JAIN MAHASABHA DELHI,DELHI vs. CIT(EXEMPTION) DELHI, DELHI

The captioned appeals have been filed at the instance of The captioned appeals have been filed at the instance of the assessee The captioned appeals have been filed at the instance of seeking to assail the different First Appellate orders, both dated 29.03.2024 seeking to assail the different First Appellate orders, both dated 29.03.2024 seeking to assail the different First Appellate orders, both dated 29.03.2024 passed passed passed by by by Ld. Ld. Ld. Commissioner Commissioner Commissioner of of of Income Income Income Tax Tax Tax (Exemption), (Exemption), (Exemption), Delhi Delhi Delhi [“Ld.CIT(Exemption)”] under section nder section 12AB(1)(1)(b) & 80G(5)(ii)(b) of the Income Tax Act, 1961 [“the Act”] respectively, respectively, pertaining to Assessment ssessment Year 2024-25 without considering the reply filed by the assessee in violation of principles of without considering the reply filed by the assessee in violation of principles of without considering the reply filed by the assessee in violation of principles of natural justice.

The assessee is stated to have been registered under Society Registration The assessee is stated to have been registered under Society Registration The assessee is stated to have been registered under Society Registration Act, 1860 on 14.08.1989 and claimed to be engaged in 1860 on 14.08.1989 and claimed to be engaged in providing providing relief to the poor and needy and fulfilling the objects of the society as mentioned in the r and needy and fulfilling the objects of the society as mentioned in the r and needy and fulfilling the objects of the society as mentioned in the Memorandum of Association of Jain Mahasabha, Delhi. The assessee applied Memorandum of Association of Jain Mahasabha, Delhi. The assessee applied Memorandum of Association of Jain Mahasabha, Delhi. The assessee applied for provisional registration for provisional registration under section 12A & 80G of the Act vide 12A & 80G of the Act vide application dated 31.03.2023 in Form No ated 31.03.2023 in Form No.10A and has been granted provisional .10A and has been granted provisional registration in Form No.10AC on 07.04.2023 registration in Form No.10AC on 07.04.2023 under section 12A sub 12A sub-section (1)

The assessee applied for regular registration in Form No.10A The assessee applied for regular registration in Form No.10AB on The assessee applied for regular registration in Form No.10A 27.09.2023 and 30.09.2023 27.09.2023 and 30.09.2023 respectively i.e. within six months of the i.e. within six months of the commencements of the activities. commencements of the activities. The Ld.CIT(Exemption) however however, questioned the genuineness of the assessee’s activities and denied regular registration as the genuineness of the assessee’s activities and denied regular registration as the genuineness of the assessee’s activities and denied regular registration as well as cancelled the provisional registration well as cancelled the provisional registration granted under section 12A & 80G granted under section 12A & 80G of the Act.

