ITAT slams Tax Dept for Negligence in Maintaining Records, says Assessee can’t be Penalized for such Mistakes [Read Order]

While granting section 12A registration to a Trust, the Pune bench of the Income Tax Appellate Tribunal ( ITAT ) has criticized the income tax department for its negligence in keeping records.

The assessee, a trust has been getting exemption under section 80G of the Act on a regular basis as per its application for renewal from 1986 till 2007. The Revenue Authorities have always renewed the exemption for the assessee’s trust under Section 80G of the Income Tax Act.

The assessee applied for registration under section 12A of the Income Tax Act and exemption under section 80G of the Act on 12.08.1986 onwards. From that time onwards, there has been a constant renewal of exemption under section 80G of the Act.

In the year 2016, the department refused to grant an exemption under section 11 of the Act to the assessee on the ground that they were not able to produce registration certificate under section 12A of the Act.

The assessee on its own has made constant efforts to obtain such a copy of the registration certificate from the Department and have even applied through RTI application.

The Tribunal noted that the efforts of the assessee did not materialize.

On behalf of the department, no evidence was produced to show that the assessee trust was not registered under section 12A of the Act.

“The action of the Revenue granting constant renewal u/s.80G of the Act from time and again itself shows that the Revenue never doubted the registration u/s.12A of the Act for the assessee trust since one of the essential criteria for granting renewal of exemption u/s. 80G of the Act is that the Trust or Society must be registered u/s.12A or 12AA of the Act. The very fact that time and gain, the exemption was granted to the assessee trust itself shows that Revenue has agreed to the fact that trust is registered u/s.12A of the Act. Just because documentary evidence was not furnished by the assessee cannot be the ground for denying exemption u/s.11 of the Act to the assessee,” the Tribunal said.

While concluding the matter, the Tribunal added that “reverting to the facts of the present case, the assessee trust has made ample efforts for procuring information from the Department regarding the duplicate copy of registration certificate. The Department was not able to provide any copy of the registration certificate. This demonstrates that the process of maintaining the record in the Department is not proper and appropriate for which bonafide assessee cannot be penalized. Furthermore, Revenue has accepted that the assessee-trust is registered u/s.12A of the Act since all these years they have granted 80G renewal to the assessee trust and this fact is not disputed by the Department.”