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Facts
The assessee, Maooli Education Foundation, is appealing against the rejection of its registration application by the CIT(E). The appeal was filed with a delay of 434 days, attributed to the managing trustee's health issues and lack of technical knowledge, leading to an oversight of the rejection order communicated via email. The assessee became aware of the order only when the AO proposed disallowance of exemption.
Held
The Tribunal condoned the delay in filing the appeal, finding a bonafide reason and no benefit to the assessee in delaying. Regarding the ground of appeal, the Tribunal found that the CIT(E) did not provide a reasonable opportunity to the assessee before rejecting the application, as only one day was given to comply with the show cause notice.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the assessee was provided with a reasonable opportunity of being heard before the rejection of the registration application.
Sections Cited
12AB, 12A, 10AB, 10AC, 11
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 29.09.2022 passed by the Ld. Commissioner of Income-tax (Exemption), Mumbai [in short ‘the Ld. CIT(E)’] in relation to rejection of registration of the Trust u/s 12AB of the Income-tax Act, 1961 (in short’ the Act’).
Maooli Education Foundation Maooli Education Foundation 2 ITA No. 514/MUM/2024
The relevant ground raised by the assessee The relevant ground raised by the assessee is is reproduced as under:
“The Ld. CIT (Exemption) erred in rejecting the grant of registration The Ld. CIT (Exemption) erred in rejecting the grant of registration The Ld. CIT (Exemption) erred in rejecting the grant of registration application made by the appellant trust in Form 10AB of the Income Tax application made by the appellant trust in Form 10AB of the Income Tax application made by the appellant trust in Form 10AB of the Income Tax Act, 1961 without giving reasonabl Act, 1961 without giving reasonable opportunity of being heard. That e opportunity of being heard. That the rejection order was passed in a hasty manner due to statutory the rejection order was passed in a hasty manner due to statutory the rejection order was passed in a hasty manner due to statutory limitation and is against the principle of natural justice and ought to be limitation and is against the principle of natural justice and ought to be limitation and is against the principle of natural justice and ought to be set aside.” 3. At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that appeal has been filed the delay of 434 days. The Ld. counsel for the peal has been filed the delay of 434 days. The Ld. counsel for the peal has been filed the delay of 434 days. The Ld. counsel for the assessee referred to the application for condonation of the delay and assessee referred to the application for condonation of the delay and assessee referred to the application for condonation of the delay and submitted that the trustees of the Trust are retired teachers who submitted that the trustees of the Trust are retired teachers who submitted that the trustees of the Trust are retired teachers who previously served in other schools. The Trust previously served in other schools. The Trust was ear was earlier registered u/s 12A of the Act dated 06.04.1994, h 2A of the Act dated 06.04.1994, however due to due to change of the provisions of the Act, provisions of the Act, the assessee was granted provisional the assessee was granted provisional registration in Form No. 10AC on 08.02.2022. The assessee applied registration in Form No. 10AC on 08.02.2022. The assessee applied registration in Form No. 10AC on 08.02.2022. The assessee applied for final registration for final registration in Form No. 10AB on 31.03.2022 .2022, which has been disposed off by the Ld. CIT(E) on 29.09.2022. disposed off by the Ld. CIT(E) on 29.09.2022. But, the said disposed off by the Ld. CIT(E) on 29.09.2022. order of the rejection of the Registration was came to the notice of order of the rejection of the Registration was came to the notice of order of the rejection of the Registration was came to the notice of the assessee only on 12.01.2024 the assessee only on 12.01.2024 , while attending , while attending to assessment proceedings for assessment year 2022 proceedings for assessment year 2022-23. The Ld. counsel referred 23. The Ld. counsel referred to the application for the condonation of the delay and submitted to the application for the condonation of the delay and submitted to the application for the condonation of the delay and submitted that the delay was not deliberate and therefore, delay should be that the delay was not deliberate and therefore, delay should be that the delay was not deliberate and therefore, delay should be condoned.