Aggrieved the assessee the assessee preferred appeal before the Tribunal Tribunal. The assessee broadly made written submissions as under made written submissions as under : [i] that the assessee the assessee has applied for provisional registration under has applied for provisional registration under section 12A and 80G vide application dated 31.03.2023 in Form section 12A and 80G vide application dated 31.03.2023 in Form section 12A and 80G vide application dated 31.03.2023 in Form 10A and has been granted provisional registration in Form 10A and has been granted provisional registration in Form 10AC 10A and has been granted provisional registration in Form on on on 07.04.2023 07.04.2023 07.04.2023 vide vide vide Unique Unique Unique Registration Registration Registration Number Number Number AAJAJ6305ME20221 under section 12A sub section (1) clause (ac) AAJAJ6305ME20221 under section 12A sub section (1) clause (ac) AAJAJ6305ME20221 under section 12A sub section (1) clause (ac) sub clause (vi) of Income Tax Act, 1961 along with provisional sub clause (vi) of Income Tax Act, 1961 along with provisional sub clause (vi) of Income Tax Act, 1961 along with provisional registration in Form 10AC on 07.04.2023 vide Unique Registration registration in Form 10AC on 07.04.2023 vide Unique Registration registration in Form 10AC on 07.04.2023 vide Unique Registration Number AAJAJ6 Number AAJAJ6305MF20231 under first proviso of clause (iv) of 305MF20231 under first proviso of clause (iv) of section 80G (5) of the Income Tax Act, 1961. These provisional section 80G (5) of the Income Tax Act, 1961. These provisional section 80G (5) of the Income Tax Act, 1961. These provisional registration has been granted from Assessment Year 2023 registration has been granted from Assessment Year 2023-24 to AY registration has been granted from Assessment Year 2023 2025-2026. [ii]. that as per Section 12A(1) (ac)(iii) of the Income Tax Act, that as per Section 12A(1) (ac)(iii) of the Income Tax Act, 1961 that as per Section 12A(1) (ac)(iii) of the Income Tax Act, states that “where the trust or institution has been provisionally where the trust or institution has been provisionally where the trust or institution has been provisionally registered under section 12AB[or provisionally approved registered under section 12AB[or provisionally approved registered under section 12AB[or provisionally approved under sub under sub-clause (iv) or sub-clause (v) or sub clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10), at least six clause (via) of clause (23C) of section 10), at least six clause (via) of clause (23C) of section 10), at least six months prior to expiry of period of the provisional ths prior to expiry of period of the provisional ths prior to expiry of period of the provisional registration (or provisional approval, as the case may be.] or registration (or provisional approval, as the case may be.] or registration (or provisional approval, as the case may be.] or within six months of commencement of its activities, within six months of commencement of its activities, within six months of commencement of its activities, whichever is earlier, whichever is earlier, [iii]. in accordance with the same, a n accordance with the same, assessee has applied for regular has applied for regular registration in Form 10AB on 27.09.2023 and 30.09.2023 i.e. registration in Form 10AB on 27.09.2023 and 30.09.2023 i.e. registration in Form 10AB on 27.09.2023 and 30.09.2023 i.e. within 6 months of the commencement of activities. within 6 months of the commencement of activities. [iv]. thereafter, the Learned CIT(Exemption) Delhi has issued notice hereafter, the Learned CIT(Exemption) Delhi has issued notice hereafter, the Learned CIT(Exemption) Delhi has issued notice having DIN ITBA/EXM/F/EXM43/2023 having DIN ITBA/EXM/F/EXM43/2023-24/1057717016(1) and 24/1057717016(1) and ITBA/EXM/EXM43/2023 ITBA/EXM/EXM43/2023- 24/1057717788(1) dated 06.11.2023 in 24/1057717788(1) dated 06.11.2023 in Page | 2 & 2781 2763 & 2781/Del/2024 which which which he he he has has has requested requested requested to to to furnish furnish furnish the the the details details details /documents/clarifications as mentioned in the total 17 points of /documents/clarifications as mentioned in the total 17 points of /documents/clarifications as mentioned in the total 17 points of the notice which is required to be furnished on or before the notice which is required to be furnished on or before the notice which is required to be furnished on or before 21.11.2023. [v]. that in compliance of same, app that in compliance of same, appellant has duly submitted its point ellant has duly submitted its point wise reply on 21.11.2023 along with all the annexures vide wise reply on 21.11.2023 along with all the annexures vide wise reply on 21.11.2023 along with all the annexures vide acknowledgment number 521016861211123, 521020561211123 acknowledgment number 521016861211123, 521020561211123 acknowledgment number 521016861211123, 521020561211123 and 521020561211123 along with the request that in case you and 521020561211123 along with the request that in case you and 521020561211123 along with the request that in case you honour are unable to accede to the request of honour are unable to accede to the request of the assessee, the the assessee, the reasons and basis for the same may be kindly be communicated to reasons and basis for the same may be kindly be communicated to reasons and basis for the same may be kindly be communicated to the appellant. [vi]. thereafter, a notice for proceedings under section 12A(1)(ac)(iii) has hereafter, a notice for proceedings under section 12A(1)(ac)(iii) has hereafter, a notice for proceedings under section 12A(1)(ac)(iii) has been issued by Learned CIT(Exemption), Delhi dated 04.01.2024 been issued by Learned CIT(Exemption), Delhi dated 04.01.2024 been issued by Learned CIT(Exemption), Delhi dated 04.01.2024 having DIN No. having DIN No. ITBA/EXM/F/EXM43/2023-24/1059355781(1) to 24/1059355781(1) to submit the response of letter dated 06.11.2023 on or before submit the response of letter dated 06.11.2023 on or before submit the response of letter dated 06.11.2023 on or before 11.01.2024 whose reply has been submitted on 20.03.2024 and 11.01.2024 whose reply has been submitted on 20.03.2024 and 11.01.2024 whose reply has been submitted on 20.03.2024 and 28.03.2024 vide acknowledgment number 148900361200234 and 28.03.2024 vide acknowledgment number 148900361200234 and 28.03.2024 vide acknowledgment number 148900361200234 and 1569998212280324. 