CIT(E) Cannot Reject 12AB & 80G Income Tax Exemption Applications without Considering Compliance Documents: ITAT [Read Order]
The Tribunal emphasised that a rejection on the ground of “non-compliance” cannot stand where the assessee has submitted the requisite material within time.
The Ahmedabad Benchof the Income Tax Appellate Tribunal in a recent case held that the Commissioner of Income Tax (Exemption) had erred in rejecting renewal applications under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii) filed by a charitable trust without considering compliance documents filed by the trust, and accordingly remanded the matters for fresh adjudication.
The facts pertain to Apna Charitable Trust (Apna Trust) - a public charitable trust that runs hospital and pharmacy units. Apna Trust held provisional registration under Section 12A(1) from April 7, 2022 until AY 2024–25 and had filed renewal applications for registration and 80G approval through Form 10AB.
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The CIT(E) issued questionnaires to Apna Trust in July and August 2024 and fixed August 21, 2024 as the cut-off date for submissions. Apna Trust filed a comprehensive reply on August 21, 2024 enclosing the trust deed, audited financial statements (FY 2020–21 to 2022–23), Form 10B audit reports, donation particulars, bank statements and identity proofs of trustees.
However, the CIT(E) failed to consider these materials and issued separate rejection orders dated September 2 and September 3, 2024 citing non-compliance by the Trust.
Before the ITAT, Apna Trust, represented by B.T. Thakkar, submitted that all documents were filed on August 21, 2024 and were acknowledged by the department and therefore the adverse orders were passed without examination of the record. It was further requested that the matter be restored to the file of the CIT(E).
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Departmental Representative V. Nandakumar did not raise any objections to restoring the matters to the file of the CIT(E) for fresh consideration.
A Bench of Suchitra Kamble, Judicial Member and Makarand V. Mahadeokar, Accountant Member observed that the record establishes timely compliance by the trust and that rejection on the basis of non-compliance without examining the submissions violated principles of natural justice.
Accordingly, the Tribunal set aside both the impugned orders and vitiated the revenue’s arguments of non-compliance, and restored the matters back to the file of the CIT(E) and directed fresh adjudication after affording the assessee an opportunity of hearing.
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