THE CARE OF ANIMALS AND SOCIETY ,REWA vs. CIT EXEMPTION BHOPAL, BHOPAL

PDF · subscribers
ITA 888/IND/2024Status: DisposedITAT Indore06 June 2025AY 2025-20269 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the impugned order passed by the learned CIT(E) was in violation of the principles of natural justice. The CIT(E) ought to have provided at least one or two more opportunities to the assessee to answer all queries, but instead, only one more opportunity was given via the letter dated 18.11.2024, and the impugned order was passed on 26.11.2024. The Tribunal disagreed with the CIT(E)'s opinion that personal hearing was not required and submissions could be made through electronic modes. It was held that it is incumbent upon the CIT(E) to afford an opportunity of personal hearing, and it is up to the assessee to avail it. The Tribunal concluded that denying an opportunity of hearing, even through video conference, was erroneous. Therefore, the Tribunal set aside the impugned order and remanded the case back to the file of the CIT(E) for de novo adjudication, with a direction to provide a reasonable opportunity to the assessee to present their case effectively, including an opportunity for personal hearing. The assessee was directed to cooperate and not seek unnecessary adjournments. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, The Care of Animals and Society, filed an application in Form 10AB for registration under Section 12AB of the Income Tax Act, 1961, with the learned Commissioner of Income Tax (Exemption) (CIT(E)), Bhopal. The assessment year in question is 2025-26. The CIT(E) issued several opportunity letters seeking various documents and clarifications to verify the assessee's objects and activities. While the assessee submitted some documents on 23.10.2024, the CIT(E) issued a further letter on 18.11.2024 seeking additional details, including audit reports, explanations regarding commercial activities exceeding 20% of total receipts, work allocation orders, bye-laws, salary payment details, bank statements, and supporting documents for expenses. The assessee failed to submit the required details by the stipulated deadline of 30.11.2024, which was communicated as the last opportunity. Consequently, the CIT(E) rejected the assessee's application for registration under Section 12AB and cancelled its provisional registration granted under Section 12AB.

What were the issues?

1. Whether the learned CIT(E) erred in passing an order due to non-compliance of required information, by not giving a proper opportunity of being heard and only providing three days to respond, thereby denying natural justice? (Question of law and fact, concerning principles of natural justice and opportunity of hearing under Section 12AB). 2. Whether the learned CIT(E) erred in rejecting the application for grant of registration under Section 12AB of the Act, and if so, whether the rejection was illegal and wrong? (Question of law and fact, concerning the validity of the rejection based on non-compliance and the merits of the application). 3. Whether the learned CIT(E) erred in rejecting the provisional registration granted under Section 12AB on flimsy grounds, and if so, whether the rejection was illegal and wrong, and should be restored? (Question of law and fact, concerning the cancellation of provisional registration). Assessee's Contentions: The impugned order is illegal and bad in law, violating the principles of natural justice as the assessee was not afforded a proper opportunity of being heard on a real-time basis. The assessee is willing to provide all relevant documents and information and requests one last opportunity. They had provided details on 23.10.2024 but could not meet further queries raised on 18.11.2024. They are now ready to answer all queries if given one more last opportunity. Revenue's Contentions: The revenue has no objection if the matter is relegated back to the file of the CIT(E) for de novo adjudication and a last and final opportunity is provided to the assessee before the CIT(E}.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 2(15),Section 194C,Section 253

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI PARESH M JOSHI

For Appellant: Shri S.S. Solanki, AR
For Respondent: Shri Ashish Porwal, Sr. DR
Hearing: 04.06.2025Pronounced: 06.06.2025

the order bearing Number ITBA/EXM/F/EXM45/2024- 25/1070652328(1) dated 26.11.2024 of Ld. CIT(E) which is hereinafter referred to as the “Impugned order”. The relevant

The Care of Animals and Society - A.Y.2025-26 Assessment Year is 2025-26 and the corresponding previous year period is from 01.04.2024 to 31.03.2025.

2.

FACTUAL MATRIX 2.1 That the assessee had applied in Form 10AB for registration u/s 12AB under the new provision of Income Tax Act 1961 before Ld. CIT(E). Chapter III of the Act deals with “Incomes which do not form part of total income”. Section 12 in Chapter III of the Act deals with “Income of Trusts or Institutions from contribution”. Section 12AA in Chapter III deals with “Procedure for Registration”. Section 12AB in Chapter III deals with “Procedure for fresh registration” w.e.f.

