2024 (6) TMI 519 - AT - Income Tax

Rejection of application of the Appellant Trust u/s 12AB r.w.s. 12A(1)(ac)(iii) terming the activities undertaken by the trust as not genuine - HELD THAT - CIT(E) was not satisfied with the proof of activities furnished by the assessee and noted that there are no proper walls, cover to protect the animals, residents of caretakers of animals, place where the fodder can be stored, etc. CIT(E) also observed that the assessee has not furnished any documentary evidence regarding the location of the cowshed, name of place, village, etc. CIT(E) also noted that the bills/vouchers submitted by the assessee are from Bharuch (Gujarat), however the assessee has its address at Thane. Accordingly, the application filed by the assessee in Form No. 10AB under section 12A(1)(ac)(iii) of the Act was rejected and the provisional registration granted on 22/03/2022 under section 12AB r.w.s. 12A(1)(ac)(vi) of the Act was also cancelled. Therefore, it is evident that the learned CIT(E) was not satisfied with the details/evidence furnished by the assessee. However, it is also evident that the assessee was not granted any other opportunity to meet the objections of the learned CIT(E). We deem it appropriate to restore the application filed by the assessee to the file of the learned CIT(E) for de novo adjudication with a direction to the assessee to substantiate the objects with activities carried on by it and necessary supporting of expenditure incurred on the objects of the trust. The learned CIT(E) may consider those details and after giving an opportunity of hearing to the assessee dispose of the application afresh in accordance with the law. Accordingly, the impugned order passed by the learned CIT(E) is set aside and the grounds raised by the assessee are allowed for statistical purposes. Rejection of application u/s 80G(5)(iii) and cancellation of provisional registration u/s 80G(5)(iv) - As undisputed that the provisional approval granted to the assessee vide order dated 23/03/2022 was valid till the assessment year 2024-25. Provisional approval was granted subject to certain conditions, however, the impugned order is completely silent as to the violation of any such condition. No merit in the cancellation of provisional approval granted to the assessee under clause (iv) of the first proviso to section 80G(5) - application filed by the assessee in Form No.10AB on 27/01/2013 is within the time limit permissible under clause (iii) of the first proviso to section 80G(5). Since the learned CIT(E) rejected the application filed by the assessee only on this technical ground and has not analysed the application on merits as per the requirements of section 80G(5) therefore we deem it appropriate to restore the application to the file of the learned CIT(E) for de novo consideration in accordance with the law, after granting a reasonable opportunity of being heard to the assessee. Grounds raised by the assessee are allowed for statistical purposes.

Summary

Issues Involved:
1. Rejection of application u/s 12A(1)(ac)(iii) and cancellation of provisional registration u/s 12AB r.w.s. 12A(1)(ac)(vi).
2. Rejection of application u/s 80G(5)(iii) and cancellation of provisional registration u/s 80G(5)(iv).

Issue 1: Rejection of Application u/s 12A(1)(ac)(iii) and Cancellation of Provisional Registration u/s 12AB r.w.s. 12A(1)(ac)(vi)

The assessee challenged the order dated 24/07/2023, rejecting the application filed u/s 12A(1)(ac)(iii) and cancelling the provisional registration granted u/s 12AB r.w.s. 12A(1)(ac)(vi). The learned CIT(E) deemed the activities of the trust as not genuine, citing discrepancies such as lack of proper infrastructure for animal care, absence of documentary evidence regarding the cowshed's location, and bills from a distant location (Bharuch, Gujarat). The Tribunal found that the assessee was not given adequate opportunity to address these objections. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the learned CIT(E) for de novo adjudication, directing the assessee to substantiate its activities and expenditures.

Issue 2: Rejection of Application u/s 80G(5)(iii) and Cancellation of Provisional Registration u/s 80G(5)(iv)

The assessee contested the order dated 22/07/2023, rejecting the application filed u/s 80G(5)(iii) on the grounds of being filed beyond the stipulated time limit and cancelling the provisional registration u/s 80G(5)(iv). The learned CIT(E) noted that the application was filed after the deadline, which was six months from the date of provisional approval or commencement of activities. The Tribunal referred to a similar case (Shri Kailash Math Trust v. CIT(E)) and concluded that the time limit should be interpreted to apply only to trusts that had not commenced activities at the time of provisional approval. Since the assessee had already commenced activities, the application was deemed timely. The Tribunal set aside the impugned order and remanded the matter back to the learned CIT(E) for reconsideration on merits.

Conclusion:

Both appeals by the assessee were allowed for statistical purposes, with directions for de novo adjudication by the learned CIT(E).