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Facts
The assessee filed an appeal against an ex-parte order of the CIT(E) rejecting their application for registration under section 12AB. The CIT(E) rejected the application primarily on grounds of an incomplete Form 10AB and lack of genuineness of activities, as the assessee failed to provide requested documents.
Held
The Tribunal noted that the assessee was not given an adequate opportunity of being heard, leading to an ex-parte order. The Tribunal allowed the appeal and restored the matter to the file of the CIT(E) for fresh adjudication, with a direction to provide the assessee with adequate opportunity.
Key Issues
Whether the CIT(E) erred in passing an ex-parte order without providing adequate opportunity to the assessee and in rejecting the registration application based on incomplete documentation and unverified activities.
Sections Cited
12AB, 10(23C), 17A(2)(e), 17A(2)(g), 17A(2)(k), 10(230)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & DR MITHA LAL MEENA, AM vk;dj vihy la-@ITA No. 763/JP/2023
ORDER PER: SANDEEP GOSAIN, JM The assessee has filed an appeal against the order of the ld.CIT(E), Jaipur dated 10-10-2023 passed u/s 12AB of the Income Tax Act, 1961 raising therein following grounds of appeal. ‘’1. On the facts and circumstances of the appellant case and in law the ld.CIT(E), Jaipur erred in passing ex-parte order without giving the appellant an opportunity of being heard.
2. On the facts and circumstances of the appellant case and in law, the ld. CIT(E) erred in rejecting the claim of registration u/s 12AB of the Income Tax Act, 1961.
2 SHRI KRISHAN KANCHAN SEWA TRUST VS CIT (E), JAIPUR 3. On the facts and circumstances of the appellant case and in law, the ld. CIT(E) erred in treating activities of trust as outside the ambit of Section 10(23C) of the Income Tax Act, 1961.’’ 2.1 At the outset of hearing, the Bench noted that there is delay of three days in filing the appeal by the assessee for which the assessee vide application dated 20-12-2023 filed a condonation application with the prayer to condone the delay of three days in filing the appeal with following narration. ‘’There is delay of 3 days in filing the appeal before your honour. This delay is due to some medical emergency come before me since I am practicing Doctor in Durlabhji Hospital. Due to medical work, I could not be able to complete this filing by 9th Dec. 2023. However, as soon as possible, I have filed this appeal on 12th Dec. 2023. The delay in filing the appeal is bona fide. Therefore, you are kindly requested to please condone the delay in filing the appeal before ITAT.’’ 2.2 On the other hand, the ld. DR objected to such delay of three days in filing the appeal by the assessee but submitted that the Court may decide the issue as deem fit and proper in such matter. 2.3 After hearing both the parties and perusing the material available on record, the Bench noted the submissions of the assessee and found that this is not an inordinate delay and the assessee has reasonable cause to consider his application for condonation of delay of three days and there is merit in 3 SHRI KRISHAN KANCHAN SEWA TRUST VS CIT (E), JAIPUR his submission. Hence, the delay of three days in filing the appeal by the assessee is allowed. 3.1 Apropos Ground No. 1 to 3 of the assessee, ld. CIT(E) rejected the assessee’s claim of registration u/s 12AB of the Act by observing as under:- ‘’2.2. On verification of the application in Form 10AB filed by the applicant, it was found that the application was not complete, and the documents required to be accompanied with Form 10AB were not furnished such as:- Self-certified copy of existing order of granting registration u/s 10 (23C) (Rule 17A(2)(e). Self-certified copies the annual accounts of the applicant for preceding years i.e. F.Y. 2022- 23 (Rule 17A(2)(g)). Note on activities of the applicant (Rule 17A(2)(k) ) It is also important to mention here that above so-called details along with some other details were called from assessee vide various notices as mentioned above. However, assessee failed to submit the same. Thus, assessee's request for registration u/s 12AB is liable to be rejected on ground of incomplete form.
Genuineness of Activities & non-compliance:-
3.1. 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 details like:- Bills and vouchers of expenses.
4 SHRI KRISHAN KANCHAN SEWA TRUST VS CIT (E), JAIPUR Details of Social handle. Digital footprint. Details of Bank account details of last three years. Details of Settiors, trustees, members, Shareholders of the trust. Details of charitable activity conducted by the institution alongwith photograph. Copies of Income tax returns for the last three year. Copy of form 10AC. However, the applicant has 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 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 F.Y 2021-22 such as Devine graphic service, Material consumed, staff salary expenses, etc. Further, the assessee was also not submitting the details of bank account of last three year and financial statement for the F.Y. 2022-23 to till date. 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 I of the scope of registration u/s 10 (230) of the Act.
04. In view of above discussion assessee's claim of registration section 12AB is liable to be rejected and thus being rejected on following grounds:-
5 SHRI KRISHAN KANCHAN SEWA TRUST VS CIT (E), JAIPUR
Incomplete form 10AB. Genuineness of Activities.’’ 3.2 During the course of hearing, the ld. AR of the assessee mainly submitted that the assessee was not provided adequate opportunity of being heard by the ld. CIT(E) and the assessee should be given one more chance to contest the case before the ld. CIT(E). 3.3 On the other hand, the ld. DR relied upon the order of the ld.CIT(E) but he has no objection in case the appeal of the assessee is restored to the file of the ld. CIT(E) for afresh adjudication. 3.4 We have heard both the parties and perused the materials available on record. It is not imperative to repeat the case of the assessee as the ld. CIT(E) has elaborately discussed the issue in his order by passing an ex-parte order without providing adequate opportunity of being heard to the assessee giving therein following narration. ‘’…….Since it is a limitation matter, therefore, the case is decided on the basis of material filed by the applicant alongwith its application in Form No. 10AB.’’ The Bench taking into consideration the order of the ld. CIT(E) and the prayer made by the ld.AR of the assessee as to restore the ex-parte order to the file of the ld. CIT(E) for afresh adjudication by providing adequate opportunity of being
6 SHRI KRISHAN KANCHAN SEWA TRUST VS CIT (E), JAIPUR heard to the assessee. To this effect, the ld. AR of the assessee is directed to submit all the concerning papers on the issue raised hereinabove before the ld.CIT(E) who will decide them afresh by providing one more opportunity to the assessee. 3.5 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.
4.0 In the result, both the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 06 /03/2024.