PURE DEVOTION FOUNDATION,JAIPUR vs CIT(E), JAIPUR, JAIPUR

Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR

Hearing: 09/05/2024Pronounced: 27/05/2024

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 298/JPR/2024 Pure Devotion foundation cuke CIT, Exemption, 116, Kasturba Nagar, Gaut Am Marg, Vs. Jaipur Nirman Nagar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AALCP8818K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assesseeby :Sh. P.C. Parwal (C.A.) jktLo dh vksj ls@Revenue by: Sh. Arvind Kumar (CIT) lquokbZ dh rkjh[k@Date of Hearing : 09/05/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 27/05/2024 vkns'k@ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

This appeal is filed by the assessee aggrieved from the order of the Learned Commissioner of Income Tax (Exemption), Jaipur [ herein after referred as ld. “CIT(E)”] dated 22.03.2023 as per provision of under Section 12AB of the Income Tax Act[ here in after the Act].

In this appeal, the assessee has raised following grounds: - “1. The Ld. CIT(E) has erred on facts and in law in rejecting the application filed by the assessee in Form 10AB seeking registration

2 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) under Sub clause (iii) of clause (ac) of sub section (1) of Section 12A of the act on the ground that assessee failed to comply with the notice and prove the genuineness of its activities. 2. The appellant craves to alter, amend and modify any ground of appeal. 3. Necessary cost be awarded to the assessee.”

3.1 At the outset of hearing, the Bench observed that there is delay of 296 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 and the assessee to this effect also filed an affidavit :-

“ With reference to above it is to submit that the order of Ld. CIT(A) Act, 1961 rejecting the application for grant of registration u/s 12AB was received by the assessee on 22.03.2023. the appeal was to be filed on or before 20.05.2023. However, for the reasons mentioned in the affidavit, the appeal could not be filed in time and there is a delay of 296 days. 2. Since the above delay of 296 days is due to a reasonable cause, we request you to kindly condone the delay and admit the appeal for hearing.”

To this effect, the assessee has filed an affidavit as to the condonation of delay in filing the appeal. The content of the affidavit reads as under:-

“I, Jay Prakash Agrawal, s/o Jawahar Lal Agrawal, aged 48 years director of Pure Devotion Foundation, a company incorporated u/s 8 of

3 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) Companies Act, 2013 resident of 116 Kasturba Nagar, Shyam Nagar, Jaipur do solemnly affirm on oath as under:- 1. That I am director of Pure Devotion Foundation, a company incorporated on 20.03.2021 u/s 8 of Companies Act, 2013 with the object of general public utility. 2. That the company filed an application for provisional registration u/s 12A(1)(ac)(vi) of Income Tax Act, 1961 and was granted provisional registration vide order dt.08.02.2022 from A.Y 2022-23 to 2024-25. 3. That the company filed application for permanent registration on 06.09.2 .2022. In course of the hearing an impression was given that unless the company is registered under the RPT Act, 1959 the permanent registration cannot be granted but in the order passed on 22.03.2023, the registration was refused on the ground on failure to submit certain details the geniuses of the activities could not be proved. 4. That the assessee company has net loss of Rs.5,569/- and I was given an impression that no appeal is required to be filed as the income of the company is at loss. 5. That the company received a show cause notice dt.06.03.2024 for A.Y 2022-23 whereby it is proposed to assess the income at Rs.26,97,148/- by treating the total receipt as business income. That on receipt of such notice when my regülar counsel CA Tushar Sharma, proprietor M/s Tushar Sharma & Company, Chartered Accountants approached CA P.C. Parwal of M/s Kalani & Company on 07.03.2024, it was advised to file appeal against the order of CIT(E) dt.22.03.2023 with a request to condone the delay in filing the appeal. 6. That the facts stated in Para 1 to 5 above are true and correct to the best of my knowledge and belief.”

3.2 The ld. AR of the assessee appearing in this appeal vehemently supplied emphasized on para 3,4 & 5 of the affidavit and submitted that the assessee should not punished on the fault of the advice given by earlier counsel. Based on that contention he supported the delay of 296 days saying that the assessee has

4 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) sufficient cause and prayed to condone the delay in bring the present appeal.

3.3. While hearing, the ld. DR, he heavily objected to the prayer of the assessee for condonation of delay and that too of 296 days. He further says that ignorance of law is not an excuse. The assessee receive the advice from the best counsel and therefore, the reasons advanced are not sufficient enough to condone the delay in filing the appeal before the bench. The assessee in the proceeding before the ld. CIT(E) was given four notices which were not attended toin full.

3.4 We have heard both the parties and perused the materials available on record. Having gone through the detailed factual aspect narrated in the affidavit filed by the assessee in support of the petition for condonation of delay of 296 days, we are of the considered view that the assessee has merit in filling the appeal belatedly. Thus, we concur with the submission of the assessee and are of the view that the assessee was prevented by sufficient cause and thereby the delay of 296 days in filing the appeal by the assessee is condoned in view of the decision of Hon’ble Supreme Court in the case of Collector, land Acquisition vs. Mst. Katiji and

5 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) Others, 167 ITR 471 (SC) as the assessee is prevented by sufficient cause. Even the apex court in the case of Collector, Land & Acquisition Vs. Mst. Katiji& Others 167 ITR 471(SC) directed the other courts to consider the liber 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.