01.04.2021 (TOLA 2020).

2.2 That opportunity letters were issued to the assessee by revenue and various document/details were called for, to process the said application u/s 12AB for registration which was made in Form 10AB the prescribed form. The documents details were sought to verify the objects and activities of the assessee.

2.3 That the details of the opportunities letters and response received in compliance thereof are as under:-

S.No Details of notices issued in respect of registration u/s 12AB opportunity Hearing fixed on Reply Status Date of Page 2 of 9

The Care of Animals and Society - A.Y.2025-26 letters 30.08.2024 25.09.2024 No reply 1

27.09.2024 30.09.2024 No reply 2 03.10.2024 15.10.2024 No reply 3 18.11.2024 22.11.2024 No reply 4

That vide above referred letters various documents/ information were called to ascertain the genuineness of the activities of the assessee society and its suitability to obtain registration u/s 12AB of the Act.

2.4 That however the assessee submitted requisite documents/ information vide submission dated 23.10.2024.

2.5 That however some clarifications/additional documents were sought by Ld. CIT(E) vide his letter dated 18.11.2024 which are as under:-

{“Please refer to your application in Form 10AB filed for registration/approval u/s 12AB under the new provisions of the Income Tax Act, 1961. In response to this office opportunity letter(s), you have submitted reply along with various documents. "1-Kindly provide a certified copy of Audit Report with all annexures for F.Y. 2023-24 ie. AY 2024-25. 2-As per Audit Reports/Computation of Income of the society submitted for F.Y. 2021-22, 2022-23 and 2023-24, there are business receipts u/s 194C of the Income Tax Act from various municipal bodies. Such receipts indicate that the society is engaged in commercial activities and the receipt from commercial activities exceeds 20% of total receipts in violation

The Care of Animals and Society - A.Y.2025-26 to proviso to section 2(15) of the Act. Thus, it is evident that the activities carried out by the assessee is not for charitable purposes as defined in Section 2(15) of the Act.

-In view of above findings, please explain the modus operandi of the society and also explain how the society is engaged in charitable activities, not in commercial activities. Please provide documents in support of your explanation.

3-Please provide copies of work allocation order/grant letter/MoU signed with various municipal bodies during FY 2022-23 & FY 2023-24.

4-Please enclose all the pages of the bye-laws of your society as the enclosed copy is incomplete.

5-As per Income & Expenditure Account for the year ending on 31.03.2023, there are expenditures on head salary as under :-

Salary to Doctors: 20,18,559/- Salary to Labours: 8,47,902/- Salary Exp: 19,66,441/- Total: 48,32,902/- Please provide details of salary payment as under:

S.No. Name of Employee Total Payment Service offered During FY 2022- by the employee 23 to the society

*Kindly provide a copy of ledger account for salary during the FY 2022-23.

6-Kindly provide a copy of Bank Account Statement of all the accounts held by the society for the period from 01.04.2022 to till date.

7-Kindly provide documents in support of expenses under heads "Medical Expenses", "Dog and Animal Feeding and "Travelling and Loging Exp" for the FY 2022-23."

3-However, in response to the query letter dated: 18.11.2024, the assessee has not submitted the required details till date. Vide aforesaid letter it was also communicated to the assessee that the matter is already barred by limitation on 30.11.2024 and hence it was requested to submit the requisite

The Care of Animals and Society - A.Y.2025-26 details/clarification/ documents within the time specified in the letter as under *--As the matter is barred by limitation on 30.11.2024 this may kindly be treated as last and final opportunity to submit requisite documents/clarification/ information.

-In case of non-compliance, the decision may be made based on the documents available with this office.

--This may also be noted that personal hearing is not required and the submission may be made through electronic modes like through portal/e-mail mentioned at the bottom of this letter."} 2.6 That in the concluding para 4 of the impugned order the Ld.

CIT(E) has held as under:-

“4-Due to non-compliance of required documents/ information filed by the assessee, the application of the assessee in Form 10AB for grant of registration u/s 12AB of the Act is hereby rejected and the provisional registration u/s 12AB in Form 10AC granted by CPC vide URN: AACAR9520ME20221 & AACAR9520ME20222, both Dated: 10.10.2022 are also hereby cancelled on the ibid grounds as per the provisions of section 12AB(1)(b)(i) (B) of the IT Act.”

