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Facts
The assessee society filed appeals against two orders of the CIT (Exemption) rejecting its applications for registration under section 12AB and approval under section 80G of the Income Tax Act, 1961. The grounds for rejection included non-registration under the Rajasthan Public Trust Act, lack of verifiable utilization of grants, and issues with timely application submission.
Held
The Tribunal held that the assessee's application for registration under section 12AB was rejected on grounds of non-registration with the RPT Act and genuineness of activities. The approval under section 80G was rejected primarily because registration under section 12AB was a prerequisite and the application for permanent registration was filed with a delay.
Key Issues
Whether the CIT (Exemption) erred in rejecting the application for registration under section 12AB and approval under section 80G due to procedural delays and lack of documentary evidence regarding utilization of funds, and whether the assessee was provided adequate opportunity of being heard.
Sections Cited
12AB, 80G, 12A, 10(23C)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA Nos. 708 & 709/JP/2023
ORDER PER: SANDEEP GOSAIN, JM These are two appeals filed by the assessee against two different orders of the Ld.CIT (Exemption), Jaipur both dated 23-09-2023 passed under section 12AB and 80G of the Income Tax Act, 1961 respectively. The grounds of appeal raised by the assessee in both the appeals are as under:-
2 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR U/S 12AB of I.T. Act, 1961 GROUNDS OF APPEAL
1. On the facts and in the circumstances of the matter, ld.CIT(A) has grossly erred in rejecting the application for registration u/s 12AB of the Income Tax Act, 1961 filed in form 10AB merely on surmises and technical grounds, without appreciating the actual facts of the case. Appellant pays that such rejection being absolutely unwarranted and unjustified deserves to be rolledback and the registration sought being most legal, deserves to be provided.
2. The ld. CIT(Exemption) has further erred in rejecting application for permanent rejection sought in form 10AB on the ground that the assessee society was not registered under Rajasthan Public Trust Act. Appellant prays that since the society has now moved an application for registration as a religious trust, rejecting the application being most unjustified, the rejection deserves to be called back.
3. That on the facts and in the circumstances ld. CIT(Exemption) has grossly erred in rejecting the application made under form 10AB by alleging that since the utilization of the grants received could not be verified in absence of specific documents asked, the genuineness of activities of the society for charitable purposes could not be established. Appellant prays that audited financials of the society were duly submitted alongwith the application filed in form 10AB, also the fact that entire grant was received from Govt. of Rajasthan is itself a proof that the same had to be utilized for the purpose it has been sanctioned. The genuineness was thus fully established and the approval deserves to be granted ITA NO. 709/JP/2023 U/S 80G of I.T. Act, 1961 1.Under the facts and circumstances of the case and in law the ld. CIT(E) has grossly erred in denying the approval of the assessee u/s 80G of the Income Tax Act.
2. Under the facts and circumstances of the case and in law the ld. CIT(E) even after granting the provisional registration u/s 12AB denied to allow the approval u/s 80G of the Income Tax Act hence the said denial being invalid in law deserves to be quashed.
