CA Led Trust Fails to Respond to Notices; ITAT Grants Final Chance and Imposes ₹2,500 Penalty [Read Order]

The  Income Tax Appellate Tribunal (ITAT), Pune bench imposed a fine of ₹2,500 on a trust led by a Chartered Accountant (CA) for failing to respond to multiple notices regarding the registration of a trust. Despite being given a final chance to submit the necessary documents for trust registration, the delay in compliance resulted in a penalty.

Avishkar Shikshan Sanstha, the assessee, applied for the registration of a trust in Form 10AB under section 12A(1)(ac)(iii) of the Income Tax Act, 1961.

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The Income Tax Department, through the Income Tax Business Application (ITBA) portal, issued a notice directing the assessee to furnish the necessary documents to verify the genuineness and eligibility of the trust.

But the assessee failed to respond to the notices. Later, the Commissioner of Income Tax (Exemption), CIT(E), also granted another opportunity to the assessee to furnish the documents. Despite the repeated notices, the assessee failed to respond to it at all.

Because of the continuous non-compliance with the statutory notices, the department cancelled the provisional registration of the trust and also rejected the request for registration of the trust.

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Aggrieved by the order, the assessee moved to the tribunal for an appeal.

Charuhas D. Upasani, the counsel for the assessee, argued that the CA of the foundation was already preoccupied with many works. The counsel submitted that the assessee is now in a position to submit all the relevant documents before the department. The counsel thereby requested the tribunal to grant one more chance to furnish the details.

Meanwhile, the counsel for the department opposed it. He argued that the assessee had already been given multiple chances and also countered that the secretary of the said foundation was also a CA. The counsel contended that the assessee was well aware of the statutory provisions, and they ignored them.

After hearing both parties, the Tribunal observed that the department had issued multiple notices to the assessee, but no response was furnished. The assessee’s counsel acknowledged this lapse during the proceedings.

However, in the interest of justice, the bench, comprising R. K. Panda (Vice President) and Astha Chandra (Judicial Member), decided to grant the assessee one final opportunity to submit the relevant documents.

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The bench also noted that the secretary of the trust, who had filed the affidavit, was a Chartered Accountant and should have been well aware of the legal obligations. Despite that, there was an undue delay in compliance. Taking a serious view of this, the tribunal imposed a penalty of ₹2,500 and directed the assessee to file the necessary documents without any further delay.

To Read the full text of the Order CLICK HERE

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