent registration under section 12A(1)(ac)(iii) and grant of approval under section 80G(5).
On the other hand, Sh. S.H. Usmani, CIT DR (hereinafter referred to as the ld. CIT DR) submitted that the ld. CIT(Exemption), had merely rejected the & 391/LKW/2024 A.Y. N.A. M/s Hindustan Seva Trust application because no compliance had been made and she was not in a position to certify the genuineness or the charitable nature of the trust activities. Moreover, since the trust already enjoyed exemption due to provisional registration under both sections 12A and 80G, and the same had not been withdrawn by the ld. CIT(Exemption), no prejudice was caused to the assessee and therefore, there was no reason to restore the matter back to the file of the ld. CIT(Exemption).
We have duly considered the facts and circumstances of the case. It is seen from the trust deed filed in the paper book that the Trust had been constituted on 15.04.2017 and had commenced its activities F.Y. 2017-18 itself. It had been granted provisional registration, after consideration of its activities for the A.Ys. 2022-23 to 2024-25. However, the provisions of section 12AB(1)(b) lay down that where an application is made for permanent registration under sub clause (iii) of clause (ac) of sub section (1) of section 12A, the ld. CIT(Exemption) is duty bound to call for such documents or information from the trust, to verify the genuineness of its activities and to verify the compliance to any other laws being in force. However, since the assessee could not respond to these notices, the ld. CIT(Exemption) rejected the application for permanent registration. Considering the circumstances pointed out by the assessee for the delay in filing the appeals, we deem it fit in the interest of justice, to restore the matter back to the file of the ld. CIT(Exemption), so that he may consider the application of the assessee after obtaining such documentation, as he deems necessary and pass a fresh order, in accordance with law. On the issue of approval to the trust under section 80G(5)(ii), we observe that the ld. CIT(Exemption) is misplaced in her assumption that the application of the assessee was premature, because as per the language of clause (iii) of the first proviso of section 80G(vi), the application has to be made at least six months prior to the expiry of provisional approval and therefore, it cannot be said that the application of the assessee is premature. Accordingly, we restore this matter also back to the file of the ld. CIT(Exemption) for consideration of the application of the assessee on its merits, after obtaining such details, as may be & 391/LKW/2024 A.Y. N.A. M/s Hindustan Seva Trust necessary to decide the matter. As both the matters have been restored to the file of the ld. CIT(Exemption), the appeals of the assessee are held to be allowed for statistical purposes.