3 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR 3.1 Apropos to the ground so raised by the assessee in the ld. CIT(E) rejected the assessee’s claim of registration u/s 12AB of the Act by observing as under:- ‘’3.4 It is seen from the donation ledger for the period from 01-04- 2021 to 30-09-2022 furnished by the appellant that applicant society is receiving donation from Govt. of Rajasthan. Further, it is seen from the Form -10AB filed by the applicant that in column 26 (income details), applicant shown all of its donation received in the column other specific grants. The nature of such grants received by the applicant from the Govt. of Rajasthan is not known as not disclosed by the applicant such as purpose of grant, grant order, application of such grant. Therefore, in order to verify the same applicant was asked to specifically vide this office letter dated 12-09-2023, relevant query reads as under:-
1.’’As you have received donation from the Rajasthan Govt., please furnish the proof whether the same have bee utilised for the same purpose alongwith copy of grant order.’’ In response, neither applicant furnished any reply nor furnished any relevant document so as to ensure whether the grant received by the applicant society is applied for the same purpose. In absence of above details, it is clear that the activities of the applicant is not genuine. 3.5 From the above discussion and in absence of supporting documents, it could not be determined whether the applicant is genuinely carrying out charitable activity. Therefore, assessee claim of registration u/s 12AB is also to be rejected on ground of not proving its genuineness of activity. In view of above discussion, assessee’s claim of registration section 12AB is liable to be rejected and thus being rejected on following grounds:-
4 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR 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:-
Non registration with RPT Act, 1959. Genuineness of Activities and non-compliance. 3.2 Apropos to the ground so raised by the assessee in the ld. CIT(E) rejected the assessee’s claim of exemption u/s 80G of the Act by observing as under:- “1. The applicant filed online application on 11.03.2023 in Form No. 10AB for seeking exemption u/s 80G (5)(iii) of the Income Tax Act, 1961………. Approval u/s 80G cannot be granted without registration u/s 12AB 2.1 As per rule 11AA of the Income Tax Rule, 1962, the registration u/s 12A/12AA or notification u/s 10(23C) is a precondition for granting approval u/s 80G of the I.T. Act, 1961. Vide this office order No. ITBA/EXM/F/EXM45/2023-24/1056460126(1) dated 23-09-2023, the applicant Society/trust/samiti has been denied registration u/s 12AB. Therefore, it is not eligible for exemption u/s 80G of the I.T. Act, 1961. In view of above discussion, the application in form No. 10AB seeking exemption u/s 80G is liable to be rejected. Further, the ld CIT(E) observed at pages 3 to 10 that in view of the above, the present application filed in Form No 10AB under clause (iii) of first proviso to sub-section (5) of Section 80G of the Act is liable to be rejected as non-maintainable.
04. In view of above discussion, asseessee’s claim of approval u/s 80G is liable to rejected and thus being on following grounds:
5 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR * approval u/s 80G cannot be granted without registration u/s 12AB * commencement of activities.’’ 3.3 During the course of hearing, the ld. AR of the assessee in both the appeals mainly submitted that the assessee was not provided adequate opportunity of being heard by the ld. CIT(E) and thus both the orders should be quashed being against the principles of natural justice. The detailed written submission as advanced by the assessee is in both the cases are mentioned as under:-
‘’1. Briefly stating the assesee is a society duly registered under the Rajasthan Societies Registration Act, 1958 vide registration certificate dated 09.07.2018 (copy enclosed). The assessee had received provisional registration u/s 12A of the Income Tax Act 1961 (hereinafter referred to as the Act) on 10.03.2022 for AYs 2022-23 to 2024-25 (copy enclosed). Corresponding application was also made for approval under section 80G of the Act and a provisional approval was also granted u/s 80G(5)(iii) of the Act on 10.03.2022 for the period 10.03.2022 to AY 2024-25 (copy enclosed).
Later on 11.03.2023 an application under form 10AB was made for providing permanent registration u/s 12A of the Act. This application was rejected by Ld. CIT (Exemption ) vide order dated 23.09.2023 citing the primary reason to be Non-registration with Rajasthan Public Trust Act, 1959 (hereinafter referred to as the RPT Act).
Subsequently, the assesse challenged the decision of Ld. CIT (E) to Hon’ble ITAT vide filing Form 36 dated 23-11-2023.
6 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR 4. The assesse also filed an application under Form 10AB for obtaining permanent approval u/s 80G of the Act, which was also rejected by Ld. CIT(E) on the grounds that assesse has not been granted registration u/s 12AB and the application was not moved within 6 months of the commencement of the activities of the Trust, henceforth the final approval u/s 80 G could not be granted. Now, the assessehumbly submits that: 5. The assesse has applied for obtaining the registration under the Rajasthan Public Trust,1959 on 10-11-2023 and requests Hon’ble Bench that the primary basis for rejection of application of assesse for want of Final registration u/s 12AB is now complied with and hence requests the Hon’ble ITAT to refer back the immediate case to Ld. CIT(E) for determination of the final registration on the basis of merits as the assessee trust is genuinely carrying on activity in form of maintaining gaushala.
