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Facts
The assessee filed an application for registration under section 12AB of the Income Tax Act, 1961. The CIT(E) rejected the application, citing incomplete form, non-compliance with Rajasthan Public Trust Act, and lack of genuineness of activities. The assessee appealed this order, but there was a delay of 37 days in filing the appeal, which was attributed to the trustee being out of India.
Held
The tribunal condoned the delay of 37 days in filing the appeal, citing bonafide reasons and judicial precedents. The tribunal found that the CIT(E) passed the order without providing adequate opportunity of being heard to the assessee, violating principles of natural justice.
Key Issues
Whether the CIT(E) erred in rejecting the registration application without providing adequate opportunity of hearing, and whether the delay in filing the appeal should be condoned.
Sections Cited
12AB of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal is filed by the assessee aggrieved from the order of the Learned Commissioner of Income (Exemption), Jaipur [herein after referred to as “ld.CIT(E)”] dated 17.02.2024. 2. The assessee has raised the following grounds of appeal:-
“1. In the facts and circumstances of the case the Learned CIT-Exemption has erred in passing the order by rejecting the registration u/s 12AB of the Income Tax Act, 1961 applied by the assessee which is void ab-initio as the order passed without signature/digital signature.
In the facts and circumstances of the case the Learned CIT-Exemption has erred in passing the order by not providing the adequate opportunity for hearing to the assessee The Safearth foundation vs. DCIT which has violated the principles of natural justice as the order was passed within a month from the first notice. I3. n the facts and circumstances of the case the Learned CIT-Exemption has erred in rejecting the registration u/s 12AB of the Income Tax Act, 1961 applied by the assessee on the ground that the assessee has not replied for notices issued which were not received by the assessee on the mail given at ITBA portal.
4. In the facts and circumstances of the case the Learned CIT-Exemption has erred in rejecting the registration u/s 12AB of the Income Tax Act, 1961 applied by the assessee on the ground that the assessee was not submitted the required documents, whereas the assessee has already submitted the required documents along with form no. 10AB filed on 27.09.2023.
5. In the facts and circumstances of the case the Learned CIT-Exemption has erred in rejecting the registration u/s 12AB of the Income Tax Act, 1961 applied by the assessee on the ground that the assessee has filed Incomplete Form 10AB.
6. In the facts and circumstances of the case the Learned CIT-Exemption has erred in rejecting the registration u/s 12AB of the Income Tax Act, 1961 applied by the assessee on the ground that the applicant has failed to justify the genuineness of activities and thus falls out of the scope of registration u/s 12AB of the Act, 1961 whereas the assessee has submitted the documents regarding genuineness along with form no. 10AB filed on 27.09.2023.
7. In the facts and circumstances of the case the Learned CIT-Exemption has erred in rejecting the registration u/s 12AB of the Income Tax Act, 1961 applied by the assessee on the basis of Hon'ble Supreme Court Decision M/s New Noble Education Society in civil appeal no. 3795 of 2014.