1569998212280324. [vii]. however, Learned CIT (Exemption) Delhi has framed the order earned CIT (Exemption) Delhi has framed the order earned CIT (Exemption) Delhi has framed the order under clause (ii)(b)(B) of second proviso to section 80G(5) of the under clause (ii)(b)(B) of second proviso to section 80G(5) of the under clause (ii)(b)(B) of second proviso to section 80G(5) of the Income Tax Act, 1961 and order under section 12AB(1)(b)(ii)(B) of Income Tax Act, 1961 and order under section 12AB(1)(b)(ii)(B) of Income Tax Act, 1961 and order under section 12AB(1)(b)(ii)(B) of the Income Tax Act, 1961 in Form 10AD having DIN Number the Income Tax Act, 1961 in Form 10AD having DIN Number the Income Tax Act, 1961 in Form 10AD having DIN Number ITBA/EXM/F/EXM45/ ITBA/EXM/F/EXM45/2023-24/1063599683(1)& 24/1063599683(1)& ITBA/EXM/F/ ITBA/EXM/F/ EXM45/2023- -24/1063599557(1) respectively on 29.03.2024 in 24/1063599557(1) respectively on 29.03.2024 in which application filed in Form 10AB under clause (iii) of first which application filed in Form 10AB under clause (iii) of first which application filed in Form 10AB under clause (iii) of first proviso to sub section (5) of section 80G of the Income Tax act proviso to sub section (5) of section 80G of the Income Tax act, proviso to sub section (5) of section 80G of the Income Tax act 1961 is rejected along with the p 1961 is rejected along with the provisional registration granted vide rovisional registration granted vide UR No. AAJAJ6305MF20231 & AAJAJ6305MF20221 UR No. AAJAJ6305MF20231 & AAJAJ6305MF20221 without UR No. AAJAJ6305MF20231 & AAJAJ6305MF20221 considering the submission of the appellant only on the basis of considering the submission of the appellant only on the basis of considering the submission of the appellant only on the basis of conjecture and surmises. conjecture and surmises. [viii]. that the Learned CIT(Exemption), Delhi has erred in canceling the that the Learned CIT(Exemption), Delhi has erred in canceling the that the Learned CIT(Exemption), Delhi has erred in canceling the appellant's provisional 80G registration, which was valid until the ellant's provisional 80G registration, which was valid until the ellant's provisional 80G registration, which was valid until the Assessment Year 2025 Assessment Year 2025- 2026. Provisional registration, granted 2026. Provisional registration, granted under Section 80G(5) of the Income Tax Act, is intended to provide under Section 80G(5) of the Income Tax Act, is intended to provide under Section 80G(5) of the Income Tax Act, is intended to provide an interim period during which the organization can establish an interim period during which the organization can establish the an interim period during which the organization can establish genuineness of its activities while being eligible for 80G benefits. genuineness of its activities while being eligible for 80G benefits. genuineness of its activities while being eligible for 80G benefits. The The The CIT(Exemption)'s CIT(Exemption)'s CIT(Exemption)'s decision decision decision to to to cancel cancel cancel this this this provisional provisional provisional registration, even if the final registration was not granted, lacks a registration, even if the final registration was not granted, lacks a registration, even if the final registration was not granted, lacks a fair basis and contradicts the objective of provisional fair basis and contradicts the objective of provisional registration. [ix]. Provisional registration should only be canceled under specific and Provisional registration should only be canceled under specific and Provisional registration should only be canceled under specific and justified circumstances, such as a demonstrable breach of justified circumstances, such as a demonstrable breach of justified circumstances, such as a demonstrable breach of compliance or evidence against the charitable intent of the compliance or evidence against the charitable intent of the compliance or evidence against the charitable intent of the organization. The Learned CIT (Exemption) has not organization. The Learned CIT (Exemption) has not presented any presented any such grounds. All requisite documents and clarifications were duly such grounds. All requisite documents and clarifications were duly such grounds. All requisite documents and clarifications were duly Page | 3 & 2781 2763 & 2781/Del/2024 submitted to satisfy the requirements for both provisional and final submitted to satisfy the requirements for both provisional and final submitted to satisfy the requirements for both provisional and final 80G registration. The unilateral cancellation of provisional 80G registration. The unilateral cancellation of provisional 80G registration. The unilateral cancellation of provisional registration, therefore, appears arbitrary an registration, therefore, appears arbitrary and unjust, depriving the d unjust, depriving the appellant of the fair opportunity to establish compliance through appellant of the fair opportunity to establish compliance through appellant of the fair opportunity to establish compliance through this period. [x]. It is pertinent to note that the Learned CIT (Exemption), Delhi has It is pertinent to note that the Learned CIT (Exemption), Delhi has It is pertinent to note that the Learned CIT (Exemption), Delhi has questioned the genuineness of the appellant's activities without questioned the genuineness of the appellant's activities without questioned the genuineness of the appellant's activities without sufficient justification. The appellant has provided extensive tification. The appellant has provided extensive tification. The appellant has provided extensive documentation of its charitable activities, as evidenced by donation documentation of its charitable activities, as evidenced by donation documentation of its charitable activities, as evidenced by donation receipts, cash book, trustee identity details, activity records, etc. receipts, cash book, trustee identity details, activity records, etc. receipts, cash book, trustee identity details, activity records, etc. clearly demonstrating the genuine, charitable nature of its clearly demonstrating the genuine, charitable nature of its clearly demonstrating the genuine, charitable nature of its operations in alignment with Section 80G requirements. ns in alignment with Section 80G requirements. ns in alignment with Section 80G requirements. [xi]. In view of the above grounds, the appellant respectfully prays that In view of the above grounds, the appellant respectfully prays that In view of the above grounds, the appellant respectfully prays that the Hon'ble Tribunal may: the Hon'ble Tribunal may:  Set aside the order of the CIT(Exemption) and remand the same Set aside the order of the CIT(Exemption) and remand the same Set aside the order of the CIT(Exemption) and remand the same back to CIT(exemption) to consider the applica back to CIT(exemption) to consider the application afresh. tion afresh.  Reinstate the provisional 80G registration valid through AY Reinstate the provisional 80G registration valid through AY Reinstate the provisional 80G registration valid through AY 2025-26, thereby allowing the appellant the remaining period to 26, thereby allowing the appellant the remaining period to 26, thereby allowing the appellant the remaining period to continue charitable activities in alignment with its registration continue charitable activities in alignment with its registration continue charitable activities in alignment with its registration terms.

