2021 (4) TMI 111 - AT - Income Tax

Grant of registration u/s 12AA - Exemption u/s 11 - absence of submission of requisite details during the proceedings - HELD THAT - As assessee is stated to be engaged in educational activities. As registered with Charity Commissioner. We find that ld. CIT(Exemption) has rejected application of the assessee for grant of registration in the absence of details, which he sought from the assessee for consideration of application for registration. Before us, the assessee has filed a paper book containing copies of trust deed, books accounts, auditor's report etc. It has also filed an affidavit duly sworn in by Shri Manharsinh Prabhatsingh Zala, Trustee of the assessee-trust, deposing therein the reasons for non-submissions of requisite details called for by the department for proceedings under section 12AA. It seems to us that upto the date of hearing, the assessee did not file the details. CIT has given opportunity upto 19.7.2018. Though the action of the ld. CIT in rejecting the application of the assessee may be justified to some extent, but looking to the reasons narrated by the trustee of the assessee-trust in his affidavit dated 9.2.2021 placed on record i.e. non-cooperation of its accountant who is looking after accounting and other related work of the Trust in timely submission of requisite details before the ld. CIT(E) during 12AA proceedings, little leniency for larger interest of justice is to be shown to the assessee, which is a trust said to be engaged in educational activities and providing medical relief to the needy sections of the society. Assessee should be given one more opportunity to support its case, and therefore, in the interest of justice, we set aside the impugned order and restore the issue back to the file of the CIT(E) for reconsideration of its application for registration after providing reasonable opportunity to the assessee. Assessee is also directed to cooperate and ensure timely submission of details/clarifications as and when called for by the CIT (Exemptions). We accordingly allow grounds of appeal of the assessee for statistical purpose.

Summary

Issues:
- Rejection of application for registration under section 12AA due to non-submission of requisite details.

Analysis:
The judgment pertains to an appeal against the order of the ld. CIT(Exemptions) rejecting the application for registration under section 12AA of the Income Tax Act, 1961. The sole issue raised was the rejection of the application due to the absence of necessary details during the proceedings.

The assessee, a trust engaged in educational and medical relief activities, had initially filed the registration application along with the required documents. However, upon receiving a letter from the Department requesting additional details, the assessee failed to comply, leading to the rejection of the application by the ld. CIT(E).

During the appeal, the assessee presented a paper book with relevant documents, attributing the non-submission of details to the negligent behavior of the accountant responsible for handling the matter. The trustee of the trust explained the situation in an affidavit, highlighting the accountant's failure to provide the necessary information to the consultant chartered accountant for submission to the ld. CIT(Exemption).

After considering the submissions, the Tribunal acknowledged the reasons provided by the trustee for the non-compliance and decided to grant the assessee another opportunity to furnish the required details. Despite justifying the ld. CIT's initial decision to some extent, the Tribunal emphasized the importance of leniency in the interest of justice, especially for a trust engaged in beneficial activities for society.

Therefore, the Tribunal set aside the earlier order, directing the ld. CIT(E) to reconsider the application for registration after affording the assessee a reasonable opportunity. The assessee was instructed to ensure timely submission of details as requested by the CIT (Exemptions). The appeal was allowed for statistical purposes, and the decision was pronounced in court on 25th March 2021 in Ahmedabad.