2024 (6) TMI 526 - AT - Income Tax

Rejection of Application for Registration u/s 12A/12AB - HELD THAT - We find that at the time of filing application for registration in Form 10AB as per Rule 17A, assessee furnished required details. In addition to, the assessee also filed copy of trust deed, the registration certificate with Charity Commissioner, old registration certificate u/s 12A, audit report and details of activities on 30/03/2023, as per acknowledgment placed on record. Thus, prima facie, the assessee has furnished certain details to substantiate the object and activities. However, the facts remained the same that the CIT(E) rejected the application by taking view that despite issuing show cause notice dated 23/09/2023, the assessee neither filed any submission nor sought any adjournment. Considering the fact that the substantial right of assessee are involved in the present appeal and the assessee has prima facie furnished certain requisite details, therefore, in our view, the assessee deserve one more opportunity for considering their case on merit and examine the object and activities of the assessee and pass order in accordance with law. The assessee is also directed to be more vigilant in making compliance in time and not raise a technical issue of non-service of physical notice as the assessee may be very well aware that in a new regime, the application is filed electronically, the show cause notice as well as the compliance is mandatorily be made only through ITBA Portal.

Summary

Issues involved:
The judgment involves rejection of application for registration u/s 12A/12AB and approval of funds u/s 80G(5) of the Income Tax Act, 1961, based on various grounds raised by the assessee.

Rejection of Application for Registration u/s 12A/12AB:
The assessee's appeals were directed against the rejection of the application for registration under Section 12A/12AB of the Income Tax Act. The ld. CIT(E) rejected the application on the grounds that the actual activity did not align with the trust's objects, there was a significant application of funds towards religious activities, and inadequate verification of documentary evidence. The assessee contended that they were not provided with a fair opportunity to be heard and sought to quash the order of the ld. CIT(E). The Tribunal considered the delay in filing the appeal and ultimately allowed the appeal for the assessee to be reconsidered on merit, emphasizing the need for a fair hearing and compliance with procedural requirements.

Approval of Funds u/s 80G(5):
The application for approval under Section 80G(5) of the Act was rejected due to a delay in filing, as well as the absence of valid registration under Section 12A/12AB. The assessee argued for an extension of the time limit based on CBDT Circulars and cited relevant case law. The Tribunal acknowledged the delay in filing the appeal but allowed it, directing a reconsideration of the application in light of the extended time limit provided by CBDT Circulars. The matter of registration under Section 12A/12AB was also referred back to the ld. CIT(E) for fresh consideration and a lawful decision.

Conclusion:
Both appeals by the assessee were allowed for statistical purposes, with directions for reconsideration of the applications for registration u/s 12A/12AB and approval of funds u/s 80G(5) in accordance with the law. The Tribunal emphasized the importance of fair hearings, compliance with procedural requirements, and vigilance in making timely compliance.