2022 (1) TMI 420 - AT - Income Tax

Exemption u/s 11 - registration u/s 12AA rejected - assessee is stated to be a religious-cum- charitable trust - As absence of the requisite details the genuineness of the charitable nature of the activities of the assessee-trust could not be verified thus rejected the application filed by the assessee trust for grant of registration u/s 12AA(1)(b)(ii) - applicant in form No. 10A assessee had not uploaded the requisite documents viz. declaration u/s 13(1)(c) of the Act; NOC from the owner of the premises; identity details of the trustees/directors; note on the activities conducted in the last three years or since inception details of donations made details of donations received undertaking for non-infringement of the 1st Proviso to sec. 2(15) - HELD THAT - Failure on the part of the assessee to furnish the requisite information was for the reason that there was an outburst of Covid-19 pandemic across the country which had brought the normal functioning of day to day activities to a standstill. In our considered view on the basis of the order of the Hon ble Supreme Court 2021 (11) TMI 387 - SC ORDER wherein the period of limitation prescribed under the general law of limitation or under any special law (both Central and/or State) qua all the proceedings before the Courts and the Tribunals had been extended from time to time it can safely be concluded that there were justifiable reasons for the assessee in not complying with the letters/notices that were issued by the ld. CIT(Exemption) therein calling upon it to furnish certain information/clarifications. We thus are of the considered view that in all fairness the issue in hand requires to be restored to the file of the ld. CIT (Exemption) with a direction to re-visit the same and dispose off the application filed by the assessee trust Form No. 10A afresh. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against rejection of registration u/s 12AA of the Income-tax Act, 1961 due to failure to provide requisite details, delay in filing appeal due to Covid-19, and restoration of application for re-consideration.

Analysis:
1. The appeal was filed by a trust against the rejection of its application for registration u/s 12AA of the Income-tax Act, 1961 by the ld. CIT (Exemption). The trust failed to upload necessary documents like declaration u/s 13(1)(c) of the Act, NOC from premises owner, identity details of trustees/directors, etc., as required by Sec. 12AA(1)(a) of the Act. The rejection was based on the inability to verify the genuineness of the trust's charitable activities due to missing information. The trust contended that the Covid-19 pandemic hindered its ability to comply with the notices issued by the CIT (Exemption). The Tribunal acknowledged the pandemic's impact and extended the period of limitation, allowing the appeal to be filed within the prescribed time frame.

2. The Tribunal found that the crux of the issue lay in the CIT (Exemption) declining to approve the trust for registration u/s 12AA due to the trust's failure to provide necessary details despite reminders. The trust's argument of pandemic-related difficulties in compliance was accepted, considering the Supreme Court's order extending limitation periods. The Tribunal concluded that the trust had justifiable reasons for non-compliance and directed the matter to be reconsidered by the CIT (Exemption) with a fresh opportunity for the trust to present its case. The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of affording a reasonable opportunity for the trust to be heard during the re-consideration process.

3. The Tribunal addressed the delay in filing the appeal, attributing it to the Covid-19 pandemic and the subsequent extension of limitation periods by the Supreme Court. The Tribunal accepted the trust's explanation for the delay and deemed the appeal within the extended period of limitation. The Tribunal's decision to allow the appeal highlighted the exceptional circumstances surrounding the pandemic and the trust's genuine reasons for non-compliance with the CIT (Exemption)'s notices. The trust's request for restoration of its application for re-consideration was granted, emphasizing the need for a fair hearing and due process in the evaluation of the trust's registration under Sec. 12AA of the Act.

Overall, the Tribunal's judgment focused on balancing the impact of the pandemic on the trust's ability to comply with regulatory requirements while upholding the principles of natural justice and fair consideration in the registration process under the Income-tax Act, 1961.