Rejection of Trust’s Registration u/s 12AB Due to Insufficient Activities: ITAT Grants Another Opportunity to Present Case [Read Order]

The Bangalore Bench of Income Tax Appellate Tribunal(ITAT) granted another opportunity to the assessee to present its case before the Commissioner of Income Tax(Exemption)[CIT(E)] after its registration under Section 12AB of the Income Tax Act,1961 was rejected due to insufficient activities.

M.V. Karmari Charitable Trust,appellant-assessee,applied for registration under section 12AB of the Act on 20.5.2023. The case was assigned to the jurisdictional Assessing Officer(AO) for verification, and the assessee was given a chance to be heard by both the AO and the Commissioner, CIT (E). Upon reviewing the financials, it was found that the assessee had not shown enough activity related to its objectives. As a result, the application for registration was rejected by the CIT (E).

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The assessee filed an appeal against the order of the CIT(E) dated 12.10.2023. The assessee’s counsel argued that the CIT(E) contradicted himself by stating both a lack of substantial activity and the absence of charitable activity as reasons for rejecting the registration.

The counsel claimed the rejection was made without proper consideration. It also explained that the trust's author, being over 82 years old and with limited access to email, believed the registration renewal was only required after three years, which led to improper representation before the AO and the CIT(E).

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A delay of 338 days in filing the appeal was reported by the assessee, instead of the 368 days mentioned in the condonation application. The tribunal reviewed the application and affidavit and found the explanation reasonable, with no malafide intention behind the delay.

Citing principles from the Collector, Land Acquisition v. Mst. Katiji case, the tribunal noted that substantial justice should be prioritized over technicalities. It concluded that refusing to condone the delay would legalize an unjust order. Therefore, the 338-day delay was condoned, and the appeal was accepted for adjudication.

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The two member bench comprising Keshav Dubey(Judicial Member) and Waseem Ahmed(Accountant Member) heard both sides and reviewed the records. The assessee counsel explained that the trust’s author, being over 82 years old with limited email access, and the lack of staff to handle administrative tasks, caused difficulties in presenting the case properly.

Read More: Cancellation of Registration of Trust u/s 12 AB of Income Tax Act due to Failure of Assessee to Furnish Genuiness of Activities: ITAT orders Re-Adjudication

The tribunal decided to grant the assessee another opportunity to present its case before the CIT(E). The assessee was asked to submit all necessary documents, including bye-laws, activity reports, audit reports, and financials, as required. It also ensured the assessee would be given a fair chance to be heard before the CIT(E) made a decision.

In short,the appeal filed by the assessee was partly allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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