2025 (3) TMI 756 - AT - Income Tax

Rejecting application for registration u/s 12A and approval u/s 80G(5) - objects and activities of the trust or institution not proved - HELD THAT - We are of the view that there is some typographical error in the findings of the CIT(E) where she accepted the charitable activities of the assessee. We are of the view that the CIT(E) has not given sufficient time to assessee to present its case. The assessee has furnished several documents and evidences before us to establish the genuineness of the activities of the trust. CIT(E) ought to have given a reasonable and adequate opportunity of being heard to the assessee. Therefore in the interest of justice and fair play we deem it fit to restore the appeal to the file of the CIT(E). CIT(E) is directed to rehear and consider all the documents submitted along with the application after affording a reasonable and adequate opportunity of being heard to the assessee. The ground of the appeal is allowed for statistical purpose. Application for registration u/s 80G(5)(iii) of the Act of the assessee was rejected by the ld. CIT(E) as non-maintainable as the same has not been filed with six months of commencement of activities - As relying on Tomorrow s Foundation 2024 (3) TMI 941 - ITAT KOLKATA we allow the appeal of the assessee for grant of approval u/s 80G(5) if otherwise the assessee is eligible. We are however of the view that as we have already set aside the issue of grant of Registration u/s 12A to the file of the CIT(E) for a fresh determination regarding genuineness of the Trust activity we deem it fit to set aside this issue of 80G(5) approval also to the file of the CIT(E) with a direction to the ld. CIT(E) not to consider the non-filing of application within 6 months of commencement of activities be an impediment in granting registration u/s 80G of the Act. The ground of appeal is allowed for statistical purpose.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment were:

• Whether the rejection of the application for registration under Section 12A of the Income Tax Act, 1961 was justified.
• Whether the rejection of the application for approval under Section 80G(5) of the Income Tax Act, 1961 was justified.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Rejection of Registration under Section 12A

Relevant legal framework and precedents:

The application for registration under Section 12A is governed by the provisions of Section 12AA of the Income Tax Act, which requires the verification of the genuineness of the objects and activities of the trust or institution.

Court's interpretation and reasoning:

The Tribunal noted that the CIT(Exemption) did not provide adequate opportunity to the assessee to present its case. The Tribunal observed a typographical error in the CIT(E)'s findings, which acknowledged the charitable activities of the assessee but still rejected the application.

Key evidence and findings:

The assessee had furnished several documents and evidence to establish the genuineness of its activities, which were not adequately considered by the CIT(E).

Application of law to facts:

The Tribunal emphasized the importance of providing a reasonable and adequate opportunity for the assessee to be heard, which was not afforded by the CIT(E).

Treatment of competing arguments:

The Tribunal considered the arguments from both sides, noting the assessee's contention that sufficient evidence was provided to demonstrate the genuineness of the trust's activities.

Conclusions:

The Tribunal restored the appeal to the file of the CIT(E) with directions to rehear and consider all submitted documents after affording a reasonable opportunity to the assessee.

Issue 2: Rejection of Approval under Section 80G(5)

Relevant legal framework and precedents:

The application for approval under Section 80G(5) involves compliance with the provisions regarding the timing of the application and the genuineness of the activities.

Court's interpretation and reasoning:

The Tribunal referenced a similar case decided by the Kolkata ITAT, which held that institutions granted provisional registration could apply for final registration without being barred by the commencement of activities prior to provisional approval.

Key evidence and findings:

The Tribunal found that the CIT(E) misconstrued the provisions and CBDT Circulars regarding the timing of applications for approval.

Application of law to facts:

The Tribunal applied the rationale from the Kolkata ITAT decision, concluding that the assessee's application was within the limitation period after the grant of provisional registration.

Treatment of competing arguments:

The Tribunal considered the arguments from both sides, particularly the assessee's contention that the application was timely and that the six-month requirement was impractical given the circumstances.

Conclusions:

The Tribunal set aside the issue of 80G(5) approval to the CIT(E) with directions not to consider the non-filing of the application within six months of commencement as an impediment, contingent on the outcome of the Section 12A registration.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

"In the interest of justice and fair play, we deem it fit to restore the appeal to the file of the CIT(E). The CIT(E) is directed to rehear and consider all the documents submitted along with the application after affording a reasonable and adequate opportunity of being heard to the assessee."

Core principles established:

The Tribunal emphasized the necessity of providing a fair opportunity for the assessee to present its case and the importance of correctly interpreting legal provisions and circulars regarding application timelines.

Final determinations on each issue:

The appeals were allowed for statistical purposes, with the matters being remanded back to the CIT(E) for fresh consideration in light of the Tribunal's observations.