2021 (1) TMI 466 - AT - Income Tax

Registration u/s 12AA rejected - assessee/applicant trust was registered under Bombay Public Trust Act, 1950 - assessee/applicant being engaged in education activities, verification of admissions given to the students from financially weaker sections of the society/RTE category students is most relevant but in absence of relevant details, the satisfaction about the compliance of the requirements of section 12AA(1)(a)(ii) by the assessee/applicant could not be arrived at by the Ld. CIT (Exemption) and the application for grant of registration was rejected by CIT (Exemption) - assessee submitted that when the application for registration was made by the assessee/applicant by that time some admissions of students have already been made corresponding fees collected - HELD THAT - We are of the considered view that one final opportunity should be given to the assessee/applicant in the interest of justice. In view thereof, we set aside the order of the Ld. CIT (Exemption) dated 29.09.2020 and restore the matter back to his file for re-adjudication while complying with the principles of natural justice.

Summary

Issues:
1. Rejection of application for registration under section 12AA(1)(b)(ii) of the Income Tax Act, 1961.
2. Rejection of corresponding exemption under section 80G(5)(vi) of the Income Tax Act.

Issue 1: Rejection of application for registration under section 12AA(1)(b)(ii) of the Income Tax Act, 1961:

The appellant's appeal against the rejection of the application for registration under section 12AA(1)(b)(ii) of the Income Tax Act was considered. The appellant, a charitable trust, had applied for registration under the Act. The appellant was required to provide various details related to educational activities, admissions, fee structure, and compliance with the Right to Education Act. Despite multiple opportunities, the appellant failed to submit the necessary information. The rejection was based on non-compliance with the statutory requirements. The appellant's counsel requested another chance to provide the required documents. The Tribunal, considering the interests of justice, set aside the order of rejection and directed the appellant to submit all relevant documents for re-adjudication by the authority, emphasizing it as the final opportunity. The appeal was allowed for statistical purposes.

Issue 2: Rejection of corresponding exemption under section 80G(5)(vi) of the Income Tax Act:

The second appeal pertained to the denial of exemption under section 80G of the Act. The appellant did not possess registration under section 12AA of the Act at the time of applying for recognition under section 80G(5)(vi) of the Act. The previous application for registration under section 12AA had been rejected. Consequently, the appellant did not meet the requirements specified under Rule 11AA of the Income Tax Rules for recognition under section 80G(5)(vi) of the Act. Due to the failure to produce the necessary documents as per the Rules, the conditions under section 80G(5)(vi) were not fulfilled, leading to the rejection of the approval by the authority. Considering the interconnected nature of the issues concerning registration under section 12AA and recognition under section 80G, the matter was remanded to the authority for reevaluation, ensuring compliance with the principles of natural justice. The appeal was allowed for statistical purposes.

In conclusion, both appeals by the assessee were allowed for statistical purposes, with the Tribunal emphasizing the importance of complying with statutory requirements and principles of natural justice in matters related to registration and exemption under the Income Tax Act.