2022 (2) TMI 814 - AT - Income Tax

Exemption u/s 11 - Non grant of registration u/s.12AA - assessee filed an application in Form No. 10A alongwith the requisite documents - HELD THAT - We observe that in the Ground No. 1 itself, the assessee has admitted the non-compliance of the notices but also stated that assessee is a State Government Organisation and at the time of notices, it was in the process of shifting its office and therefore could not attend the hearing. Having regard to this fact and the consent of Ld. D/R to set aside the matter to CIT(Exemption), we think it appropriate to refer the matter back to the file of Ld. CIT(Exemption) for deciding the matter afresh. CIT(A) shall give an opportunity to the assessee and decide the application on merit after considering the response of assessee.

Summary

Issues:
1. Registration u/s. 12AA not granted by Ld. CIT without considering application and evidences.
2. Non-compliance with notices by the assessee leading to rejection of registration application.

Issue 1 - Registration u/s. 12AA not granted:
The appellant, a society established by the State Govt., applied for registration u/s. 12AA of the Income-tax Act, 1961. However, the Ld. CIT(Exemption) rejected the application citing lack of charity activities, failure to offer profits for taxation, and absence of requisite documents. The appellant contended that it is engaged in promoting vocational education and skill development, with the Governing Board comprising government officials. The Ld. A/R argued that the rejection was solely based on the recommendations of JCIT/AO, without considering the documents submitted with the application. The Ld. A/R asserted that the appellant qualifies for registration u/s. 12AA.

Issue 2 - Non-compliance with notices:
The Ld. CIT(Exemption) rejected the registration application due to the appellant's non-compliance with hearing notices. The appellant admitted the non-attendance, attributing it to the office relocation at the time of the notices. The Ld. D/R argued that the rejection was justified given the non-compliance. However, the Ld. D/R agreed to set aside the matter for fresh consideration by the Ld. CIT(Exemption) with directions for the appellant to comply. The ITAT observed the appellant's explanation for non-attendance and the agreement to set aside the matter, deciding to refer the case back to the Ld. CIT(Exemption) for a fresh decision after giving the appellant an opportunity to be heard and make necessary compliance.

In conclusion, the ITAT allowed the appeal for statistical purposes, directing the Ld. CIT(Exemption) to reconsider the registration application after providing the appellant with an opportunity to present its case and ensure compliance.