2021 (5) TMI 357 - AT - Income Tax

Grant of registration u/s. 12AA and 80-G denied - absence of any charitable activities - HELD THAT - Commissioner failed to decide the application for registration u/s 12A the Act in its right perspective in the absence of proper pleadings, information, documents and satisfaction, whereas while deciding the Application u/s 80G of the Act correctly held that before granting approval u/s 80G, it is mandatory that the Assessee should have 12A registration. Appellant/Trust had reasonable and bonafide cause for not joining the proceedings before the ld. Commissioner due to Covid-19 pandemic in the months of May, July and September of 2020 when the Applications U/s 12A of the Act were filed and considered, because at that particular point of time, the entire nation was on hold and therefore the Appellant failed to avail the opportunities to satisfy the Ld. Commissioner qua objects and charitable activities of the Trust and further failed to plead and establish its case in proper manner. Considering the peculiar facts and circumstances, we deem it appropriate to set aside the impugned orders and to remand back the cases to the file of ld. Commissioner for decision afresh on merits - Appeals filed by the Appellant stands allowed for statistical purpose.

Summary

Issues:
1. Rejection of registration under sections 12A and 80G of the Income Tax Act, 1961.
2. Failure to comply with submission requirements.
3. Impact of Covid-19 pandemic on proceedings.
4. Decision to set aside and remand the case for fresh consideration.

Detailed Analysis:
1. The appeals were filed by the Assessee against the orders dated 19/09/2020 passed by the ld. Commissioner of Income Tax (Exemption) rejecting the applications for registration under sections 12A and 80G of the Income Tax Act, 1961. The Commissioner held that in the absence of proper pleadings, information, and charitable activities, the Assessee was not fit for registration under these sections. It was emphasized that for approval under section 80G, registration under section 12A is mandatory.

2. The Appellant failed to comply with submission requirements despite multiple notices. The Appellant was asked to produce the original Memorandum of Association (MOA)/Trust Deed and furnish a detailed reply on specific points, which remained un-complied. Subsequent notices were also ignored, leading to the rejection of the applications by the Commissioner.

3. The Tribunal acknowledged the impact of the Covid-19 pandemic on the Appellant's ability to participate in the proceedings before the Commissioner. It was noted that due to the pandemic, the Appellant had reasonable cause for not joining the proceedings in May, July, and September of 2020. The Tribunal considered this as a valid reason for the Appellant's failure to satisfy the Commissioner regarding the objects and charitable activities of the Trust.

4. In light of the above considerations, the Tribunal set aside the impugned orders and remanded the cases back to the file of the ld. Commissioner for a fresh decision on merits. The Tribunal emphasized the need to afford the Appellant reasonable opportunities to be heard and present its case properly. As a result, the appeals filed by the Appellant were allowed for statistical purposes.

This judgment highlights the importance of compliance with submission requirements, the impact of external factors such as the Covid-19 pandemic on legal proceedings, and the need for proper consideration of merits in registration applications under the Income Tax Act.