2025 (3) TMI 1366 - AT - Income Tax

Rejection of application for registration in Form No.10AB under clause (iii) of section 12A(1)(ac) and application for approval in Form No.10AB under clause (iii) of first proviso to sub-section (5) of section 80G - HELD THAT - We find that admittedly the assessee made compliance to the initial notice issued by Ld. CIT Exemption Pune but the subsequent notice could not be answered by him. It is the sole contention of Ld. AR that if the assessee has not furnished requisite information/documents on the requisite date one further opportunity should have been provided to him by Ld. CIT Exemption Pune. It was further submitted that somehow the notice was missed the assessee could not respond in time. We find some force in the arguments of Ld. AR therefore considering the totality of the facts of the case in the interest of justice and without going into the merits of the case we deem it appropriate to set-aside the order passed by Ld. CIT Exemption Pune and remand the matter back to him with a direction to give one more opportunity to the assessee to file the requisite details and decide the application for registration afresh as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to comply with the notices issued by Ld. CIT Exemption Pune and produce requisite documents/information in support of the application for registration without taking any adjournment under any pretext otherwise Ld. CIT Exemption Pune shall be at liberty to pass appropriate order as per law. Thus the grounds of appeal raised by the assessee are partly allowed.

ISSUES PRESENTED and CONSIDERED

The legal questions considered in this judgment are:

Whether the rejection of the application for registration under section 12AB of the Income Tax Act by the CIT, Exemption, Pune was justified.
Whether the denial of approval under section 80G(5) of the Income Tax Act by the CIT, Exemption, Pune was appropriate, given the circumstances.
Whether the assessee was afforded adequate opportunity to present their case and furnish the necessary information as required by the CIT, Exemption, Pune.

ISSUE-WISE DETAILED ANALYSIS

1. Rejection of Application for Registration under Section 12AB

Relevant Legal Framework and Precedents: Section 12AB of the Income Tax Act deals with the registration of trusts and institutions. It requires the CIT to verify the genuineness of the activities and compliance with applicable laws.
Court's Interpretation and Reasoning: The Tribunal noted that the assessee had initially complied with the notice issued by the CIT, Exemption, Pune. However, the subsequent notice was not responded to by the assessee. The Tribunal found merit in the assessee's argument that an additional opportunity should have been provided, especially since the notice was missed inadvertently.
Key Evidence and Findings: The Tribunal acknowledged that the assessee had responded to the initial notice but failed to respond to the subsequent one due to oversight. The Tribunal emphasized the importance of providing a fair opportunity to the assessee to present the necessary documents.
Application of Law to Facts: The Tribunal applied the principles of natural justice, which require that parties be given a fair chance to present their case. The Tribunal decided that the CIT, Exemption, Pune should have provided another opportunity for the assessee to submit the required information.
Treatment of Competing Arguments: The Tribunal considered the Revenue's argument for upholding the CIT's decision but found the assessee's request for another opportunity more compelling in the interest of justice.
Conclusions: The Tribunal set aside the order of the CIT, Exemption, Pune and remanded the matter for reconsideration, directing the CIT to provide the assessee with another opportunity to furnish the requisite details.

2. Denial of Approval under Section 80G(5)

Relevant Legal Framework and Precedents: Section 80G(5) pertains to the approval of institutions for donations to be eligible for deductions. This approval is contingent upon the institution's registration under section 12AB.
Court's Interpretation and Reasoning: The Tribunal noted that since the issue of registration under section 12AB was being remanded for fresh adjudication, the matter of approval under section 80G(5) should also be reconsidered.
Key Evidence and Findings: The Tribunal did not delve into specific evidence for this issue, as it was deemed consequential to the registration under section 12AB.
Application of Law to Facts: The Tribunal applied the principle that the approval under section 80G(5) is dependent on the registration under section 12AB. Therefore, both issues should be adjudicated together.
Treatment of Competing Arguments: The Tribunal did not specifically address competing arguments for this issue, as it was directly linked to the outcome of the section 12AB registration.
Conclusions: The Tribunal remanded the issue of approval under section 80G(5) to the CIT, Exemption, Pune for fresh consideration alongside the section 12AB registration.

SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal emphasized the importance of natural justice and the need to provide adequate opportunity to the assessee to present their case. It highlighted that procedural fairness is crucial in adjudicating applications for registration and approval under tax laws.
Final Determinations on Each Issue: The Tribunal set aside the orders of the CIT, Exemption, Pune regarding both the registration under section 12AB and the approval under section 80G(5). It remanded both issues for fresh adjudication, directing the CIT to provide the assessee with a reasonable opportunity to submit the required information.

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