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Facts
The assessee, Jamshedpur Management Association, filed an application for regular registration under Section 12A of the Income Tax Act. The CIT(E) rejected the application, citing non-submission of requisite details and insufficient financial documentation. The assessee contested this, claiming a lack of adequate opportunity to be heard.
Held
The Tribunal found that the assessee was not given a reasonable opportunity to present their case before the rejection of the application. The short notice provided by the CIT(E) and the holiday period led to the assessee's submission being overlooked.
Key Issues
Whether the CIT(E) erred in rejecting the application for registration without providing a reasonable opportunity for the assessee to be heard and submit necessary documents, and whether the assessee's activities qualified for charitable purposes.
Sections Cited
12A, 12AA, 12AB, 2(15)
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri R.R. Mittal, A.R. Department represented by Md. A.H. Chowdhury, CIT-DR Date of hearing 06/05/2025 Date of pronouncement 06/05/2025 O R D E R PER: BENCH 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Exemption), Patna (in short, the ld. CIT(E)) dated 24/04/2023 for the A.Y. 2022-23. In this appeal, the assessee has raised following grounds of appeal:
1. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Exemption) erred in rejecting the application for registration u/s 12AA made on 08th December, 2021 without establishing that the activities of the assessee institute as well as the objects of the Trust were in genuine.
2. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Exemption) erred in rejecting the application for registration u/s 12AA without giving full opportunity of being heard and passed the order without considering the submissions made. Thus not provided natural justice to the assessee Institute.
3. That, the learned Commissioner of Income Tax (Exemption) erred in rejecting the application for registration u/s 12AA in applying proviso to Section 2(15) of the Income Tax Act while all the receipts are for the education purpose.
4. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Exemption) erred in rejecting the application for registration u/s 12AA holding that applicant has not maintained the books of account on regular basis ITA 157/Ran/2023 Jamshedpur Management Association Vs CIT(E) while all the financials had already been submitted and available with the Income Tax Department for due verification. Thus the order of rejection of registration under Section 12A against equity of Principle of natural justice.
5. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Exemption) erred in rejecting the application for registration u/s 12AA without considering the appreciating that all activities of the trust was in the field of Education and as per object of the trust (i) to promote amongst exchange of knowledge, experience and ideas on sound management principles and practice and other object includes to promote education in theory and practice of management and related subjects through meetins, discussion, lecture, research projects seminars, conference and ideas, libraries, publications of booklets, tracts, journals and periodicals. And to meet these objects fees has been charged from sponsoring entity and thus receipts do not attract proviso of Section 2(15).
6. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Exemption) erred in rejecting the application for registration u/s 12AA without establishing that the activities are non charitable in nature.
7. Further, On the facts and circumstances of the case, the learned Commissioner of Income Tax (Exemption) erred in cancelling the provisional registration granted u/s 12A(1)(ac)(vi) in Form 10AC dated 31/12/2021 with unique Registration Number AAEAJ2108FE20217 for A.Y. 2022-23 to 2024-25 without establishing that the activities are non-charitable in nature.
8. That the appellant craves, leave to add, alter, amend or vary and/or withdraw any or all of the aforesaid grounds of appeal
or at time of hearing of the above appeal."
2. We find from perusal of record that there is delay of 17 days in filing this appeal of the assessee before the Tribunal. Impugned order was passed by the ld. CIT(E) on 24/04/2023, however, this appeal is filed on 10/07/2023. The assessee has filed application for condonation of delay mentioning the fact that the assessee requested the Auditors-Agarwal Mahesh K & Co., Chartered Accountants to prepare an appeal before the ITAT, they undertook to do the needful soon but due to rush of work in filing of return of income, the same could not be filed within due date and when the undersigned followed up the matter with them the required documents were prepared and appeal fee was paid on 05th July, 2023. The assessee stated that the delay in filing appeal is neither intentional nor deliberate. The delay is not inordinate. The assessee has ITA 157/Ran/2023 Jamshedpur Management Association Vs CIT(E) good case on merit would suffer prejudice if delay is not condoned in its case and the appeal is not adjudicated on merit.
On the other hand, the learned Senior Departmental Representative (ld. Sr.DR) for the revenue submits that on the issue of condonation of delay, the Bench may take appropriate view as per their discretion.
We have considered the submissions of both the parties on the plea of condonation of delay, we find that the impugned order was passed on 24/04/2023, however, this appeal is filed on 10/07/2023, the registry has calculated delay of 17 days in filing the appeal. As recorded above, the assessee submitted that due to rush filing of return of income by the Authorised Representative of the assessee, he could not file appeal within the time limit. Considering the fact that the delay is not inordinate and seems to be not intentional, therefore, delay of 17 days in filing this appeal is condoned. Now adverting to the merit of the case.
