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Income Tax Appellate Tribunal, PUNE “A” BENCH : PUNE
Before: SHRI RAMA KANTA PANDA & MS. ASTHA CHANDRA
The above two appeals filed by the assessee are directed against the separate orders dated 01.03.2024 of the learned CIT(E), Pune rejecting grant of registration u/sec.12A of the Income Tax Act, 1961 (in short "the Act") and also denying approval u/sec.80G of the Act; respectively.
There is delay of 107 days and 108 days respectively in filing of these appeals, for which, the assessee has filed condonation applications along with affidavits explaining the 2 ITA.No.1734 & 1721/PUN./2024 reasons for such delay which is due to ill-health of the trustee Mr. Arun Sawant who was looking after the day-to-day affairs of the trust. Learned Counsel for the Assessee referring to the contents of the affidavits filed along with the condonation applications and relying on the decision of Hon’ble Supreme Court in the case of Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) requested the Bench to condone the delay and admit the appeals for adjudication.
3. Learned DR on the other hand strongly opposed condonation applications filed by the assessee.
We have heard the rival arguments made by both the sides on the issue of condonation of delay in filing of the above appeals. We find the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs., MST Katiji (supra) has held that when substantial justice and technical considerations are pitted against each othe, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
It has further been held that refusing to condone delay can result in a meritorious matter being thrown-out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. In view of the above decision of Hon’ble Supreme Court in the 3 ITA.No.1734 & 1721/PUN./2024 case of Collector, Land Acquisition vs., MST Katiji (supra) and considering the contents of the condonation application filed along with the affidavits, the delay in filing of both the appeals is condoned and the above appeals are admitted for adjudication.
Facts of the case, in brief, in it’s “lead” appeal ITA.No.1734/PUN./204 are that the assessee is a charitable institution and a company formed u/sec.8 of the Companies Act, 2013 with no motive to earn any profit. It filed an application for registration in Form No.10AB under clause (iii) of section 12A(1)(ac) of the Act on 30.09.2023. In order to verify the genuineness of activities of the assessee and compliance to requirements of any other law for the time being in force by the trust/institution as are material for the purpose of achieving its objects, the CIT(E) issued a notice through ITBA portal on 28.11.2023 requesting the assessee to upload certain information. Since, the assessee did not respond to the said notice, the learned CIT(E) issued another notice dated 08.01.2024 which was duly served upon the assessee. In response to the same, the assessee submitted certain documents/details.
5.1. On verification of the details submitted by the assessee, the learned CIT(E) noted certain discrepancies. He noted that the objects of the trust deed are of religious nature
4 ITA.No.1734 & 1721/PUN./2024 and some of it’s activities are not eligible. Further, the assessee itself has confirmed that it has not carried-out any activities since its inception and large amounts as donations have been lying idle despite there being numerous objects provided for in the MoA. He, therefore, issued another notice dated 15.02.2024 which was duly served on the assessee through e-portal and email to explain the above discrepancies on or before 21.02.2024. It was mentioned therein that in the event of failure to furnish the information before the due date, his application for registration u/sec.12AB will be liable to be cancelled. Since the assessee did not furnish any explanation to the discrepancies communicated to it, the learned CIT(E) rejected the application of the assessee for registration u/sec.12AB(1)(b) of the Act and also cancelled the provisional registration granted earlier on 31.12.2021. The relevant observations of the learned CIT(E) are as under :
“4. Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961 as well as the provisions of Rule 17A(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is unable to draw any satisfactory conclusion about the genuineness of activities of the and compliance of requirements of any other law for the time being in force
5 ITA.No.1734 & 1721/PUN./2024 by the assessee as are material for the purpose of achieving its objects.
5. In view of the above, the application filed by the assessee is hereby rejected and the provisional
registration granted on 31/12/2021 under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act,
1961 is hereby cancelled.”
Due to similar non-compliance, the Ld. CIT(E) rejected the application for grant of approval u/sec.80G of the Act.
7. Aggrieved with such order of the Ld. CIT(A), the assessee-trust is in appeal before the Tribunal by raising the following grounds in ITA.No.1734/PUN./2024 :
1. The learned CIT (Exemption) Pune erred in not granting
registration u/s 12A as applied with reference to application dated 30.09.2023 even though it was holding provisional registration u/s 12A(1)(ac)(vi) of I.T. Act 1961.
2. The learned CIT (Exemption) erred in not granting
registration by observing discrepancies at para 2.2 as to Trust Deed having objects of commercial nature and no activities having been carried out since inception.
6 ITA.No.1734 & 1721/PUN./2024
3. The order passed by CIT (Exemption) non-granting
registration u/s 12AB is unjustified, unwarranted and bad in law.
