ITAT Sets Aside Rejection of 12A Application: Trust Gets Another Chance to Prove Genuineness [Read Order]

Gramya Vikas Pratishthan Koba is a charitable trust registered under the Bombay Public Trusts Act, 1950, with its formation dating back to July 21, 1972. Over the decades, it has operated as a public-spirited entity, holding valid registration under Sections 12A and 80G of the Income Tax Act, and filing returns of income regularly. However, with the introduction of new compliance mandates under Section 12A(1)(ac), it became necessary for trusts to reapply for registration under the amended regime.

Accordingly, the trust filed its re-registration application in Form 10A on 16 February 2023. Following this, the CIT(E) issued notices on 25 July 2024 and 13 September 2024, calling for supporting documents to verify the genuineness of the trust's activities. However, due to non-compliance with these notices, the CIT(E) proceeded to reject the application and cancelled the provisional registration that had been granted earlier.

Aggrieved by this order, the trust filed an appeal before the ITAT. During the hearing, the Authorised Representative (AR) submitted that the non-response to the notices was unintentional. He explained that the trustees and staff, particularly the aged Accountant (74 years old), were not conversant with the digital modes of communication required under the reformed application system.

The AR emphasised that the trust had been active and compliant for decades, and there was no mala fide intent or deliberate disregard of the law. The lapse, according to him, was purely a procedural matter. He requested that the Tribunal direct the CIT(E) to provide another opportunity to furnish the necessary documents for the registration process.

The Departmental Representative (DR) did not object to the request for a remand. Recognising this, the Tribunal took into account both the procedural evolution under the new regulatory environment and the established track record of the assessee.

The bench, comprising Sanjay Garg(Judicial Member) and Makarand V. Mahadeokar (Accountant Member), observed that the rejection came solely from non-compliance with the notices issued and did not involve any substantial inquiry into the genuineness of the trust’s activities. Furthermore, the Tribunal ruled that the failure to respond to the notices could not be considered willful negligence, particularly given the explanation provided, which was rooted in practical difficulties.

The Tribunal set aside the order of the CIT(E) and restored the matter for reconsideration. The CIT(E) was directed to grant a reasonable opportunity to the trust to furnish the documents required for the registration process. The Tribunal also reminded the assessee to cooperate fully and ensure compliance with procedural mandates, including Rule 17A of the Income Tax Rules, 1962. As a result, the appeal was allowed for statistical purposes.

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