The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that registration under Section 12B of Income Tax Act 1961 could not be denied on no-clarification of discrepancies due to non-receipt of notice.
The appellant, Adimata Shakti Pratishthan vide Form No.10AB made an application to the respondent under clause (iii) of Section 12A(1)(ac) of the Income Tax Act thereby seeking regular/final registration under Section 12AB of the Income Tax Act. The afore stated application by the impugned order was rejected by the registering authority CIT(E) for his failure to arrive at positive satisfaction about genuineness of activities of the assessee in the absence of evidence and compliance of discrepancies communicated.
Upon appellants failure to annex required documents as contemplated under rule 17A(2)(k) of Income Tax Rules, the CIT(E) by notice afforded an opportunity to make good the deficiency in the application, the assessee complied accordingly. After considering the submission of the appellant, certain discrepancies were noticed and for the reason by a notice the appellant was again called upon to cure the defects and clarify the discrepancies; however this remained unattended for the good reason of non-receipt of notice by the appellant.
Divyesh Tripati, appeared on behalf of the assessee and Ramnath Murkunde, appeared on behalf of the revenue.
The two-member Bench of Partha Sarathi Choudhury, (Judicial Member) and G.D.Padmahshali,(Accountant Member) observed that the purpose of the provisions for registration of trust under Section 12A/12AB of the Income Tax Act and granting of recognition under Section 80G of the Income Tax Act, derives their spirit from Directive Principles of State Policy enshrined in the Constitution of India. The Govt. of India makes every endeavour to provide welfare to one and all in the society at large, and in view thereof the registration for public charitable trusts were given in order to ensure that through these charitable trusts benefits flows to the entire society, thus the Directive Principles of State Policy are achieved.
These provisions of registration under Section 12A/12AB of the Income Tax Act and granting of recognition under Section 80G of the Income Tax Act enhance socio economic welfare of the society. Furthermore, Income Tax laws were welfare legislations and not penal in nature, therefore, in larger interest of justice with forgoing observations, the Bench was of the considered view that the appellant deserved one more opportunity to make good the defects/shortcomings.
The Bench set aside the impugned order and remitted the matter back to the CIT(E) for de-novo consideration.
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