8. The assessee craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing.”
3. 1 At the outset of hearing, the Bench observed that there is delay of 37 days in filing of the appeal by the assessee for which the ld. AR of the assessee filed an application for condonation of delay with following prayers:-
In this case the Learned CIT(Exemption) has passed the order in the form 10AD [rule 2C or 11AA or 17A) on 17/02/2024 which was served to the assessee on mail on 04/03/2024. As the setters of the trust Mr. Anuvrat Saboo who is looking after the income The Safearth foundation vs. DCIT tax matters was out of India in the Month of February-2024. When he came in India and contacted in his counsel's office for preparation the income tax return, the fact came into the knowledge that an order was passed by the Learned CIT-Exemption on 17/02/2024 which was not received by the assessee. When the given mail address was checked it was found that the order was received on mail on 04/03/2024. Then the appeal was prepared and is being filing. If we take the date of order as 04/03/2024, then the delay is for 18 date and if we take the date of order is 17/02/2024, then the delay is for 34 days. Therefore, the delay for 18/34 days which was bonafide and not intentional. It is settled position of law that where the delay was bonafide and there is no malafide or intentional delay for delay in filing appeal the delay must be condone by the appellate authority specially when it is necessary for rendering the substantial justice to the assessee. The following case laws are quoted in support: - (i) Vijay Vishan Meghani vs. DCIT (Bombay High Court) (2017) 398 ITR 250 High Court condoned delay of 2984 days in filing appeals-Assessee's Appeals allowed. (ii) Just Steels vs DCIT (2012) 74 DTR (MA) 86 Appeal could not be filed in time before the ITAT because the order of CIT(A) was misplaced. The firm stood dissolved and was recurring into losses. Delay to be condoned. (iii) Oracle India Pvt Ltd vs. Deputy Commissioner of Income Tax (2008) 13 DTR 371 that condonation of delay reasonable cause delay of 1297 days in filing appeal being on account of lapse on the part of consultant and not being malafide, there was valid reason warranting condonation of delay and admission of appeal". (iv) Improvement Trust vs. Ujagar Singh (Supreme Court) CIVIL APPEAL NOS. 2395 of 2008 dated 26.06.2010 Unless mala fides are writ large, delay should be condoned. Matters should be disposed of on merits and not technicalities. In the circumstances it is submitted that it was because of the bonafide mistake on the part of the assessee that he has no knowledge about the completion of the CIT-Exemption order ex-parte and he did not inquire about the service of judgment. The appeal could not be filed in time. It is submitted that for something which happened due to inadvertence and beyond the control. Hence it is the prayer of the assessee as well as of the counsel that the Hon'ble Bench may kindly condone the delay and admit the appeal.”
3.2 The ld. AR of the assessee appearing in this appeal submitted that the assessee is serious on the duties and the delay of 37 days is on account of the fact that trustee Mr. Anuvrat Sabook was out of India in the month of Fabruary,2024 resulted in delay. To support his argument the ld. AR for the assessee has submitted proof of his air tickets and passport. Considering these evidences placed on record and judicial precedent where in the courts has considered that if there are sufficient reasons, the delay should be condoned. Even the Hon’ble Mombay High Court in case of Vijay Vishan Meghani vs. DCIT 398 ITR 250,, Just Steels vs. DCIT 74 DTR (MA) 86 Oracle India Pvt. Ltd. Vs. DCIT 13 DTR 371 and Hon’ble Supreme Court in Civil Appeal Nos. Improve Trust vs. Ujagar Singh directed the other courts to consider the liberal approach in deciding the petition for condonation as the assessee is not going to achieve any benefit for the delay in fact the assessee is at risk. 3.3. During the course of hearing, the ld. DR objected to assessee’s application for condonation of delay stating that reasons advanced are not sufficient and prayed that Court may decide the issue as deem fit and proper in the interest of justice.
The Safearth foundation vs. DCIT 3.4 We have heard both the parties and perused the materials available on record. The Bench noted that the assessee for condonation of delay of 37 days has merit based on the evidences placed on record, and we concur with the submission of the assessee. Thus the delay of 37 days in filing the appeal by the assessee is condoned in view of the decision of Hon’ble Supreme Court in the case of Vijay Vishan Meghani vs. DCIT 398 ITR 250,, Just Steels vs. DCIT 74 DTR (MA) 86 Oracle India Pvt. Ltd. Vs. DCIT 13 DTR 371 and Hon’ble Supreme Court in Civil Appeal Nos. Improve Trust vs. Ujagar Singh as the assessee is prevented by sufficient cause.
Now coming to the merits of the case, the brief facts of the case are that the assessee filed filed online application in Form No. 10AB seeking registration u/s 12AB of the Income Tax Act, 1961 was filed on 27.09.2023. A letter/notice dated 18.01.2024 was issued at the e- mail/address provided in the application requiring the assessee to submit certain documents/explanations by 01.02.2024, but no compliance has been made by the assessee. Thereafter, a reminder letter was issued vide this office DIN & Notice dated 06.02.2024 wherein date of hearing was fixed as 09.02.2024, but no compliance has been made by the assessee. Further, again one more opportunity was also provided to the assessee vide this The Safearth foundation vs. DCIT office DIN & Notice dated 10.02.2024 to submit complete details/information by 15.02.2024. That time also on given date, the assessee had not produced any details/documents. Therefore, the case is decided on the basis of material filed by the assessee along with its application in Form no. 10AB.
Apropos to the application so filed by the assessee, the relevant findings of the ld. CIT(E) is reproduced here in below:- “However, the applicant has failed to comply with the letters, despite being given threeopportunities details of which given in para-I. All the above details were sought in order to determine the actual working of the institution. The applicant didn't furnish the sought details. The applicant has not furnished the details along with bill vouchers of expenses debited in income and expenditure account for the last three financial years. Further, the assessee was also not submitting the details of bank account for the F.Y. 2020-21 & 2022-23. The above details were sought from the applicant to determine the actual purpose/nature of expenditures made and to determine whether the impugned charitable activity had actually been done by the trust or not. Such type of verification is necessary to keep a check and balance on the actual working of the trust. Since, the applicant didn't furnish sought details, in the absence of such documents/details, the justification of impugned activity could not be derived and it is not known whether the applicant is genuinely carrying out charitable activity as per its objects. Hence, the applicant has failed to justify the genuineness of activities and thus falls out of the scope of registration u/s 12AB of the Act.
5. In view of above discussion assessee's claim of registration section 12AB is liable to be rejected and thus being rejected on following grounds: -
Incomplete Form 10AB. Rajasthan Public Trust Act, 1959. Genuineness of Activities.
06. Further 12AB (1)(b)(ii)(B) of the Income Tax Act, 1961 also state that if CIT is not satisfied has to pass order rejecting such application and also cancelling its earlier The Safearth foundation vs. DCIT registration. Thus, it is clarified that applicant's provisional registration un der clause (vi) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961 dated 27.05.2021 is also being cancelled. Further assessee has failed to give proper justification for regularisation of provisional registration, thus with this or der provisional registration is also lapsed and cancelled.”
During the course of hearing, the ld. AR for the assessee prayed that the ld. CIT(E) has passed the order without providing adequate opportunity of being heard to the assessee. Therefore, the assessee may be provided one more opportunity to advance their arguments/submissions before the ld. CIT(E).
Per contra, the ld. DR relied on the orders of the ld. CIT(E) and submitted that various opportunities were granted but the assessee has not filed details in time.
We have heard the rival contentions and perused material available on record. The Bench noted from the order of the ld. CIT(E) that he has rejected the application of the assessee pertaining to registration of the society u/s 12AB of the Act on the ground of incomplete Form 10AB, Rajasthan Public Trust Act, 1956 and Genuineness of activities. Bench further note that the ld. CIT(E) has given 3 notices within short span. The reason for non compliance has been supported with evidence i.e. Air tickets and passport. that the assessee was out of India from 04.02.2024 to 05.05.2024. It is also pertinent to mention that during the course of The Safearth foundation vs. DCIT hearing, the ld. AR of the assessee prayed that he was deprived off availing adequate opportunity of being heard by the ld. CIT(E) in the application for registration/recognition. We note from the records available and show cause notice were issued by the ld. CIT(E) and no reply has been filed by the assessee in response to notice. The ld. AR for the assessee submitted that the assessee was not aware of the subsequent notice issued by the ld. CIT(E) and therefore, response could not be submitted. We note that the ld. CIT(E) has passed the order without providing adequate opportunity of hearing. The Bench does not want to go into merit of the case but it is imperative that the assessee must be provided adequate opportunity of being heard by the ld. CIT(E). In this view of the matter, the Bench feels that the assessee should be given one more chance to contest the case before the ld. CIT(E) and the assessee is directed to produce all the relevant papers concerning the application so filed before the ld. CIT(E) to settle the dispute raised hereinabove.
Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. CIT(E) independently in accordance with law.