The Ld. Departmental Represent The Ld. Departmental Representative (DR) on the other hand ative (DR) on the other hand objected for the condonation of the delay. the condonation of the delay.
Maooli Education Foundation Maooli Education Foundation 3 ITA No. 514/MUM/2024
We have heard rival submission of the parties on the issue of We have heard rival submission of the parties on the issue of We have heard rival submission of the parties on the issue of condonation of the delay in filing appeal. The reasons cited by the condonation of the delay in filing appeal. The reasons cited by the condonation of the delay in filing appeal. The reasons cited by the assessee in its application assessee in its application for the delay is reproduced as under: duced as under:
“6. The appellant was unaware of any such notice and order “6. The appellant was unaware of any such notice and order “6. The appellant was unaware of any such notice and order being passed in its case. Furthermore, the trust lacks the the trust lacks the being passed in its case. Furthermore, qualified staff to handle the compliances qualified staff to handle the compliances, resulting in the , resulting in the oversight of the email containing the order. The managing trus oversight of the email containing the order. The managing trus oversight of the email containing the order. The managing trustee, Mr Arjun Vidhate, aged 75 years is the only one actively involved Mr Arjun Vidhate, aged 75 years is the only one actively involved Mr Arjun Vidhate, aged 75 years is the only one actively involved in managing the functioning of the trust. However, Mr. Arjun in managing the functioning of the trust. However, in managing the functioning of the trust. However, Vidhate is not technically conversant with the online Vidhate is not technically conversant with the online Vidhate is not technically conversant with the online process. He suffers from various health process. He suffers from various health-related problems related problems like high blo like high blood pressure, diabetes, and requires the use of od pressure, diabetes, and requires the use of a catheter for urination several times a day, as well as a catheter for urination several times a day, as well as a catheter for urination several times a day, as well as needing an enema for bowel movements. Owing to these needing an enema for bowel movements. Owing to these needing an enema for bowel movements. Owing to these health reasons and age on his side, both the notice and health reasons and age on his side, both the notice and health reasons and age on his side, both the notice and rejection order went oversight rejection order went oversight. 7 The appellant became aware of the order only upon receiving lant became aware of the order only upon receiving lant became aware of the order only upon receiving the show cause notice dated 12.01.2024 for AY: 2022 the show cause notice dated 12.01.2024 for AY: 2022 the show cause notice dated 12.01.2024 for AY: 2022-23, wherein the Ld. Assessing Officer proposed to disallow wherein the Ld. Assessing Officer proposed to disallow wherein the Ld. Assessing Officer proposed to disallow exemption u/s. 11 of the Income Tax Act, 1961, owing to rejection exemption u/s. 11 of the Income Tax Act, 1961, owing to rejection exemption u/s. 11 of the Income Tax Act, 1961, owing to rejection dated 29.09.2022. Upon disco dated 29.09.2022. Upon discovering this, the appellant promptly vering this, the appellant promptly referred the matter to a Chartered Accountant and took referred the matter to a Chartered Accountant and took referred the matter to a Chartered Accountant and took necessary actions to file the present appeal. necessary actions to file the present appeal. 8 The delay is attributable to the above 8 The delay is attributable to the above-mentioned reasons and mentioned reasons and was unintentional. If the delay is not condoned, it woul was unintentional. If the delay is not condoned, it woul was unintentional. If the delay is not condoned, it would significantly significantly significantly jeopardize jeopardize jeopardize the the the functioning functioning functioning of of of the the the school. school. school. Approximately 300 underprivileged students, who rely on the Approximately 300 underprivileged students, who rely on the Approximately 300 underprivileged students, who rely on the appellant trust for education and support, would also be appellant trust for education and support, would also be appellant trust for education and support, would also be adversely affected by such consequences.” adversely affected by such consequences.” 5.1 On perusal of the above, it is evid On perusal of the above, it is evident that the order passed by ent that the order passed by the Ld. CIT(A) was communicated through e the Ld. CIT(A) was communicated through e-mail which could not mail which could not be noticed by the managing trustee by the managing trustee, who was suffering from various who was suffering from various medical ailments. The Ld. counsel for the assessee has filed a The Ld. counsel for the assessee has filed a The Ld. counsel for the assessee has filed a certificate from doctor regarding certificate from doctor regarding the medical conditions conditions of the trustee, which is available on page No. 2 of the Paper Book. We find which is available on page No. 2 of the Paper Book. We find which is available on page No. 2 of the Paper Book. We find
