2025 (3) TMI 798 - AT - Income Tax

Rejecting the application for registration in Form No.10AB under clause (iii) of section 12A(1)(ac) and u/s 80G - HELD THAT - We find that admittedly the assessee made compliance to the initial notices issued by the Ld. CIT Exemption Pune. It is the sole contention of the assessee that only the last notice could not be complied by the assessee and it was the prayer of AR that one more opportunity may kindly be granted to the assessee to explain his case. Considering the totality of the facts of the case and in the interest of justice without going into the merits of the case we set-aside the order passed by Ld. CIT Exemption Pune and remand the matter back to him with a direction to decide the application for registration afresh as per fact and law after providing reasonable opportunity of hearing to the assessee.

ISSUES PRESENTED and CONSIDERED

The primary issues considered in this judgment are:

1. Whether the Commissioner of Income Tax, Exemption, Pune erred in rejecting the application for registration under section 12A(1)(ac)(iii) of the Income Tax Act, 1961, and cancelling the provisional registration granted under section 12AB.

2. Whether the Commissioner of Income Tax, Exemption, Pune erred in denying the application for approval under section 80G(5) of the Income Tax Act, 1961.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Rejection of Registration under Section 12A(1)(ac)(iii)

Relevant legal framework and precedents: Section 12A of the Income Tax Act, 1961, provides for conditions for registration of a charitable trust or institution. Section 12AB relates to the procedure for granting provisional registration, and section 12A(1)(ac)(iii) specifies the requirements for registration.

Court's interpretation and reasoning: The Tribunal noted that the assessee had initially complied with the notices issued by the Commissioner. However, the failure to respond to the last notice led to the rejection of the application and cancellation of the provisional registration. The Tribunal emphasized the importance of providing a fair opportunity to the assessee to present its case.

Key evidence and findings: The Tribunal found that the assessee had missed responding to the final notice, which was crucial for the decision-making process of the Commissioner. The Tribunal acknowledged the assessee's compliance with earlier notices and the lack of opportunity to address the final notice.

Application of law to facts: The Tribunal applied principles of natural justice, emphasizing that the assessee should be given a fair chance to present the necessary documents and information to support its application for registration.

Treatment of competing arguments: The Tribunal considered the arguments from both the assessee and the Revenue. While the Revenue relied on the procedural compliance by the Commissioner, the Tribunal found merit in the assessee's claim for another opportunity to furnish the required information.

Conclusions: The Tribunal set aside the order of the Commissioner and remanded the matter for fresh adjudication, instructing the Commissioner to provide a reasonable opportunity for the assessee to present its case.

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

Relevant legal framework and precedents: Section 80G of the Income Tax Act, 1961, provides for deductions in respect of donations to certain funds, charitable institutions, etc., subject to approval under section 80G(5).

Court's interpretation and reasoning: The Tribunal treated the issue of approval under section 80G(5) as consequential to the registration under section 12A(1)(ac)(iii). Since the registration issue was remanded for fresh consideration, the Tribunal found it appropriate to remit the approval issue as well.

Key evidence and findings: The Tribunal did not delve into specific evidence for this issue, as it was deemed consequential to the primary issue of registration.

Application of law to facts: The Tribunal applied the principle that the approval under section 80G(5) is dependent on the registration status under section 12A. Therefore, a fresh adjudication of the registration issue necessitates a re-evaluation of the approval issue.

Treatment of competing arguments: The Tribunal did not provide a detailed analysis of competing arguments for this issue, as it was contingent upon the resolution of the registration matter.

Conclusions: The Tribunal remanded the issue of approval under section 80G(5) to the Commissioner for fresh adjudication, following the outcome of the registration process.

SIGNIFICANT HOLDINGS

Core principles established: The Tribunal reinforced the principle of natural justice, emphasizing the need for providing adequate opportunity to the assessee to comply with procedural requirements and present its case.

Final determinations on each issue: The Tribunal set aside the orders of the Commissioner regarding both the registration under section 12A(1)(ac)(iii) and the approval under section 80G(5), remanding both matters for fresh consideration with instructions to provide a fair opportunity for the assessee to submit necessary documentation and information.

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