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Facts
The assessee, The Kisan Trust, appealed against an ex-parte order by the CIT(E) dated 23.08.2023, which denied its application for registration under Section 12A(1)(ac)(iii) of the Income Tax Act. The CIT(E) rejected the application due to alleged non-compliance with statutory notices. There was a delay of 100 days in filing the appeal before the Tribunal.
Held
The Tribunal condoned the delay, acknowledging the assessee's charitable work and partial compliance. It set aside the CIT(E)'s ex-parte order, emphasizing the need for fair play and natural justice. The issue was restored to the CIT(E) for a de novo consideration, granting the assessee another opportunity to present its case.
Key Issues
Whether the ex-parte rejection of a registration application under Section 12A(1)(ac)(iii) by the CIT(E) was justified without providing sufficient opportunity, and whether the delay in filing the appeal should be condoned.
Sections Cited
Section 12AB(1)(b)(ii)(B), Section 12A(1)(ac)(iii), Section 12AB, Section 12AA
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Income Tax Appellate Tribunal, DELHI BENCH “C” DELHI
Before: SHRI PRADIP KUMAR KEDIA & SHRI SUDHIR PAREEK
PER PRADIP KUMAR KEDIA - A.M.: The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Exemption), Delhi dated 23.08.2023 passed under Section 12AB(1)(b)(ii)(B) of the Income Tax Act, 1961 (the Act).
As per the grounds of appeal, the assessee has sought remedy from the Tribunal against the ex-parte order passed by the CIT(E) denying registration sought in terms of application made under Section 12A(1)(ac)(iii) of the Act.
When the matter was called for hearing, the ld. counsel at the outset submitted that there is a delay of 100 days in filing the present appeal before the Tribunal and sought condonation thereof on the grounds of mismatch in communication of the impugned order passed
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by the CIT(E) dated 23.08.2023 complied with fact of honorary work associated in such cases. On merits, the ld. counsel for the assessee pointed out that the CIT(E) has rejected the application seeking registration under Section 12A(1)(ac)(iii) of the assessee ex-parte on the grounds of non-compliances of statutory notices without giving sufficient opportunity. The ld. counsel submitted that the competent authority has failed to appreciate that the assessee has filed application within prescribed time limit and fulfilled all the conditions provided under the Income Tax Act and thus eligible for registration. The ld. counsel thus urged for suitable relief.
The ld. CIT-DR for the Revenue, on the other hand, contended that sufficient notices were served upon the assessee and only part reply was received in compliances thereof. The assessee has failed to discharge the onus to support the genuineness of the activities carried out. Hence, where the conditions laid down under Section 12AB of the Act could not be verified, the action of the CIT(E) cannot be faulted in rejecting the application seeking registration under Section 12A(1)(ac)(iii).
We have carefully considered the impugned order passed by the CIT(E) and the respective submissions made by both sides.
To begin with, we observe that the condonation of delay of about 100 days sought by the assessee is based on reasonable explanation. Keeping in mind the honorary work done by the trustees of such trust for benefit of public at large and having regard to the lack resources and understanding together with factum of no substantial prejudice perceived to have been caused to the other side, a short delay of 100 days requires to be condoned to advance cause of justice. The delay in filing appeal is thus condoned.
We now advert to the plea raised on behalf of the assessee. The
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assessee contends that it has duly complied on two occasions and filed details as admitted by the CIT(E) himself. Subsequent notices were not received and the Trustees learnt about such notices only when the accountant of the assessee visited to income tax portal and got to know about the ex-parte order passed.
On perusal of the order passed by the CIT(E), it is noticed that the order itself acknowledges the fact that the assessee has filed certain replies albeit incomplete. Thus, the assessee do not appear to be grossly negligent in furnishing the information. Having regard to advent of digital eco-system and compliances in virtual mode recently introduced, it is common knowledge certain practical difficulties do arise to certain section of tax payers. Having regard to the fact that the assessee is engaged in charitable work and the trustees are doing honorary work and having regard to the fact that partial compliances were carried out, in our considered view it is only desirable that one more opportunity is granted to the assessee to satisfy the designated authority, i.e., CIT(E), for its rightful entitlement for registration in accordance with law. It will promote fair play and will accord with principles of natural justice enured by the legislature in unequivocal terms in Section 12AA / Section 12AB of the Act.
Consequently, we set aside the order of the CIT(E) dated 23.08.2023 and restore the issue back to the file of the designated authority for de novo consideration of all aspects for the purposes of registration in accordance with law. Needless to say, application shall be disposed of by the designated authority after giving proper opportunity to the applicant-assessee. The assessee is also cautioned to dutifully attend the de novo proceedings before the designated authority without any demur. All points are kept upon for reconsideration of the designated authority without any fetters. It shall be open to the assessee to support the application of registration afresh
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before the designated authority with all documentary evidences as it may be considered expedient.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 15th May, 2024.
Sd/- Sd/- [SUDHIR PAREEK] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: May, 2024 Prabhat