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2025 (6) TMI 50 - AT - Income TaxDenial of registration u/s 12AB - rejecting that application CIT(E) observed that the assessee has not submitted legible copy of trust deed and noted that the application moved registration u/s 12AB was not complete and the assessee and the required registration of the trust under the Rajasthan Public Trust Act 1959 was not submitted HELD THAT - First is non submission of legible copy of trust deed for which the assessee assured the same will be submitted and that reasons so advanced is curable. Assessee also submitted that since the registration under the RPT Act is under finalization and reasons for incomplete details in Form no. 10AB are also curable reasons as the assessee - applicant will submit the copy of registration certificate and completed form in physical to the file of the CIT(E) if the matter is remanded back to the file of the CIT(E). So far as the last reasons assessee submitted that the required details are available but due to short time they could not be submitted before the ld. CIT(E). Therefore considering the reasons advanced being curable in nature we are of the considered view that the assessee applicant needs one chance to contest the merits of the dispute. Based on the overall facts as discussed herein above bench adopt a lenient view and feels that the assessee should be given one more chance to advance documents before the ld. CIT(E) as to the application for registration u/s 12AB of the Act. Matter is restored to the file of ld. CIT(E) for afresh adjudication by providing by adequate opportunities of being heard to the assessee with regard to the registrations of the trust u/s 12AB of the Act. Thus the appeal of the assessee is allowed for statistical purposes.
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: Validity and Lawfulness of the Rejection Orders under Sections 12AB and 80G Relevant Legal Framework and Precedents: Section 12AB of the Income Tax Act mandates registration of charitable trusts for exemption purposes. Section 80G provides for approval of donations to such trusts for tax deduction purposes. The CIT(E) must ensure compliance with procedural and substantive requirements before granting registration or approval. Principles of natural justice require adequate and reasonable opportunity of hearing before adverse orders are passed. Court's Interpretation and Reasoning: The CIT(E) rejected the registration application under section 12AB primarily on four grounds: non-submission of a legible copy of the trust deed, incomplete Form 10AB, absence of registration certificate under the RPT Act, and failure to submit details evidencing genuineness of charitable activities, including donor lists, vouchers, photographs, bank account details, and social media presence. The CIT(E) consequently rejected approval under section 80G, as such approval is contingent on registration under section 12AB. Key Evidence and Findings: The assessee failed to submit a legible trust deed and complete Form 10AB within the time allowed. The registration certificate under the RPT Act was pending. The assessee also did not provide requisite details evidencing genuineness of activities. Application of Law to Facts: The CIT(E)'s rejection was based on non-compliance with statutory requirements and failure to establish genuineness of activities, which are essential for registration and approval. Treatment of Competing Arguments: The assessee contended that the deficiencies were curable and arose due to limited time and procedural delays, including ongoing registration under the RPT Act. The assessee sought additional opportunity to submit the required documents and details. Conclusions: The Tribunal recognized that the reasons for rejection were curable and that the assessee should be given an opportunity to remedy the defects. It held that the assessee deserves one more chance to contest the merits of the dispute by submitting the required documents and details. Issue 2: Adequacy of Opportunity of Hearing and Jurisdictional Validity of the Impugned Orders Relevant Legal Framework and Precedents: Natural justice principles require that an assessee be given adequate and reasonable opportunity to present its case before adverse orders are passed. Jurisdictional validity requires that the authority act within the scope of its powers under the Act. Court's Interpretation and Reasoning: The assessee argued that the CIT(E) did not provide adequate opportunity to submit legible trust deed and other documents, resulting in an order passed without proper hearing. The Tribunal observed that only three opportunities were granted, which was insufficient given the circumstances. Key Evidence and Findings: The assessee's counsel assured submission of the legible trust deed, completed Form 10AB, and registration certificate under the RPT Act if the matter was remanded. Application of Law to Facts: The Tribunal found that the procedural deficiencies could be cured and that the assessee was entitled to adequate opportunity to present its case. The rejection orders were therefore premature and liable to be set aside. Treatment of Competing Arguments: The revenue did not object to the remand but relied on the findings of the CIT(E). The Tribunal favored the assessee's request for remand in the interest of justice. Conclusions: The Tribunal concluded that the CIT(E) should provide adequate opportunities of hearing and fresh adjudication on the applications under sections 12AB and 80G. Issue 3: Condonation of Delay in Filing Appeals Relevant Legal Framework and Precedents: Section 5 of the Limitation Act, 1963 empowers courts to condone delay if sufficient cause is shown. The Supreme Court has repeatedly emphasized a liberal approach to condonation of delay to ensure substantial justice, as seen in cases such as Collector, Land & Acquisition v. Mst. Katiji and Vedbai v. Shantaram Baburam Patil. Court's Interpretation and Reasoning: The appeals were filed with a delay of 33 days. The assessee explained that the delay was due to non-regular checking of the email ID where the order was communicated, and lack of awareness of the order until the CA discovered it upon portal scrutiny. The Tribunal noted the binding precedents advocating liberal construction of "sufficient cause" and the importance of advancing substantial justice. Key Evidence and Findings: The assessee submitted a detailed prayer for condonation of delay supported by an affidavit from a trustee. The reasons were accepted as sufficient cause. Application of Law to Facts: The Tribunal applied the principle that the cause for delay, rather than the length of delay, is determinative. The assessee's explanation was found to fall within "sufficient cause." Treatment of Competing Arguments: The revenue argued that engagement of counsel negated the reasonableness of delay but did not dispute the facts. The Tribunal gave precedence to the liberal judicial approach. Conclusions: The delay in filing the appeals was condoned in the interest of justice. Issue 4: Consequential Effect on Section 80G Approval Relevant Legal Framework and Precedents: Approval under section 80G is contingent upon registration under section 12AB. Without valid registration, approval cannot be granted. Court's Interpretation and Reasoning: Since the registration under section 12AB was rejected, the CIT(E) also rejected approval under section 80G. The Tribunal noted that the outcome of the 80G appeal is consequential to the 12AB appeal. Key Evidence and Findings: The assessee's inability to secure registration under section 12AB led to denial of approval under section 80G. Application of Law to Facts: The Tribunal restored both matters to the CIT(E) for fresh adjudication, implying that if registration is granted on remand, approval under section 80G can be considered accordingly. Treatment of Competing Arguments: The revenue did not oppose remand on this issue. Conclusions: The appeal against rejection of approval under section 80G was restored for fresh consideration following the outcome of registration under section 12AB. 3. SIGNIFICANT HOLDINGS The Tribunal held: "Considering the reasons advanced being curable in nature we are of the considered view that the assessee applicant needs one chance to contest the merits of the dispute." "The matter is restored to the file of ld. CIT(E) for afresh adjudication by providing adequate opportunities of being heard to the assessee with regard to the registrations of the trust u/s 12AB of the Act." "The delay so caused may be condoned in the interest of justice as the cause shown falls within the four corners of 'sufficient cause' irrespective of the length of delay." Core principles established include:
Final determinations on each issue were:
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