Facts of the case, in brief, are that the appellant is a society and filed an application in Form 10AB before the ld. CIT(E), Patna on 20/10/2022 for grant of regular registration under sub-clause (iii) of clause (ac) of sub-section (1) of Section 12A read with section 12AB(1)(b) of the Income Tax Act, 1961 (in short, the Act. While examining the objects of the society and the genuineness of its activities and the compliance of such requirements of any other law for the time being in force to achieve the objects of the society, the society was asked by the ld. CIT(E) vide its letter dated 28/02/2023 to submit the requisite documents viz. Notes on activities undertaken by the applicant during last three years, annual accounts of the applicant for last three years, evidences in ITA 157/Ran/2023 Jamshedpur Management Association Vs CIT(E) support of nature/quantum of receipts received during last three years, copies of statements of bank accounts for last three years, location details etc. on 05/04/2023, which was duly filed by the applicant/society. Again a letter dated 18/04/2023 was issued to the society calling for the explanation to be submitted latest by 21/04/2023 giving certain details as required by the ld. CIT(E) mentioned in the impugned order. The ld. CIT(E) cancelled the provisional registration granted under Section 12A(1)(a)(c)(vi) in Form 10AC by rejecting the application filed in Form 10AB for grant of regular registration on the ground that the assessee society has not filed requisite details as required by the ld. CIT(E).
Aggrieved by the order of ld. CIT(E), this appeal has been preferred by the assessee before us. During the appellate proceeding before us, the assessee society has submitted a written submission as under: "Assessee is society registered under the Jharkhand Society Act. Assessee applied for the Provisional Registration under Section 12A and provisional registration certificate was issued by the department of Income Tax in form No. 10AC on 31/12/2021 for A.Y. 2022-23 to A.Y. 2024-25. An application in Form 10AB was filed on 20/12/2022 by the applicant, Jamshedpur Management Association, for grant of regular registration under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A read with section 12AB(1)(b). In compliance to letter dated 07/12/2022 the applicant has filed submission dated 11/01/2023. In the course of proceedings taken u/s 12AB, vide letter dated 28/03/2023, CIT(E), Patna asked to submit on 05/04/2023 the requisite documents viz Notes on activities undertaken by the applicant during last three years, annual accounts of the applicant for last three years, evidences in support of nature/quantum of receipts received during last three years, copies of statements of bank accounts for last three years, location details etc. 4 ITA 157/Ran/2023 Jamshedpur Management Association Vs CIT(E) On examination of the submission filed by the applicant, a letter dated 18/04/2023 was issued calling for the explanation latest by 21/04/2023 by the CIT, Exemption, Patna. The notice issued on 18/04/2023 has been issued for compliance after only three days i.e. on 21st April, 2023. The 21st, 22nd and 23rd happened to be holidays due to Eid-ul-Fitr, Saturday and Sunday and we only gone through and prepared reply and filled on 24th April, 2023. Very short notice has been given and the submission made on 24/04/2023 has not been considered while passing the order of rejection on 24/04/2023. In this regard, it is to submit that the delay was not intentional and happed due to geuine reasons. The copy of acknowledgment dated 24/04/2023 are enclosed herewith for your kind perusal. The primary reason for rejection relates to non-submission of certain details as called for by Notice dated 18/04/2023 and the compliance date in this regard was fixed on 21/04/2023. CIT(E) erred in rejecting the application for registration u/s 12AA holding that applicant has not maintained the books of account on regular basis while all the financials had already been submitted and uploaded to the income tax portal and were available with the Income tax department for due verification. Learned CIT(E) erred in rejecting the application for registration u/s 12AA without establishing that the activities are non-charitable in nature. Further, on the facts and circumstances of the case, the learned CIT(E) erred in rejecting the application for registration u/s 12AA without considering and appreciating that all activities of the trust was in the field of Education and as per object of the trust (i) to promote amongst exchange of knowledge, experience and ideas on sound management principles and practice and other object includes to promote education in theory and practice of management and related subjects through meetings, discussion, lecture, research projects seminars, conference and ideas, libraries, publications of booklets, tracts, journals and periodicals. And to meet these objects fees has been charged from sponsoring entity and thus receipts do not attract proviso of Section 2(15) of the IT Act. All the activities are for the charitable and educational purpose ITA 157/Ran/2023 Jamshedpur Management Association Vs CIT(E) and therefore application of proviso for determination of 20% limit do not apply in instance case."
On the other hand, the ld. CIT-DR for the revenue justified the action of the ld. CIT(E).
We have considered the facts of the case and the submissions made as above. It is found that the reasonable opportunity was not given to the assessee society to submit the requisite details before the ld. CIT(E). On examination of the submission filed by the applicant, a letter dated 18/04/2023 was issued by the ld. CIT(E) calling for the explanation to be filed by the society latest by 21/04/2023. The notice was issued on 18/04/2023 and compliance was required after only after three days i.e. on 21st April, 2023. The 21st, 22nd and 23rd happened to be holidays due to Eid-ul-Fitr, Saturday and Sunday and the applicant filed their reply on 24th April, 2023, which was not considered while passing the order of rejection on 24/04/2023. Thus, it is not a case of deliberate non-compliance on the part of the assessee society but it is a case where reasonable opportunity was not given to the assessee society to file the requisite details and to explain its case on merits.
Thus, the action of ld. CIT(E) for rejecting the claim of assessee society under Section 12A of the Act is arbitrary and cannot be sustained. Thus, we deem it appropriate to send the mater back to the file of ld. CIT(E) to give reasonable opportunity of being heard to the assessee society and then decide the grant of registration accordingly. The assessee society is also directed to file necessary details as and when required by the ld. CIT(E) for the purpose of claim of registration under Section 12A of the Act. In the result, grounds of appeals raised by the assessee are allowed for statistical purposes only. 6