4. The learned CIT (Exemption) ought to have grant
registration u/s 12AB of I.T. Act 1961 considering the facts and evidence on record.
5. The learned CIT (Exemption) erred in cancelling the provisional registration without specifying any specified
violation in the case of assessee.
6. The learned CIT (Exemption) erred in concluding that para
3.2 and 3.3 are not eligible objects even though it is specified in the Trust Deed as to above said matters as necessary for furtherance of objects specified in clause 3 which are not faulted.
7. Any other ground that shall be prayed at the time of hearing.”
Grounds in ITA.No.1721/PUN./2024 :
1. The learned CIT (Exemption) Pune erred in not granting
Approval under clause (iii) of first proviso to sub-section (5) of section 80G of I.T. Act 1961 as applied with reference to application dated 30.09.2023 even though it was holding provisional Approval under clause (iv) of first proviso to sub-section (5) of section 80G of I.T. Act 1961.
7 ITA.No.1734 & 1721/PUN./2024
2. The learned CIT (Exemption) erred in not granting approval
by observing discrepancies at para 2.2 as to Trust Deed having objects of commercial nature and no activities having been carried out since inception.
The order passed by CIT (Exemption) non-granting
approval under clause (iii) of first proviso to sub-section (5) of section 80G of I.T. Act 1961 is unjustified, unwarranted and bad in law.
4. The learned CIT (Exemption) ought to have grant approval
under clause (iii) of first proviso to sub-section (5) of section 80G of I.T. Act 1961 considering the facts and evidence on record.
5. The learned CIT (Exemption) erred in cancelling the provisional Approval without specifying any specified
violation in the case of assessee.
6. The learned CIT (Exemption) erred in concluding that para
3.2 and 3.3 are not eligible objects even though it is specified in the Trust Deed as to above said matters as necessary for furtherance of objects specified in clause 3 which are not faulted.
Any other ground that shall be prayed at the time of hearing.”
8 ITA.No.1734 & 1721/PUN./2024
Learned Counsel for the Assessee submitted that assessee-trust was holding provisional registration u/sec.12A of the Act. He submitted that without going through the various evidences on record, the learned CIT(E) rejected the application for grant of registration u/sec.12A. Further, adequate opportunity was not granted by the learned CIT(E).
He accordingly submitted that in the interest of justice one more opportunity may be granted to the assessee-trust to substantiate it’s case before the learned CIT(E) by producing all necessary details to his satisfaction.
The Learned DR on the other hand, heavily relied on the order of the learned CIT(E) and submitted that he has given valid reasons for rejecting the application filed for grant of registration u/sec.12A and approval u/sec.80G. Therefore, the same should be upheld and the grounds raised by the assessee in both the appeals should be dismissed.
We have heard the rival arguments made by both the sides and perused the material available on record. We find the Ld. CIT(E) rejected the application of the assessee seeking grant of registration u/sec.12A of the Act on the ground that the objects of the assessee-trust are purely of religious nature; some of the activities of the assessee-trust are not legible; the assessee has not carried-out any activities since it’s inception and large amounts as donation are lying
9 ITA.No.1734 & 1721/PUN./2024 idle despite there being numerous objects provided for in the MoA, Therefore, the learned CIT(E) rejected the application for registration u/sec.12A of the Act and also cancelled the provisional registration granted earlier on 31.12.2021. It is the submission of the Learned Counsel for the Assessee that the assessee was granted provisional registration u/sec.12A.
Further adequate opportunity was not granted by the Ld. CIT(E) to substantiate it’s case and, therefore, matter may be restored to the file of Ld. CIT(E) with a direction to grant one more opportunity to the assessee to substantiate it’s case. We find some force in the arguments advanced by the Learned Counsel for the Assessee that sufficient opportunity was not granted by the learned CIT(E) for filing the necessary details.
Considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the matter back to the file of Ld. CIT(E) with a direction to grant one final opportunity to the assessee to substantiate it’s case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make it’s submissions, if any, before the Ld. CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which, the Ld. CIT(E) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
10 ITA.No.1734 & 1721/PUN./2024
Since we have restored the appeal in ITA.No.1734/ PUN./2024 filed by the assessee seeking registration u/sec.12A of the Act, therefore, we restore the appeal ITA.No.1721/PUN./2024 filed by the assessee seeking approval of it’s trust u/sec.80G of the Act back to the file of Ld. CIT(E) with similar directions. The grounds raised by the assessee in ITA.No.1721/PUN./2024 are accordingly allowed for statistical purposes.
In the result, both the appeals filed by the assessee are allowed for statistical purposes. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 04.12.2024.