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Facts
The assessee's applications for registration under Section 12A(1)(ac)(iii) and Section 80G(5)(iii) of the Income-tax Act, 1961, were rejected by the CIT(Exemption). The rejection was based on the assessee's failure to provide complete details, bills/vouchers, and to demonstrate that its activities benefited the general public as required under Section 2(15). This resulted in the cancellation of provisional registration for both applications.
Held
The Tribunal held that the principle of natural justice should have been observed, and the assessee deserved another opportunity to present its case. Both orders of the CIT(Exemption) were set aside, and the matter was remanded back for fresh adjudication. The assessee was given reasonable time to submit all relevant details to substantiate its claim as a genuine charitable company.
Key Issues
Whether the CIT(Exemption) was justified in rejecting the applications for registration under Section 12A and 80G without providing adequate opportunity to the assessee to submit details and prove its charitable nature.
Sections Cited
Section 12A(1)(ac)(iii), Section 80G(5) clause (iii), Section 2(15), Section 25
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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI MAHAVIR SINGH SHRI MAHAVIR SINGH, , , , VICE SHRI MAHAVIR SINGH & SHRI NAVEEN CHANDRA, ACCOUNTANT SHRI NAVEEN CHANDRA SHRI NAVEEN CHANDRA
The only common issue in these two appeals of the assessee is as regards the order of learned CIT(Exemption) is against rejection of application under Section 12A(1)(ac)(iii) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) filed in Form No.10AB on 26th September, 2023 and under Section 80G(5) clause (iii) of first proviso in Form No.10AB dated 26th September, 2023. For these two appeals, assessee has raised various grounds, in each of appeal, which are argumentative, factual and need not be reproduced.
We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the assessee filed an application electronically on 26th September, 2023 in Form No.10AB seeking registration under Section 12A(1)(ac)(iii) of the Act with the learned CIT(Exemption) submitted various letters for submission of details like financial statements, bank statements, form 10AB, address of the trustees, etc. as assessee is a company registered under Section 25 being charitable company. The assessee has not furnished form 10AB for the relevant financial year and details remain unexplained with regard to the nature of expenses and accumulation etc. Learned CIT(Exemption) has noted from the perusal of the details that the assessee has not carried out any charitable activity benefiting general public as envisaged under the provisions of Section 2(15) of the Act. The assessee has not submitted any bills/vouchers in support of its claim and from the pictures and documents submitted by the assessee, he concluded that the dominant objects and activities of the company are not for general public. Finally, learned CIT(Exemption) held that the assessee failed to submit requisite details and documents in support of its claim of carrying out charitable activity as mandated under Section 2(15) of the Act and therefore, the conditions for grant of registration are not satisfied. Hence, he rejected form 10AB and provisional registration was also cancelled.
Similarly, learned CIT(Exemption) also rejected the application in form 10AB dated 26th September, 2023 filed under clause (iii) of first proviso to sub-section 5 of Section 80G of the Act.
Now, before us, learned counsel for the assessee only requested that one more opportunity be provided before learned CIT(Exemption) and he is ready to file all the required details. To this proposition, learned CIT-DR has not objected.
After hearing both the sides and going through the facts and circumstances of the case, we are of the view that the principle of natural justice should have been adhered to. The assessee should be allowed reasonable time to submit the details. The assessee is also advised to file all the relevant details to substantiate its claim that it is a genuine charitable company. Consequent to the above, we set aside both the orders of learned CIT(Exemption) and remand the matter back to his file for fresh adjudication.
In the result, both the appeals of the assessee are allowed for statistical purposes. Above decision was pronounced in the open Court on 03-12-2024.