With respect to the rejection of the final approval u/s Section 80G of the Act, it is humbly submitted that since the application for approval under section 80G is consequential and related to the registration application made under section 12AB hence the fate of such application should be decided based on the consequences of para 5 mentioned above.
With respect to second ground of rejection of the final approval u/s 80G which was not moving the application within 6 months of the commencement of the activities, emphasis is laid upon a recent judgement of Hon’ble ITAT, Jaipur in the case of Go Gram Eco Foundation, Jaipur v/s CIT(E), the ITAT ordered the Ld. CIT(A) that the rejection of final approval cannot be done entirely only on the basis of assesse not complying with the technical deadlines as prescribed in the law and order Ld. CIT(A) that the final approval u/s 80 G should be granted as and when the application was moved by the assessee. The assessee wishes to avail the due support from the above cited judgment in the interest of natural justice as well as in the context of genuine charitable activities being carried on by it.
7 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR Hence, in the instant case, the Hon’ble Bench is requested to refer backboth of the matters pending in present appeals to Ld. CIT(Exemption) for fresh consideration in light of the humble submission made above and oblige.’’ 3.4. Per contra, the ld. DR relied on the orders of the ld. CIT(E). 3.5 We have heard the rival contentions and perused material available on record. The Bench noted that ld. CIT(E) has rejected the applications of the assessee u/s 12AB and u/s 80G of the Act as narrated in the respective CIT(E) orders (supra). The Bench also finds that the assessee’s application for registration u/s 12AB was rejected by the ld. CIT(E) on the ground of non-registration with RPT Act, 1959 and also on the ground of genuineness of activities and non-compliance. In this regard, the ld. AR at the very outset submitted that now the assessee has applied for registration under RPT Act, 1959 and also placed on record the required certificate before us . Hence, in this way, the assessee has already complied with the requisition contained for registration u/s 12AB of the Act. Further the Bench noted that the assessee also filed an application under form 10AB for obtaining permanent approval u/s 80G of the Act which was also rejected by the ld CIT(E) on the ground that the assessee has not been granted registration u/s 12AB and the application was not moved within 6 months of the commencement of the activities of the Trust and thus final approval u/s 80G could not be granted. It is also pertinent to mention that during the 8 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR course of hearing the ld. AR of the assessee prayed that he was deprived off availing of adequate opportunity of being heard by the ld. CIT(E) in both the orders (supra). 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). It is also noteworthy to mention that the issue relating to approval u/s 80G has also been disposed off by the ITAT Jaipur In the case of Go Gram Eco Foundation vs CIT(E) (ITA No. 504/JP/2023 order dated 28-11-2023 by observing as under:-
‘’6. We have heard the rival contentions and perused the material placed on record. The brief facts of the case is that the assessee is incorporated u/s 8 of the Companies Act, 2013 on 13.10.2021 with the main object to provide, facilitate and channelise all and every kind of assistance to organizations which are working in the field of protection of cows and its progeny. The assessee filed an application for provisional registration on 16.10.2021 in Form No.10A u/s 12A(1)(ac)(vi) and under clause (iv) of first proviso to section 80G(5). It was granted provisional registration in Form No.10AC on 27.10.2021 from 27.10.2021 to A.Y. 2024-25. The assessee commenced its activities from 13.10.2021, i.e. from the date of its incorporation. Therefore, it filed an application in Form No.10AB both u/s 12A(1)(ac)(iii) (PB 47-55) and under clause (iii) of first proviso to section 80G(5) on 16.12.2022 for permanent registration. The Ld. CIT(E) granted permanent registration in Form No.10AD u/s 12A(1)(ac)(iii) vide order dated 29.06.2023 but refused the registration u/s 80G(5) by giving the following reasons:-
9 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR (i) The application in Form No.10AB under clause (iii) of first proviso to sub-section 80G(5) is required to be filed at least 6 months prior to the expiry of provisional approval or within 6 months of commencement of its activities, whichever is earlier.
(ii) The assessee commenced the activities on 13.10.2021 (in the order date is wrongly mentioned as 22.03.2015) and thus the application was required to be filed by 13.04.2022 which got extended till 30.09.2022 as per CBDT Circular No.8/2022 dated 31.03.2022.
