Failure to Consider Submitted Documents for Trust Registration: ITAT Remands with One More Opportunity [Read Order]

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the order of the Commissioner of Income Tax (Exemptions) [CIT(E)], which cancelled the registration under Section 12AB of the Income Tax Act, 1961, and remanded the matter for fresh adjudication.

Kodavaame (assessee) a trust applied for registration under Section 12AB through Form 10AB on 29.06.2024. The CIT(E) assigned the case to the Jurisdictional Assessing Officer (JAO) for verification, who issued multiple notices requesting documents to verify the genuineness of the trust’s activities and compliance with relevant laws. The CIT(E) alleged that the assessee failed to respond to these notices or submit the required documents.

The CIT(E) rejected the application and cancelled the registration under Section12AB of the Income Tax Act. The CIT(E) also cancelled the approval under section 80G. Aggrieved by the orders of the CIT(E), the assessee filed an appeal to the ITAT.

The assessee argued that the CIT(E)’s allegation of non-response was incorrect. The assessee’s auditor had visited the CIT(E)’s office and sought time until 03.12.2024 to submit the documents.

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The assessee submitted the required documents online in parts on 03.12.2024, as advised by the CIT(E) that soft copy submissions were sufficient. The assessee submitted that the CIT(E) passed the rejection order on the same day without considering the submitted documents.

The assessee further contended that they visited the department on 05.12.2024 with physical copies of the documents, but the CIT(E) refused to accept them, citing the already passed rejection order.

The two-member bench comprising Shri Laxmi Prasad Sahu (Accountant Member) and Shri Keshav Dubey (Judicial Member) observed that the assessee had submitted the required documents on 03.12.2024, as evidenced by the partial responses uploaded online.

The tribunal observed that the CIT(E) failed to consider these submissions before passing the rejection order. The tribunal held that, in the interest of justice and fair play, the assessee deserved another opportunity to present the case.

The tribunal remanded the matter to the CIT(E) for fresh consideration and also directed that a reasonable opportunity of being heard be granted to the assessee. The tribunal also instructed the assessee to submit all necessary documents, financials, and reports promptly and avoid unnecessary adjournments.

The tribunal applied the same reasoning to the cancellation of approval under Section 80G, remanding that matter to the CIT(E) as well. The appeals of the assessee were partly allowed for statistical purposes.

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