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Facts
Lifeline Foundation, a charitable Trust, was granted registration under Section 12A of the Income Tax Act, 1961, based on an application in Form-10A. The CIT(E) subsequently cancelled this registration, opining that the application filed in Form-10AB under Section 12A(1)(ac)(iii) was erroneous since the Trust was not previously registered, making the granted registration liable for cancellation.
Held
The Income Tax Appellate Tribunal found that the CIT(E)'s order was cryptic, failing to address the assessee's explanation or detail the circumstances warranting cancellation. The Tribunal held that merely citing a wrong section or clause in the application is not sufficient grounds for cancellation. The matter was remitted back to the CIT(E) to pass a fresh order after providing the appellant Trust a reasonable opportunity of being heard.
Key Issues
Whether the cancellation of registration granted under Section 12A of the Income Tax Act is justified merely due to an alleged erroneous application form, without a proper assessment of the assessee's reply or the circumstances warranting cancellation.
Sections Cited
12A, 12A(1)(ac)(iii)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Exemptions), Kochi (in short “CIT(E)”), dated 24/12/2024 passed cancelling the registration granted U/s. 12A of the Income Tax Act, 1961 (in short “the Act”).
Brief facts of the case are that the assessee is a charitable Trust incorporated with the objects of providing relief to the poor, education, medical facilities etc. The appellant Trust was incorporated on 12/10/2023. The appellant had filed an application in Form-10A of the Act seeking registration U/s. 12A of the Act and the same was granted by the CIT(E) in Form-10AC vide order dated 09/05/2024. However, the CIT(E) was of the opinion that since the appellant Trust was not earlier registered U/s. 12A of the Act, the application filed in Form-10AB under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act is erroneous and consequently, the registration granted vide order dated 09/05/2024 is liable for cancellation. Accordingly, the appellant was show caused and in response the appellant filed a reply. After considering the reply, the CIT(E) cancelled the registration granted on 09/05/2024.
2. Being aggrieved the appellant is in appeal before us in the present appeal.
When the appeal was called on, none appeared on behalf of the assessee despite issue of service of notice. Therefore, we dispose of this appeal after hearing the Ld. CIT-DR.
We have carefully perused the impugned order. The impugned order merely states that the appellant was show caused to explain as to why the registration granted earlier cannot be cancelled. In response, the appellant filed a reply. However, the CIT(E) did not dealt with the explanation offered by the appellant nor pointed out the circumstances warranting cancellation of the registration granted earlier. Therefore, in our considered opinion the CIT(E) had passed the order in a very cryptic manner. Mere mentioning a wrong section or a wrong clause in the application seeking registration is not fatal enough to cancel the registration. Therefore, we remit the matter back to the file of the CIT(E) with a direction to pass a fresh order in accordance with law after affording a reasonable opportunity of being heard to the appellant Trust.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 27th June, 2025.