Failure to respond to notice issued to produce required documents contemplated u/r 17A(2) of IT Rules: ITAT directs re-adjudication [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune bench, held that the assessee failed to respond to the notice issued to produce required documents contemplated under Rule 17A(2) of the Income Tax Rules. Thus, after analyzing the facts, the tribunal directs readjudication by providing an opportunity to the assessee.

The assessee, Mahesh Shikshan Sanstha, filed the appeal against the order of rejection by the Commissioner of Income Tax (Exemption). The assessee filed an application under clause (iii) of section 12A(1)(ac) of the Income Tax Act for seeking regular/final registration under section 12AB of the Act.

During the verification, the assessee failed to produce requisite documents as contemplated under Rule 17A(2) of the Income Tax Rules. Therefore, the CIT(E) issued several notices for submitting the documents in respect of the registration.

However, the assessee did not respond to the notice issued by the CIT(E). Therefore, the CIT(E) rejected the application for his failure to arrive at a positive satisfaction about the genuineness of the activities of the assessee.

Aggrieved, the assessee filed an appeal before the tribunal. After establishing the facts, MK Kulkarni, Assessee Representative, adequately outlined the non-compliance reasons and prayed for one genuine opportunity for resolving the issue. Ramnath Murkunde, Counsel for Revenue, supported the decision of lower authorities.

The bench, during the proceedings, observed that the purpose of the provisions for the registration of trust under Section 12A/12AB and granting of recognition under section 80G of the Act derives their spirit from the Directive Principles of State Policy enshrined in the Constitution of India.

Further, the Government of India makes every endeavor to provide welfare to one and all in the society at large, and in view thereof, the registration for public charitable trusts is given to ensure that benefits flow to the entire society. Thus, the Directive Principles of State Policy are achieved.

After reviewing the facts and records, the two-member bench of G. D. Padmahshali (Accountant Member) and Partha Sarathi Choudhury (Judicial Member) observed that the appellant deserves one more opportunity to rectify the defects/shortcomings. Therefore, the bench remits the matter back to the CIT(E) for de-novo consideration.

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