ITAT Restores Trust’s 12A Registration, Imposes ₹2,500 Cost on CA for Negligence [Read Order]

In a recent judgment, the Pune bench of the Income Tax Appellate Tribunal (ITAT) restored an application for registration under Section 12A of the Income Tax Act, 1961 of a Trust, while imposing a ₹2,500 cost for the negligence of the Chartered Accountant’s (CA) in ensuring compliance.

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Godavari Shikshan Mandal (assessee), a trust, applied for its registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, on 02.04.2024. The Commissioner of Income Tax (Exemption) ( CIT(E) ), while reviewing the documents of the trust, found some discrepancies and issued notices repeatedly seeking compliance proofs. But the assessee failed to respond to the statutory notices on time.

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The CIT(E) thus rejected the registration application and cancelled the provisional registration of the trust.

Aggrieved by the CIT(E)’s order, the assessee appealed before the tribunal, seeking a remand to submit the pending documents.

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Charuhas D. Upasani, the counsel appearing on behalf of the assessee, argued that the non-compliance was due to the CA’s preoccupation and requested a final opportunity to file documents. They stressed that the trust had complied with laws for decades and deserved a merit-based review.

Meanwhile, M.M. Chate, the counsel representing the revenue, opposed the plea, highlighting that the trust’s secretary was a CA and should have ensured compliance. They urged dismissal, citing persistent defaults, and demanded costs for wasting judicial time.

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After hearing both sides, the bench led by Astha Chandra (Judicial Member) and R. K. Panda (Vice President) observed that the CIT(E) had given necessary time for the assessee, yet they still failed to submit relevant documents. However, in the interest of justice, the bench restored the matter to the CIT(E), directing the assessee to submit documents without adjournments. The tribunal also imposed a ₹2,500 cost for negligence, noting the secretary’s CA qualification.

To Read the full text of the Order CLICK HERE

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