The facts as culled out from the records is that the application in Form No. 10AB seeking registration u/s 12AB of the Income Tax Act, 1961 was filed by the assessee online on 06.09.2022. Thereafter, a letter/notice No. ITBA/EXM/F/EXM43/2022- 23/1048125875(1) dated 21.12.2022 was issued at the e- mail/address provided in the application requiring the assessee to submit certain documents/explanations by 05.01.2023. However, the assessee didn't file any response. Therefore, one more opportunity was provided to the assessee vide letter/notice No. ITBA/EXM/F/EXM43/2022-23/1049206243(1) dated 28.01.2023 fixing the date of submission of documents by 03.02.2023. In response to the same, the assessee furnished a reply on 03.02.2023 which was duly examined and few discrepancies were found by the ld. CIT(E). Thereafter, a show cause letter was issued vide letter/notice No. ITBA/EXM/F/EXM43/2022-23/1050441943(1)

6 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) dated 06.03.2023 requesting to submit the response by 10.03.2023. However, this time, the assessee didn't furnish any response. Since it is a limitation matter, the case is decided on the basis of material placed on record and application of the assessee in Form 10AB for registration u/s 12A was rejected and the relevant part of the order of the ld. CIT(E) is reproduced here in below :

“2.1. It is important to mention here that while examining the claim of the assessee u/s 12AB of I.T. Act, the Commissioner of Income-tax has been empowered to call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf. Under such powers vested in CIT (E), the applicant was asked to file the following details vide this office letter dated 21.12.2022 and 06.03.2023 which is reproduced as under:-  "Furnish complete reply of the questionnaire dated 21/12/2022. Furnish bank account statement of the institution for the last three years/since inception.  Furnish complete final accounts for the last three years/since inception including the details of notes & annexures.  Furnish details of charitable expenses undertaken by you including copy of Bills/ Vouchers/Evidences of the activities done along with marking of same in the bank account statement or cash book.  Furnish details of any other income received by the institution as mentioned in the statement of P&L for the period 20-03-21 to 31-03-22.” However, even after giving sufficient opportunities, the applicant has failed to submit the following details:  Bank account statement of the institution for the last three years/since inception.  Complete reply of the questionnaire dated 21.12.2022.  Final accounts for the last three years/since inception.  Evidences of expenditure incurred on charitable activities.  Details of any other income received by the institution. In the absence of such documents/details, it could not be determined whether the applicant is genuinely carrying out charitable activity as per its objects.

7 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) However, even after giving sufficient opportunities, the applicant has failed to submit the clarification on the above and thus failed to justify its claim of registration u/s 12AB of the Act. Therefore, applicant's claim of registration u/s 12AB is also liable to be rejected on ground of not proving its genuineness of activity. In view of above discussion at length, applicant's claim of registration under section 12AB is being rejected on following grounds: -  Genuineness of activities and non-compliance.”

Feeling dissatisfied, the assessee preferred the present appeal on the grounds as stated here in above. In support of the grounds of appeal the ld. AR of the assessee has relied upon the following written submission ::- “1. The assessee company was incorporated on 20.03.2021 u/s 8 of Companies Act, 2013 with the object of general public utility (PB 2-3). It filed an application in Form No.10AB on 06.09.2022 seeking permanent registration u/s 12A of the Act.

The Ld. CIT(E) issued notice dt. 21.12.2022 & 28.01.2023 requiring the assessee to submit certain documents/explanations against which assessee furnished the part reply on 03.02.2023 (PB 1). Thereafter another notice was issued on 06.03.2023 which could not be complied by the assessee. Accordingly Ld. CIT(E) passed the order on 22.03.2023 rejecting the application filed by the assessee seeking permanent registration on the ground that assessee failed to comply with the notice and prove the genuineness of its activities as assessee has not furnished the bank account statement, complete reply of questionnaire dt. 21.12.2022, financial statements of assessee since inception, evidence of expenditure incurred on charitable activities and details of other income received by the assessee.

Against the order of Ld. CIT(E) assessee filed the appeal before Hon'ble ITAT on 12.03.2024 along with the affidavit explaining the reasons for delay of 296 days in filing the appeal before Ld. CIT(E). It is therefore requested that the delay be condoned and the appeal be admitted for hearing.

8 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E)

It is submitted that the assessee company was incorporated on 20.03.2021 and filed application for permanent registration on 06.09.2022, Along with the application it has filed the financial statement for the period 20.03.2021 to 31.03.2022 (PB 14-18). Thus it is incorrect on part of CIT(E) to held that final accounts since inception is not filed. The bank account details were also submitted in the application form. From the financial account it can be noted that during the year under consideration it received donation of Rs 26,97,148/- and incurred expenditure of Rs.27,02,718/-. The detail of donation received along with sample donation receipts is at PB 19-51 and the major details of expenses along with the bills & evidences are at PB 52-98. Even the AO has accepted the expenditure claimed by the assessee in the assessment made u/s 143(3) of the Act dt. 26.03.2024 (PB 99-104). Thus assessee is genuinely carrying out the charitable activities and therefore the Ld. CIT(E) be directed to grant permanent registration u/s 12AB of the Act.”