Maooli Education Foundation Maooli Education Foundation 4 ITA No. 514/MUM/2024
that the assessee noticed the order of the Ld. CIT(E) only in the that the assessee noticed the order of the Ld. CIT(E) only that the assessee noticed the order of the Ld. CIT(E) only course of assessment proceedings for assessment proceedings for assessment year 2022 assessment year 2022-23, when the AO proposed to disa proposed to disallow exemption u/s 11 of the Act llow exemption u/s 11 of the Act owning to rejection rejection of registration dated 29.02.2022. In the dated 29.02.2022. In the circumstances, we find that there is circumstances, we find that there is a bonafide reason a bonafide reason for the delay in filing the appeal and assessee would not be benefited in any in filing the appeal and assessee would not be benefited in any in filing the appeal and assessee would not be benefited in any manner by way of delaying by way of delaying the filing of the appeal. In the interest of the filing of the appeal. In the interest of substantial justice, we condone the substantial justice, we condone the delay in filing the appeal and delay in filing the appeal and admit the appeal for adjudication on merit. admit the appeal for adjudication on merit.
As far as the ground of the appeal of not providing reasonable As far as the ground of the appeal of not providing reasonable As far as the ground of the appeal of not providing reasonable opportunity to the assessee is concerned, we find that the assessee opportunity to the assessee is concerned, we find that the assessee opportunity to the assessee is concerned, we find that the assessee had filed the application in Form No. 10AB on 31.03.2022 whereas had filed the application in Form No. 10AB on 31.03.2022 whereas had filed the application in Form No. 10AB on 31.03.2022 whereas the Ld. CIT(E) issued show cause notice only on 25.09.2022 fixing the Ld. CIT(E) issued show cause notice only on 25.09.2022 f the Ld. CIT(E) issued show cause notice only on 25.09.2022 f the case on 26.09.2022 and application has been disposed on the case on 26.09.2022 and application has been disposed on the case on 26.09.2022 and application has been disposed on 29.09.2022. The period of one day given to the assessee for 29.09.2022. The period of one day given to the assessee 29.09.2022. The period of one day given to the assessee complying the show cause notice is not sufficient and therefore, the complying the show cause notice is not sufficient and therefore, the complying the show cause notice is not sufficient and therefore, the Ld. CIT(E) is not justified in rejecting the application of the assessee Ld. CIT(E) is not justified in rejecting the application of t Ld. CIT(E) is not justified in rejecting the application of t without providing a reasonable opportunity to the assessee. without providing a reasonable opportunity to the assessee. without providing a reasonable opportunity to the assessee. Accordingly, we set aside the finding of the Ld. CIT(E) on the issue Accordingly, we set aside the finding of the Ld. CIT(E) on t Accordingly, we set aside the finding of the Ld. CIT(E) on t in dispute and restore in dispute and restore the matter back to him for deciding the the matter back to him for deciding the issue of registration of the assessee trust after pr registration of the assessee trust after providing adequate oviding adequate opportunity of being heard to the assessee. The ground of appeal of opportunity of being heard to the assessee. The ground of appeal of opportunity of being heard to the assessee. The ground of appeal of the assessee is accordingly allowed for statistical purposes. the assessee is accordingly allowed for statistical purposes. the assessee is accordingly allowed for statistical purposes.
Maooli Education Foundation Maooli Education Foundation 5 ITA No. 514/MUM/2024
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the o Order pronounced in the open Court on 30/05/2024. /05/2024.
Sd/- Sd/- Sd/ (RAJ KUMAR CHAUHAN) (RAJ KUMAR CHAUHAN (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/05/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai