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Facts
The assessee filed an online application for registration under Section 12AB of the Income Tax Act. The Commissioner of Income Tax (Exemption) rejected the application, citing incomplete form, issues with Rajasthan Public Trust Act, and lack of genuineness of activities. Despite multiple opportunities, the assessee failed to provide required details.
Held
The Tribunal noted that the assessee had been given several opportunities but failed to submit the necessary documents to justify the genuineness of its activities. The assessee's representative requested one more opportunity to present the documents and argue the case. The Tribunal restored the matter to the CIT(E) for fresh decision.
Key Issues
Whether the Commissioner of Income Tax (Exemption) was justified in rejecting the assessee's application for registration under Section 12AB of the Income Tax Act due to non-compliance and failure to prove genuineness of activities.
Sections Cited
12AB, 12A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
ORDER PER: DR. S. SEETHALAKSHMI, J.M. These are two appeals filed by the assessee against orders of the Learned Commissioner of Income Tax (Exemption), Jaipur [herein after referred to as “CIT(E)”] both dated 05.03.2024 passed under section 12AB of the Income Tax Act, 1961 respectively.
“1. That the order passed by Ld. Commissioner of Income Tax, Exemption, Jaipur by rejecting application u/s 12AB(1)(b) of the I.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same.
That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.”
the assessee has raised following grounds: - “
1. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case by neither recording the independent satisfaction for rejection of provisional registration and nor issued Show Cause Notice for rejection of provisional registration u/s. 12A of the I.T. Act 1961 which is wrong, unwarranted and bad in Law. Kindly restore the same.
2. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case in rejecting the provisional registration u/s. 12A without issuing separate DIN of the rejection order, which is against the circular & notification issued by the CBDT. So, the same is wrong, unwarranted and bad in Law. Kindly restore the same.
3. That the order passed by Ld. Commissioner of Income Tax (Exemption), Jaipur by rejecting provisional registration u/s. 12A of the I.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same.
4. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.”
Brief facts of this case is that the assessee filed online application in Form No. 10AB seeking registration u/s 12AB of the Income Tax Act, 1961 on 27.09.2023. In this case, the application was rejected as withdrawn vide order DIN & Notice No. ITBA/EXM/F/EXM45/2022-23/1045815072(1) dated 22.09.2022. A & 596/JPR/2024 All India Derawal Bhatia Biradari Trust letter/notice No. ITBA/EXM/F/EXM43/2023-24/1059818947(1) dated 17.01.2024 was issued at the e- mail/address provided in the application requiring the assessee to submit certain documents/explanations by 01.02.2024. In response to letter/notice dated 17.01.2024, the assessee had requested for adjournment. Thereafter, a reminder/adjournment letter was issued vide this office DIN & Notice No. ITBA/EXM/F/EXM43/2023-24/1060575018(1) dated 06.02.2024 wherein date of hearing was fixed as 12.02.2024, but no compliance has been made by the assessee. Further, again one more opportunity was also provided to the assessee vide office DIN & Notice No. ITBA/EXM/F/EXM43/2023-24/1060846436(1) dated 13.02.2024 to submit complete details/information by 19.02.2024. In response to the above, the assessee had requested for adjournment for 15 days. Further, again one more opportunity was also provided to the assessee vide office DIN & Notice No. ITBA/EXM/F/EXM43/2023-24/1061203286(1) dated 20.02.2024 to submit complete details/information by 26.02.2024. Again, the assessee had requested for adjournment. Further, again final opportunity was also provided to the assessee vide office DIN & Notice No. ITBA/EXM/F/EXM43/2023-24/1061576990(1) dated 27.02.2024 to submit complete details/information by 01.03.2024. This time also on given date, the assessee had not produced any details/documents. Despite then five opportunities, assessee has not submitted the details required to prove genuineness of activities & 596/JPR/2024 All India Derawal Bhatia Biradari Trust &compliance of other law, proves that assessee is not having anything in its support to give reply or plead or prove its case and it is also seen that the assessee had requested to adjourn the case on the fixed dates again and again. Therefore, the case was decided on the basis of material filed by the assessee along with its application in Form no. 10AB by the Ld. CIT(E).
3. While dealing with the application the ld. CIT(E) rejected the assessee’s claim of registration 12AB of the Act by observing as under:- “However, the applicant had failed to comply with the letters, despite being given three opportunities details of which given in para- 1.
All the above details were sought in order to determine the actual working of the institution. The applicant did not 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 & financial statement for last three financial years and details of note on activities carried out by the institution/trust. 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.
06. 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.
07. 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 & 596/JPR/2024 All India Derawal Bhatia Biradari Trust registration. Thus, it is clarified that applicant's provisional registration under 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 order provisional registration is also lapsed and cancelled.”
During the course of hearing, the ld. AR of the assessee submitted that in both the appeals that the assessee if given an opportunity will be able to satisfied the queries/ issues raised / details to be submitted and thus in both the case the ld. AR of the assessee prayed that one more chance of presenting the case of the assessee be given as the reasons advanced for rejection are curable in nature.
Per contra, the ld. DR relied on the orders of the ld. CIT(E) and submitted that the assessee even though various opportunities were given the assessee has not submitted required details. Therefore, the plea of the assessee is not maintainable, considering the non serious approach of the assessee cost be imposed on the assessee.
We have heard the rival contentions and perused material available on record. The Bench noted that the assessee has submitted that the ld. CIT(E) has rejected the assessee’s claim for registration u/s 12AB of the & 596/JPR/2024 All India Derawal Bhatia Biradari Trust Act on the following grounds i.e. incomplete form 10AB, Rajasthan Public Trust Act, 1959 and Genuineness of activities. We note that the ld. CIT(E) has given five opportunities to the assessee to furnish the details bills/ vouchers, in income and expenditure account for the last three financial years and the details of the bank account and financial statement for last three financial years and details of note on activities carried out by the trust. Before us, Ld. AR for the assessee prayed to give one more chance to advance of submit the above documents as desired by the ld. CIT(E) and argue the case to settle the issue in question. Hence, in view of matter, we restore the matter back to the file of the ld.CIT(E) to decide it afresh by providing one more opportunity of being heard to the assessee. The assessee is directed to produce all the relevant papers concerning the issue in question before the ld.CIT(E). As is evident that inspite of giving five opportunities, the assessee unable to give complete details. Considering that lapses on the part of assessee Rs. 2500/- for each appeal cost to be deposited in to “Prime Minister Relief Funds” before start of the proceedings before Ld. CIT(E) and receipt be presented before him. Thus the appeal of the assessee is allowed for statistical purpose.
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 & 596/JPR/2024 All India Derawal Bhatia Biradari Trust 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. In the result, the appeals of the assessee in and ITA No. 596/JPR/2024 are allowed for statistical purposes. Order pronounced in the open court on 10/09/2024.
Sd/- Sd/- ¼jkBksM deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 10/09/2024 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- All India Derawal Bhatia Biradari Trust, Jaipur. 1. 2. izR;FkhZ@ The Respondent- ITO, Ward-1 (Exemption), Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. vk;djvk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZQkbZy@ Guard File & 596/JPR/2024) vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेजज. त्महपेजतंत