(iii) The assessee filed application for grant of permanent registration on 16.12.2022 which is after the extended due date. No power is given under the Act to CIT(E) to condone the delay and therefore the application filed by the assessee is rejected as non-maintainable for which reliance is placed on the decision of Hon’ble Kolkata ITAT in case of Bishnupur Public Education Institute 139 Taxman.com 121.
6.1 The Bench noted that section 80G allows deduction to an assessee in computing his total income in respect of donation paid to any fund or institution. However, under sub-section 5, the deduction is allowable only if such fund or institution is established in India for charitable purpose and it fulfills the following conditions:-
(i) The income of the fund or institution is exempt u/s 11 & 12. (ii) No part of income or asset of the fund or institution is used for any purpose other than a charitable purpose. (iii) The fund or institution is not for the benefit of any particular religious community or caste. (iv) It maintains regular accounts of its receipt & expenditure.
10 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR (v) It is constituted as a public charitable trust or registered under Societies Registration Act, 1860 or u/s 8 of Companies Act, 2013 (vi) It is approved by the Commissioner. (vii) It prepares & delivers the statement of donation to the prescribed authorities. (viii) It furnishes to the donor a certificate specifying the amount of donation received.
The assessee has satisfied all the conditions mentioned above. It is provisionally approved under clause (vi) of section 80G(5). However, clause (iii) of the proviso to section 80G(5) provides that where the institution or fund has been provisionally approved, it shall make an application for permanent registration within 6 months of commencement of its activities. In the present case there is a delay of about 2.5 months from the extended date of filing the application for obtaining the permanent registration u/s 80G(5)(vi). The question therefore arises is that if there is a delay, the application itself would be rejected or registration would stood cancelled and whether the Ld. CIT(E) has power to still accept the application and grant permanent registration. There is no dispute as to the fact that assessee is provisionally registered till A.Y. 2024-25 vide order dated 27.10.2021. Thus it has complied with section 80G(5). The proviso to this section only deals with the procedure as to the filing of the application. The law of procedure has to be approached, understood and appreciated as a helpmate in the course of the process of administration of justice. Procedural provision should be so construed as to sub serve the course of justice and not to hinder it. It is a settled proposition of law that technicalities should not come in way in imparting the substantial justice. We get support of our this view from the decision of Hon’ble Supreme Court in case of S. Nagaraj & Others Vs. State Of Karnataka & Another 4 SCC 595.
6.2 The Ld. CIT(E) has relied on the decision of ITAT, Kolkata Bench. This decision is with reference to exemption u/s 10(23C)(vi) where it was held that CIT(E) does not have any power to condone the delay in granting approval for earlier years. This decision is on section 10(23C)(vi) and thus not applicable. Even the principle laid down in this decision and the High Court decision referred therein is that even if application is filed late, the approval should be granted from the AY relevant to the PY in which the application is filed. Therefore, permanent registration ought to have been granted to the assessee at least from the date 11 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR when the application is filed instead of rejecting the application in toto. In the light of the above discussion, we are of the considered view that though the assessee has filed the application of 2.5 months delay and the provisions registration was not cancelled merely for permanent registration the application filed delayed. The assessee has all the reasons for recognition u/s 80G of the Act at least from the date the assessee filed an application and therefore, in the light of this facts and circumstances of the case we direct the ld. CIT(A) to decide the issue of registration u/s 80G of the Act in accordance with law from the date on which the assessee made an application for permanent registration. In the light of this facts and circumstances of the case the assessee of the assessee is allowed for statistical purpose. In the result, appeal of the assessee is allowed for statistical purpose.’’ 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 ld. AR of the assessee is directed to produce all the relevant papers concerning both the applications so filed before the ld. CIT(E) to settle the dispute raised hereinabove in view of the decision of ITAT Jaipur Bench in the case of Go Gram Eco foundation (supra) relating to Section 80G.
3.6 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.
12 DHYAN YOG GAU SEVA SOCIETY VS CIT (EXEMPTION) , JAIPUR 4.0 In the result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open court on 31/01/2024.