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2025 (5) TMI 1059 - AT - Income TaxDenial of registration sought for u/s 12AB and denied the 80G exemption - CIT(E) has stated that he is unable to come to the conclusion about the genuineness of the trust - HELD THAT - Before the ITAT appellant has stated that the time given to submit all the required details is quite short and the Trust is genuine in all represents and he is entitled for registration u/s 12AB and 80G - As submitted that during the hearing proceedings before the ITAT the Ld. AR of the appellant has stated that if an opportunity is given all the required details would be submitted. Hence it is requested that an opportunity may be given to file all the required details before the CIT(Exemption). After hearing the submission of the appellant Trust and perusing the order of the CIT(Exemption) it is decided that an effective opportunity was not given to the appellant trust with reasonable time to submit all the required details.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Appellate Tribunal (AT) in these appeals are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Denial of registration under section 12AB of the Income-tax Act Relevant legal framework and precedents: Section 12AB mandates registration of trusts or institutions seeking exemption under sections 11 and 12 of the Act. Registration requires the assessing authority to be satisfied about the genuineness of the trust and compliance with its objects. The statutory timeline for disposal of application is prescribed, and the applicant is required to furnish all relevant details and documentary evidence to enable proper scrutiny. Court's interpretation and reasoning: The Ld. CIT(E) issued notices requesting detailed information regarding the trust's activities, including application of funds outside India as per the trust deed's object clause, and details of donations received in FY 2022-23 and 2023-24. The appellant trust failed to furnish the requisite information within the stipulated time, and its request for adjournment was declined due to the statutory deadline of 31.07.2024. Consequently, the Ld. CIT(E) concluded that in the absence of necessary compliance, he was unable to determine the genuineness of the trust and thus rejected the registration application. Key evidence and findings: The appellant trust did not submit the documentary evidence and details requested by the Ld. CIT(E) within the prescribed timeframe. The trust's request for extension was denied on the ground of statutory limitation and the need to conclude on the genuineness of the trust. Application of law to facts: The rejection was premised on the trust's failure to comply with procedural requirements and inability of the authority to verify the trust's bona fides within the statutory time. The statutory framework mandates registration only upon satisfaction of genuineness, which was not possible here due to incomplete submissions. Treatment of competing arguments: The appellant argued that the time given to submit details was very short and requested an opportunity to furnish the required documents. The Ld. Departmental Representative did not oppose this submission before the Tribunal. Conclusions: The Tribunal found that the appellant was not given a reasonable opportunity with adequate time to submit the required details. Therefore, it remitted the matter to the Ld. CIT(E) to consider all submissions afresh and pass a fresh order. Issue 2: Rejection of exemption under section 80G of the Income-tax Act Relevant legal framework and precedents: Section 80G provides exemption for donations made to funds or institutions registered under section 12AB and fulfilling conditions under section 80G(5). Section 80G(5)(iii) requires that funds received by the trust should be applied within India unless otherwise permitted. The exemption is contingent on registration under section 12AB. Court's interpretation and reasoning: The Ld. CIT(E) issued a letter under section 80G(5)(iii) noting that the appellant's funds were applied beyond Indian shores, which is impermissible. The appellant was asked to submit documentary evidence of activities and expenses incurred, as well as details of donations received. Failure to submit these details led to rejection of the application for 80G exemption. Furthermore, since the registration under section 12AB was rejected, the appellant failed to satisfy the eligibility criteria for exemption under section 80G. Key evidence and findings: The appellant did not submit the requested documentary evidence or bank statements within the prescribed time. The rejection of registration under section 12AB directly impacted the eligibility for section 80G exemption. Application of law to facts: The law requires that only registered entities under section 12AB can claim exemption under section 80G. The appellant's failure to secure registration and non-submission of evidence led to the conclusion that the exemption was untenable. Treatment of competing arguments: The appellant contended that the short time frame prevented submission of details and requested an opportunity to furnish the same. The Ld. DR did not dispute this before the Tribunal. Conclusions: The Tribunal held that since the appellant was not afforded a reasonable opportunity to submit evidence, the rejection of exemption under section 80G was premature. The matter was remitted for fresh consideration after allowing the appellant to submit all required details. Issue 3: Adequacy of opportunity to submit details and evidence Relevant legal framework and precedents: Principles of natural justice require that an applicant be given a reasonable and effective opportunity to present its case and submit necessary evidence before adverse orders are passed. The statutory timelines must be balanced against the right to be heard. Court's interpretation and reasoning: The Tribunal observed that the appellant was given a very short time frame to submit voluminous and detailed information, which was not reasonable. The appellant's request for extension was rejected on the basis of statutory limitation, but the Tribunal noted that no effective opportunity was thus provided. Key evidence and findings: The appellant's submissions before the Tribunal included an undertaking to furnish all required documents if given an opportunity. The Ld. DR did not controvert this claim. Application of law to facts: The Tribunal balanced the statutory limitation against the appellant's right to be heard and found that the latter was compromised. Hence, the orders rejecting registration and exemption were set aside and remitted for fresh consideration. Treatment of competing arguments: The Department relied on statutory deadlines to deny extension, while the appellant emphasized the need for a fair opportunity to submit evidence. The Tribunal sided with the appellant on this procedural aspect. Conclusions: The Tribunal directed the Ld. CIT(E) to provide a reasonable opportunity and consider all submissions before passing fresh orders. 3. SIGNIFICANT HOLDINGS The Tribunal's crucial legal reasoning includes the following verbatim excerpts:
Core principles established:
Final determinations on each issue:
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