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Facts
The assessee filed an application for registration under Section 12A(1)(ac)(iii) of the Income-tax Act. The CIT(E) rejected the application and cancelled the provisional registration, citing the assessee's failure to provide documentary evidence and adhere to procedural requirements.
Held
The Tribunal held that the delay in filing the appeal, though not deliberate, was condoned subject to a cost of Rs. 10,000. The Tribunal also noted that the assessee could not appear before the CIT(E) due to non-service of notices on the correct email ID. Therefore, in the interest of justice, the order of the CIT(E) was set aside and the matter was remitted back to the CIT(E) for fresh consideration.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the assessee should be granted another opportunity to present their case before the CIT(E) due to alleged non-service of notices.
Sections Cited
12A(1)(ac)(iii), 253(3)
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Before: DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal emanates from the order dated 18.09.2023 passed by the Commissioner of Income-tax (Exemption), Ahmedabad [in short “the CIT(E)”], wherein CIT(E) rejected assessee’s application filed in Form No.10AB u/s 12A(1)(ac)(iii) of the Income-tax Act (in short ‘the Act’) and also cancelled the provisional registration.
The appeals filed by the assessee are late by 460 days in terms of provisions of section 253(3) of the Act. The assessee has filed affidavit giving reasons for delay in filing appeal before this Tribunal. In the affidavit, the assessee submitted that order in Form No.10AD was passed on 18.09.2023 wherein the application of the Trust in Form No. 10AB u/s 12A(1)(ac)(iii) of Kumari Hemangi Somchand Sumaria Charitable Trust the Act was rejected. The assessee was unaware of technical knowledge to navigate the complexities of the tax matter. The assessee trust was reliant on tax consultant, Shri Rajendrakumar M. Jain, who handled the tax-matter and his email Id was also registered on the Income-tax portal. Due to increasing complexity of frequent amendments to the law, the committee decided to engage Shri Jaynish Chauhan, Consultant, in place of earlier tax consultant. The assessee submitted that the cancellation of provisional registration came to its knowledge only upon initiation of assessment proceedings for AY. 2023- 24, during which the appellant had wrongly filed its return of income under the status of a registered trust despite the cancellation of its provisional approval. Thereafter, the assessee filed details submissions before the AO, wherein the bona fide nature of the situation was clearly explained and the return had been filed under a genuine and reasonable belief that the Trust's provisional registration remained valid. But, the AO passed an assessment order dated 12.02.2025 and treated the Trust as an AOP. Thereafter, the Consultant, Shri Jaynish Chauhan advised the trust to file an appeal against the ex-parte order dated 18.09.2023. Pursuant to this, matter of the assessee trust was referred to present learned Authorized Representative (ld. AR), Shri Advocate Hardik Vora, who filed the present appeal before the Tribunal. The ld. AR submitted that there was no malafide intention for causing the delay. He requested that the delay of 460 days may be condoned in the interest of justice.
Kumari Hemangi Somchand Sumaria Charitable Trust 3. On the other hand, the learned Commissioner of Income-tax - Departmental Representative (ld. CIT-DR) for the revenue submitted that the Tribunal may decide the case as it thinks fit.
We have considered the reasons given by the ld. AR and perused the accompanying documents along with the affidavit. Though the appellant was not alert, the delay in filing the appeal was not deliberate and intentional on the part of assessee. Moreover, the assessee was not going to be benefitted by filling appeal belatedly. It is now fairly settled that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred. Hence, delays in filling appeal is condoned in the interest of justice subject to payment of cost of Rs.10,000/- (Rupees ten thousand only) by the assessee to the credit of the “District Legal Services Authority, Surat” within 3 weeks from receipt of this order.
The brief facts of the case are that the assessee filed an application for registration in Form No.10AB u/s 12A(1)(ac)(iii) of the Act. The CIT(E) issued notices on 19.07.2023, 19.08.2023 and 12.09.2023. He has discussed legal background of Rules 12A(1)(ac), 17A(1), 17A(2) along with section 12AB of the Act. He noted that the date of application for registration for approval in Form No.10AB u/s 12A(1)(ac)(iii) of the Act was 28.03.2023 and the date of provisional approval was 03.08.2022 for the period from AY.2023-24 to 2025- 26. The assessee was requested to submit certain details/documents vide Kumari Hemangi Somchand Sumaria Charitable Trust notice dated 19.07.2023 and 19.08.2023. In response, the assessee neither filed any submission nor sought any adjournment. A final opportunity was given to the assessee on 12.09.2023, but the assessee again failed to furnish requisite details. The CIT(E) relied on the decisions of Hon’ble Supreme Court in cases of CIT vs. Dawoodi Bohara Jamat, Civil Appeal No.2492 of 2024 and M/s New Nobel Educational Society, Civil Appeal No.3795 of 2014. Thereafter, the CIT(E) examined the application based on materials on record and held that due to failure of assessee to file documentary evidences, he was unable to be satisfied about (i) genuineness of the activities of the trust or institution, (ii) that the activities of trust or institution are in consonance with the objects of the trust or institution and (iii) that other laws material for the purpose of achieving objects are complied with. The CIT(E) rejected the application filed in Form 10AB for approval sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act and also cancelled the provisional registration.
Aggrieved by the order of CIT(E), the assessee filed appeal before this Tribunal. The learned Authorized Representative (ld. AR) submitted that the CIT(E) issued notices of hearing on 19.07.2023, 19.08.2023 and 12.09.2023. The assessee could not appear before the CIT(A) due to non-service of notices in the correct e-mail Id i.e., ‘kushal.choraria@gmail.com’, instead of email Id ‘itassociates2018@gmail.com’, in which the notices were wrongly issued. The ld. AR has filed screenshot from the e-filing portal of Income-tax Kumari Hemangi Somchand Sumaria Charitable Trust Department in support of such claim. The ld. AR submitted that as the case has been decided without considering the merit of the case, the matter may be set aside to the file of CIT(E). He submitted that the order passed by CIT(E) is clearly violative of the principles of natural justice. He requested that in the interests of justice, one more opportunity should be given to the assessee to plead its case on merit before the CIT(E).
On the other hand, the learned Commissioner of Income-tax - Departmental Representative (ld. CIT-DR) for the revenue submitted that the Tribunal may decide the matter as it thinks fit.
We have heard both parties and perused the materials available on record. The CIT(E) issued notices on 19.07.2023, 19.08.2023 and 12.09.2023. The CIT(E) observed that the assessee failed to file documentary evidence during the proceedings. The ld. AR has contended before us that the assessee could not submit necessary details due to non-service of the notice issued by the CIT(E). He has also filed screenshot from the e-filing portal of Income-tax Department in support of such claim. He submitted that the appellant is ready to submit all details and evidences needed by the CIT(E) and one more opportunity may be given to the assessee. It is evident from the above facts that assessee could not pursue its case effectively before the CIT(E) by filing necessary evidences and documents. We are of the view that one more opportunity should be given to the assessee to file relevant documents / evidences and to plead its case before the CIT(E). It is settled law that Kumari Hemangi Somchand Sumaria Charitable Trust principles of natural justice requires that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much into the merits of the case, in the interest of justice, we set aside the order of CIT(E) and remit the matter back to the file of CIT(E) with a direction to pass fresh order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the CIT(E) by not seeking adjournment without valid reasons. With these directions, the grounds of appeal
are allowed for statistical purposes.
9. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 13/08/2025.