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Facts
The assessee filed an application for registration under section 12AB of the Income-tax Act, 1961. The CIT(E) issued notices requesting details and documents. The assessee failed to provide a timely response due to the maternity leave of their accountant and the President's professional engagements abroad. Consequently, the CIT(E) rejected the application and cancelled the provisional registration.
Held
The Tribunal noted that the principle of audi alteram partem (hear the other side) was not fully followed. Considering the circumstances beyond the appellant's control and their assurance of future vigilance, the appeal was restored to the CIT(E) for a fresh decision.
Key Issues
Whether the rejection of the trust's application for approval under section 12AB of the Income-tax Act, 1961, was justified due to non-compliance with notices, or if a further opportunity should be granted.
Sections Cited
12AB, 12A(1)(ac)(iii)
AI-generated summary — verify with the full judgment below
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from order of Commissioner of Income-tax (Exemption), Ahmedabad [for short to as “CIT(E)”] dated 15.05.2024 in rejecting approval of Trust under section 12AB of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Though, the assessee has raised multiple grounds of appeal, however effective ground of appeal relates to rejection of approval under section 12AB of the Act to assessee-trust. Grounds of appeal raised by the assessee are as under:
Hands For Human Happiness 1. The appellant submitted an application for provisional registration, intimation, approval, or provisional approval in accordance with Rule 17A/11AA/2C/5CA on February 20, 2023. The appellant received approval for provisional registration on February 28, 2023. Subsequently, the appellant commenced charitable activities and applied for final registration on November 24, 2023. In January and February 2024, the appellant field grievances to ascertain the status of the application. However, the Learned CIT did not issue any notice or response until March 19, 2024, when a notice was sent via email.
2. The appellant’s legal documentation is managed by Namrata Chodvadiya, a professional chartered accountant and trustee of the trust. The email address used for communication s that of Namrtea Chodvadiya. Due to her maternity leave, she did not review the email until August 26, 2024. Upon reviewing the correspondence, she verified the mail. Therefore, the appellant was unable to provide a timely response to the notice due to the trustee’s maternity leave.
3. Mr. Mehul Akbari, the President of the trust, has been heavily engaged in his professional duties for the past seven months. During this period, he has travelled abroad on several occasions, specifically from April 11 to April 20, 2024, from July 27 to August 3, 2024 and August 12, 2024 to August 24, 2024. Consequently, Mr. Mehul Akbari was not in India during these times and, consequently, was unable to monitor the status of the application.
4. In the interest of justice and to provide an opportunity for a response, it is requested that the Learned CIT reissue the noticed with reference to the application submitted by appellant in Form 10AB to enable the appellant to respond appropriately.
Facts of the case in brief are that appellant filed application for registration u/s 12AB of the Act on 24.11.2023. The provisional approval had been granted to it on 28.02.2023. In response to application filed by the appellant in Form-10AB, notices were issued by Ld.CIT(E) on 19.03.2024 and 04.04.2024 requiring the assessee to submit certain details and documents. The appellant did not file any submission or reply due to which, the Ld.CIT(E) could not verify (i) the genuineness of the trust (ii) the activities of the trust are Hands For Human Happiness in consonance with the objects of the assessee-trust and (iii) that other laws material for the purpose of achieving objects are complied with. Hence, the application filed in Form-10AB u/s 12A(1)(ac)(iii) of the Act was rejected and provisional registration was also cancelled.
Aggrieved by the order of Ld.CIT(E), appellant filed present appeal before the Tribunal. The Ld. AR submitted that the appellant received approval for provisional registration on 28.02.2023 and started its charitable activities. The appellant filed application on for final registration on 24.11.2024. The legal documentation of the appellant-trust was managed by Mrs. Namrata Chodvadiya, Chartered Accountant and trustee of appellant-trust. Due to maternity leave, she could not receive the e-mail till 26.08.2024. Therefore, appellant was unable to provide timely compliance to the notice issued by Ld.CIT(E). It was also submitted that the president of the trust, Mr. Mehul Akbari was engaged in professional duties and he travelled abroad on several occasions during the said period. Hence, he was unable to monitor the status of application. Therefore, the non-compliance was not intentional but due to circumstances beyond control of the appellant. The Ld. AR of the assessee requested the Bench that one more opportunity of hearing may be given before Ld.CIT(E) on merit.
On the other hand, Ld. Commissioner of Income-tax Departmental Representative (Ld.CIT-DR) for the Revenue supported the order of ld. CIT(E).
Hands For Human Happiness He would, however, have no objection if the matter is restored to Ld.CIT(E) for fresh consideration on merit.
We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. The Ld.CIT(E) issued two notices on 19.03.2024 and 04.04.2024 respectively. The assessee-trust did not file any reply to the said notices. In absence of the details, the Ld. CIT(E) could not verify the genuineness of the activities of the trust or that activities are in consonance with objects of the trust. Further, he was unable to ascertain whether the other laws material for purpose of achieving objects are complied with. Hence, he rejected the application filed by the assessee and also cancelled the provisional registration. Thus, application of assessee-trust was rejected for want of proper submission. The principle of audi alteram partem envisages that parties are eligible for fair hearing or that no one should be condemned unheard. Thus, considering the prayer of Ld. AR of the assesse that he undertook on behalf of assessee-trust to be more vigilant in future in making compliance, this appeal of assessee is restored back to the file of Ld.CIT(E) to pass the order afresh in accordance with law. Needless to direct that before deciding the application afresh, the Ld. CIT(E) shall grant reasonable and fair opportunity of hearing to the assessee and allow it to make further submission to prove the objects of assessee-trust and its activities. The appellant-trust is also directed to file/furnish any other Hands For Human Happiness necessary information, if it so desires. With this direction, the grounds of appeal raised by the assessee are treated as allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in accordance with Rule 34 of ITAT Rules, 1963 on 28/05/2025 in the open court.