2.7 That the assessee being aggrieved by the “impugned order” has preferred the instant appeal before this Tribunal and has raised following grounds of appeal (In Form No.36 which is a form of appeal to be filed before this Tribunal) against the “impugned order” which are as under:-

“1. That the learned CIT(A) erred in passing order due to non compliance of required information. That the learned (ITA) had not given proper opportunity of being heard and only 3 days were given to the assessee to respond. The order so passed being denial of natural justice, the same may very kindly be quashed.

The Care of Animals and Society - A.Y.2025-26

2. That the learned CIT(A) erred in rejecting the application for grant of Registration u/s 12AD of the Act. The rejection of application being illegal and wrong, the same may very kindly be allowed.

3.

That the learned CIT(A) erred in rejecting provisional registration granted u/s 12AB on flimsy grounds. The rejection so made being illegal and wrong, the same may very kindly be restored”. 3. Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 04.06.2025 when Ld. AR for and on behalf of the assessee appeared before us and interalia contended that the “impugned order” is illegal and bad in law. It is in violation of principle of natural justice. It is thus not a proper order and the “impugned order” thus deserves to be set aside as no opportunity on “real time basis” were afforded to the assessee. The assessee is now willing to provide all the relevant documents and other information as is sought in support of their application u/s 12AB of the Act. The Ld. AR submitted that vide submission dated 23.10.2024 they had provided all the details but they could not meet further query of the department which were raised by the department vide their letter dated 18.11.2024. That now they are ready and willing to answer all the query of the department as raised in the department’s letter dated 18.11.2024 if one more

The Care of Animals and Society - A.Y.2025-26 last opportunity is afforded to them. Per contra Ld. DR appearing for and on behalf of the Revenue contended that revenue has no objection if the matter is relegated back to the file of Ld. CIT(E) for denovo adjudication and adjudgement and one more last and final opportunity to the assessee be provided for before Ld.

CIT(E), before any order is passed by him.

4.

Observations,findings & conclusions.

4.1 We now have to decide the legality, validity and the proprietery of the “impugned order” basis records of the case and rival contentions canvassed before us.

4.2 We have carefully perused the records of the case.

4.3 We basis records of the case and so also after hearing and upon examining the contentions are of the considered opinion that the “impugned order” is in violation of the principles of natural justice as Ld. CIT(E) ought to have given to the assessee at least one or two few more opportunities to answer all queries raised but instead of that only one more opportunity by letter dated 18.11.2024 was given to the assessee and on 26.11.2024 “impugned order” was passed. From the “impugned order” it is also noticeable that the Ld. CIT (E) held

The Care of Animals and Society - A.Y.2025-26 an opinion that personal hearing is not required and submission can be made through electronic mode. With respect we cannot subscribe to such opinion of Ld. CIT (E) as it is incumbent upon Ld. CIT (E) to afford an opportunity of personal hearing to the assessee and then it is up to assessee whether to avail such an opportunity or not of personal hearing. Further we hold that merely because Ld. CIT (E) opines that personal hearing is not required and submissions can be made through electronic mode is no ground to deny an opportunity of hearing to assessee.

Nothing prevented Ld. CIT (E) to give video conference hearing to the assessee. We finally hold that there is indeed a violation of the principles of natural justice as Ld. CIT (E) erroneously held an opinion that personal hearing would not make a difference.

4.4 We basis premises drawn up by us as aforesaid set aside the “impugned order” and remand the case back to the file of Ld. CIT (E) to pass a fresh order on denovo basis after giving reasonable opportunity to the assessee to present his case in an effective manner. Assessee to be afforded an opportunity of personal hearing before the case is finally adjudged and adjudicated. Assessee to cooperate with the department of Page 8 of 9

The Care of Animals and Society - A.Y.2025-26 Income Tax and not to seek any unnecessary adjournments on flimsy grounds.

5.

Order 5.1 The “impugned order” is set aside as and by way of remand back to the file of Ld. CIT (E) on denovo basis.

5.2 Appeal of the assessee is allowed for statistical purpose.

Order pronounced in open court on 06.06.2025.

More judgments on Section 12AB

All 5,972 judgments and leading authorities on Section 12AB →

Recent GST High Court judgments

Search GST case law →