ITAT Sets Aside Rejection of Section 12AB Registration to Charitable Trust Due to Non-Service of Order: Appeal Allowed for Statistical Purposes with Fresh Opportunity to Present Evidence [Read Order]

The Nagpur Bench of the Income Tax Appellate Tribunal (ITAT) has provided relief to Bhartiya Sadvichar Prasarak Mandal, a public charitable trust based in Chandrapur, by setting aside the rejection of its application under section 12AB of the Income Tax Act, 1961. The Tribunal allowed the appeal for statistical purposes and directed the Commissioner of Income Tax (Exemption), Pune [CIT(E)], to reconsider the matter afresh after providing the assessee with a reasonable opportunity to be heard.

The order came in response to an appeal filed by the trust challenging the rejection of its application for registration under section 12AB, a prerequisite for availing tax exemption benefits granted to charitable institutions under the Income Tax Act.

Step by Step Guidance for Tax Audit & E-filing, Click Here

The appellant trust had filed an application in Form 10AB under section 12A(1)(ac)(iii) of the Act seeking regular registration. The Office of the CIT(E), Pune, processed the application. However, it was rejected because the assessee failed to comply with multiple notices requesting specific documents and information regarding the genuineness of its activities and its compliance with other legal obligations.

The Revenue contended that two separate notices had been sent via the ITBA e-portal, seeking details such as the commencement date of activities, provisional registration status, trustee identity proofs, list of donors, compliance under other applicable laws, and financial information. Despite the notices being served through the portal and email, the assessee allegedly did not respond, leading the CIT(E) to conclude that the trust had failed to substantiate the genuineness of its activities.

The assessee appeared before the Tribunal through its authorised representative, who also sought condonation of a delay of 486 days in filing the appeal. An affidavit stated that the trust was unaware of the rejection order, as no physical copy or electronic communication had been received. The trust only became aware of the order on 31 January 2024, after logging into the Income Tax e-filing portal upon receiving a different message from the Department.

Get a Complete Kit of Essential Books for Daily Practice, Click Here

After reviewing the affidavit, the tribunal held that the delay was unintentional and did not reflect any mala fide intention on the part of the assessee. Accordingly, the delay was condoned.

The bench, comprising Shri V. Durga Rao (Judicial Member) and Shri K.M. Roy (Accountant Member), noted that although the CIT(E) had provided sufficient opportunity through electronic means, the assessee may have remained unaware due to procedural limitations.

The Tribunal observed that it is incomprehensible that the Trust has no provisional registration, and the application is rejected at the very onset. It was held that these small trusts are in a transition phase of the faceless registration regime, and, in the fitness of things, they may be given one more opportunity.

Accordingly, the ITAT set aside the impugned order and remanded the matter to the file of CIT(E), Pune, with instructions to re-adjudicate the application on merits, after giving the assessee a fresh opportunity to submit the required information and be heard.

To Read the full text of the Order CLICK HERE

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