The Ld.Sr.DR for the The Ld.Sr.DR for the Revenue on the other hand, did not offer any and, did not offer any comments except to rely upon the comments except to rely upon the impugned order passed by The order passed by The Ld.CIT(Exemption).

On appraisal of facts pointed out of facts pointed out on behalf of the assessee, it is noticed on behalf of the assessee, it is noticed that the reply in support of the application for regular registration were made the reply in support of the application for regular registration were made the reply in support of the application for regular registration were made on 20.03.2024 and 28.03.2024. The Ld.CIT(Exemption) has passed the order on 20.03.2024 and 28.03.2024. The Ld.CIT(Exemption) has passed the order on 20.03.2024 and 28.03.2024. The Ld.CIT(Exemption) has passed the order cancelling the provisional registration as well as denying the final registration cancelling the provisional registration as well as denying the final registration cancelling the provisional registration as well as denying the final registration on the next day of filing of the of the last reply i.e. 29.03.2024. The plea raised on reply i.e. 29.03.2024. The plea raised on behalf of the assessee is that the impugned orders are without consideration that the impugned orders are without consideration that the impugned orders are without consideration and reply filed on 28.03.2024. This action of and reply filed on 28.03.2024. This action of the Ld.CIT(Exemption) has he Ld.CIT(Exemption) has resulted in violation of principles of natural justice resulting in mis resulted in violation of principles of natural jus mis-carriage of justice. Hence, to set right such mis justice. Hence, to set right such mis-carriage, the impugned order carriage, the impugned orders passed by the Ld.CIT(Exemption) under section 12AB and 80 G of the Act are set the Ld.CIT(Exemption) under section 12AB and 80 G of the Act are set aside the Ld.CIT(Exemption) under section 12AB and 80 G of the Act are set and remitted back to the file of the Ld.CIT(Exemption) for to the file of the Ld.CIT(Exemption) for denovo denovo consideration of the respective application in accordance with law after giving proper of the respective application in accordance with law after giving proper of the respective application in accordance with law after giving proper opportunity to the assessee. to the assessee. Having set aside the impugned order order inter-alia Page | 4 & 2781 2763 & 2781/Del/2024 cancelling provisional registration cancelling provisional registration, separate direction to reinstate provisional , separate direction to reinstate provisional registration under section 80G of the Act is not necessary. under section 80G of the Act is not necessary.

The Ld.CIT(Exemption) shall pass a The Ld.CIT(Exemption) shall pass a speaking order after ta after taking into account the explanation and documentary evidences in support of the account the explanation and documentary evidences in support of the account the explanation and documentary evidences in support of the application for registration as may be considered application for registration as may be considered expedient by the a by the assessee society.

In the result, both both appeals of the assessee are allowed for assessee are allowed for statistical purposes. Order pronounced in the open Court on Order pronounced in the open Court on 20th November, 2024. November, 2024.