ITAT Directs Reconsideration of School's Tax Exemption Denial, Cites Lack of Proper Hearing [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune Bench, has set aside an order passed by the Commissioner of Income Tax (Exemption), Pune, which had denied tax exemption registration under Section 12AA of the Income Tax Act, 1961.

The petitioner, Shaan Education Society, runs Guardian School in Pune and is registered under the Maharashtra Public Trusts Act, 1950. It filed an application on 29 March 2024 in Form 10AB seeking regular registration under clause (iii) of Section 12A(1)(ac) of the Income Tax Act. The trust had previously been granted provisional registration. To verify the genuineness of its activities, the Commissioner issued a notice through the ITBA portal on 24 May 2024, in response to which the trust submitted the required documents and details.

How to Audit Public Charitable Trusts under the Income Tax Act Click Here

However, on 13 September 2024, a second notice was issued by the CIT (Exemption), pointing out certain discrepancies in the documents submitted earlier. The trust did not respond to this follow-up notice. Subsequently, without further communication or a hearing opportunity, the Commissioner passed an order rejecting the application for regular registration and also cancelled the provisional registration earlier granted to the trust.

Challenging this decision, the trust approached the Tribunal, arguing that it had complied with the first notice and submitted key documents, including the registration certificate, trust deed, and memorandum of association. It further submitted that the Commissioner failed to consider these documents and dismissed the application without providing a reasonable opportunity for further explanation.

After hearing both parties and examining the case file, the Tribunal held that in the interest of justice, the trust should be given another opportunity to present its case and address the alleged discrepancies. It remanded the matter back to the file of the CIT (Exemption), directing that a fresh order be passed after giving the trust sufficient opportunity to be heard.

Want a deeper insight into the Income Tax Bill, 2025? Click here

The order was delivered by the Bench comprising Dr. Manish Borad (Accountant Member) and  Astha Chandra (Judicial Member). The appeal was allowed for statistical purposes.

In conclusion, the Tribunal has remitted the matter back to the CIT (Exemption) for fresh consideration, observing that the applicant trust was not afforded a fair and adequate opportunity to be heard.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates