2024 (9) TMI 268 - AT - Income Tax

Rejection of approval u/s. 80G - application made by the assessee was not within six months prior to expiry of period of the provisional approval or within six months of commencements of its activities whichever is earlier - HELD THAT - Recently CBDT has issued an advisory to relax that situation vide circular no. 07/2024 dated 25.04.2024. Considering that aspect of the matter the assessee could not put on a different situation. Assessee trust was not considered as Genuine - Since on that aspect of the matter where considering the activities of the trust registration u/s. 12AB was granted the recognition u/s. 80G cannot be denied. Noncompliance on the part of the assessee - We note that only two notices were issued and therefore, considering the peculiar set of facts we found force in the arguments of assessee that considering the facts of the case it demands that the same be set aside to the file of the ld. CIT(E) to be decided as fresh. Thus, we do not intend to go into the merit of the case or that of the dispute, but it is imperative that the assessee must be provided adequate opportunity of being heard by the ld. CIT(E) and based on circular of the CBDT the matter require a fresh examination. In this view of the matter, the Bench feels that the assessee should be given one more chance to contest the case before the ld. CIT(E). Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Rejection of approval under Section 80G of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:

The assessee filed an appeal with a delay of 197 days. The reasons for the delay included inadvertent mistakes by the principal trustee, where the appeal documents were misplaced among other papers. The assessee submitted an affidavit explaining the delay and requested condonation. The Revenue objected, arguing that the reasons lacked merit and the appeal should be dismissed. However, the Tribunal noted that courts should adopt a pragmatic approach to advance substantial justice. Considering the affidavits and the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji and Others, the delay was condoned as the assessee was prevented by sufficient cause.

2. Rejection of Approval under Section 80G of the Income Tax Act, 1961:

The assessee's application for approval under Section 80G was rejected by the Commissioner of Income Tax (Exemption) [CIT(E)] due to non-compliance with document submission and doubts about the genuineness of activities. The assessee failed to submit bank statements and audited financial accounts despite multiple notices. The CIT(E) concluded that the genuineness of the assessee's activities could not be determined, leading to the rejection.

The assessee argued that the rejection was unlawful and against natural justice principles, noting that registration under Section 12AB had been granted, indicating genuine activities. The assessee also cited a recent CBDT advisory (Circular No. 07/2024) extending the due date for filing Form No. 10AB, which should apply to their case.

The Tribunal acknowledged the new CBDT circular and found merit in the assessee's argument that the rejection was contradictory given the granted registration under Section 12AB. The Tribunal noted that the assessee was not given sufficient opportunities to comply and decided that the matter required fresh examination by the CIT(E). The Tribunal restored the issue to the CIT(E) for a fresh decision, ensuring the assessee is given adequate opportunity to present relevant documents.

Conclusion:

The appeal was allowed for statistical purposes, with the matter remanded to the CIT(E) for a fresh examination in light of the CBDT circular and ensuring compliance with natural justice principles. The Tribunal clarified that this decision does not reflect on the merits of the dispute, which the CIT(E) should adjudicate independently.