ITAT Grants Relief in Trust Registration Case Despite Procedural Defaults, Subject to Conditions [Read Order]

In a recent decision, the Surat bench of the Income Tax Appellate Tribunal (ITAT) overturned a decision by the Commissioner of Income Tax (Exemption) ( CIT(E) ) that canceled  the Appellant-Assessee trust's registration, despite the trust's delay in submitting the required documents.

Surat Sewa Foundations, the assessee trust, has already been provisionally registered under the Income Tax Act of 1961. The trust was then directed to submit the necessary documents to the CIT(E) to prove its genuineness and activities.

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CIT(E) sent frequent notices directing the assessee to furnish relevant documents. However, the assessee failed to submit the documents and never sought any adjournments.

CIT(E) thus issued an ex parte order rejecting the assessee's application for registration under section 12A(1)(ab)(ii) of the Income Tax Act, 1961, and canceling the trust's provisional registration under section 80G of the Act.

Aggrieved by the order, the assessee moved before the tribunal.

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The assessee's counsel, Nilisha Shah, argued that the assessee failed to submit necessary documents due to the trust's ongoing construction and that the assessee has yet to start the business. The counsel submitted relevant documents before the tribunal, which include the Memorandum of Association, Articles of Association, financial statements, details of the Board of Directors, etc.

The counsel, by submitting these documents, argued that CIT(E) passed the order without considering the merits of the case and by violating the principles of natural justice. The counsel thus requested the tribunal to grant one more chance by setting aside the order.

Meanwhile, the department’s counsel, Ravi Kant Gupta, did not object to the assessee’s request.

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After hearing both parties, the bench headed by Pawan Singh (Judicial Member) and  Bijayananda Pruseth (Accountant Member) noted that the assessee had failed to submit the requisite documents within the stipulated time, despite being given several chances by the CIT(E).

However, in the interest of justice, the Tribunal granted the assessee another opportunity by remanding the matter to the CIT(E), subject to the condition that a cost of ₹10,000 be paid to the Gujarat High Court Legal Aid Authority within two weeks

To Read the full text of the Order CLICK HERE

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