The ld. AR of the assessee also filed an application for admission of additional evidence under Rule 29 of Appellate Tribunal Rules, 1963, the content of the application reads as under :-

“With reference to above, it is to submit that the assessee company was incorporated on 20.03.2021 ws 8 of Companies Act, 2013 with the object of general public utility. It filed an application in Form No.10AB on 06.09.2022 seeking permanent registration u/s 12A of the Act. Against the notice dt 21.12.2022 & 28.01.2023 issued by Ld. CIT(E) requiring the assessee to submit certain documents/explanations, assessee furnished the part reply on 03.02.2023. Thereafter another notice was issued on 06.03.2023 which could not be complied by the assessee. Accordingly Ld. CIE) passed the order rejecting the application filed by the assessee seeking permanent registration on the ground that assessee failed to comply with the notice and prove the genuineness of its activities From the above facts it can be noted that assessee was not provided sufficient opportunity to fumish the documents. Hence we are now

9 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) enclosing herewith the documents at S. No.5 to 10 of Paper Book showing the details of donation received by the assessee and details of charitable & other expenses incurred by the assessee which goes to the root of the matter. Therefore, it is requested to kindly admit theses evidences to impart substantial justice to the assessee.”

The ld. AR of the assessee in support of the written submission and petition for additional evidence has supplied the following evidence:-

S. No. Particulars Pg. No. 1. Copy of reply dt. 03.02.2023 filed before Ld. CIT(E) 1 2. Copy of certificate of Incorporation dt. 20.03.2021 2-3 3. Copy of Memorandum of Association 4-13 4. Copy of Financial statement for the period 20.03.2021 to 14-18 31.03.2022 5. Details of donation received along with sample donation 19-51 receipts 6. Copy of ledger account of Food Expenses for Poor along 52-82 with the bills 7. Copy of ledger account of donation paid along with the 83-84 receipt 8. Copy of ledger account of repair & Maintenance along with 85-96 the Bills 9. Details of salary paid along with the ledger account 97-98 10. Copy of assessment order dt. 26.03.2024 passed u/s 143(3) 99-104 of the Act for AY 2022-23

During the course hearing, the ld. AR of the assessee submitted that the assessment in this case was made u/s. 143(3) of the Act determining the Nil income. He submitted that before ld. CIT(E) the assessee already made part compliance. The notice

10 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) issued on 06.03.2023 remained unattended and has relied on the written submission made in this appeal.

Per contra, the ld. DR relied on the order of the ld. CIT(E) and submitted that even though four opportunities were given to the assessee who had not submitted required details. The petition to consider the additional evidence cannot be entertained as the same has not been tested by the lower authority. As regards the contention that the assessee has submitted all the details before the ld. AO has nothing to do with the registration process before the ld. CIT(E).

10.

We have heard the rival contentions and perused material available on record. The Bench noted that the assessee company was incorporated on 20.03.2021 and filed application for permanent registration on 06.09.2022, Along with the application it has filed the financial statement for the period 20.03.2021 to 31.03.2022 (PB 14-18). Based on that set of information we note that it is incorrect on part of CIT(E) to held that final accounts since inception is not filed. The bank account details were also submitted in the application form. From the financial account it can be noted that during the year under consideration

11 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) assessee received donation of Rs 26,97,148/- and incurred expenditure of Rs.27,02,718/-. The detail of donation received along with sample donation receipts placed on record at PB 19-51 and the major details of expenses along with the bills & evidences are at PB 52-98. Even the ld. AO has accepted the expenditure claimed by the assessee in the assessment made u/s 143(3) of the Act dt. 26.03.2024 (PB 99-104). Thus, it is not under dispute that the assessee is not doing the charitable activity and therefore, in the last occasion the assessee could not supply the information and therefore, we are of the considered view that assessee in the interest of justice require one more opportunity to be heard on merits before the ld. CIT(E). Thus, we set aside the matter before the ld. CIT(E) who decide the issue based on the submission of the assessee and after providing proper opportunity of being heard to the assessee and making necessary enquiry in accordance with the law. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. CIT(E).

11.

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

12 ITA No. 298/JPR/2024 Pure Devotion foundation vs. CIT(E) on the merits of the dispute, which shall be adjudicated by the ld. CIT(E) independently in accordance with law.

In the result, the appeal of the assessee is allowed for statistical purposes

Order pronounced in the open court on 27/05/2024. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksM deys'k t;UrHkkbZ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 27/05/2024 *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Pure Devotion Foundation, Jaipur. 1. 2. izR;FkhZ@ The Respondent- CIT(E), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr ¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 298/JPR/2024) vkns'kkuqlkj@ By order, सहायकपंजीकार@Aेेज. त्महपेजतंत

PURE DEVOTION FOUNDATION,JAIPUR vs. CIT(E), JAIPUR, JAIPUR