Facts of the Case

The assessee, Jovit Helpers Foundation, filed an application seeking registration under Section 12A(1)(ac)(iii) of the Income Tax Act through Form 10AB on 17.09.2023 before the Commissioner of Income Tax (Exemptions).

The purpose of the application was to enable the authorities to verify whether the activities of the trust were genuine and carried out in accordance with its stated objects, as well as to examine compliance with other applicable legal requirements.

During the course of the proceedings, the CIT(E) issued a questionnaire and several reminders seeking relevant documents and details from the assessee. However, according to the CIT(E), the assessee failed to comply with the notices and did not furnish the required information despite being granted multiple opportunities.

In the absence of the necessary submissions and evidences, the CIT(E) concluded that it was not possible to ascertain the genuineness of the activities or verify the objects of the trust. Accordingly, the application for registration under Section 12AB was rejected.

Aggrieved by the rejection order dated 24.01.2024, the assessee preferred an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi.

Issues Involved

  1. Whether the CIT(E) was justified in rejecting the application for registration under Section 12AB on account of non-submission of documents by the assessee.
  2. Whether the assessee should be granted another opportunity to furnish documents and substantiate its claim for registration.

Petitioner’s Arguments

The assessee contended that the rejection of registration by the CIT(E) was not justified considering the circumstances of the case.

It was argued that the assessee was not aware of the requirements and that the notices issued by the department were not received by the assessee, which resulted in non-compliance with the queries raised by the authority.

The assessee therefore requested that the matter be restored to the file of the CIT(E) and that a fresh opportunity be granted to present the required documents and submissions to support the application for registration.

Respondent’s Arguments

The Revenue relied on the order passed by the CIT(E) and submitted that the assessee had failed to comply with the notices issued during the proceedings.

According to the department, multiple opportunities had been granted to the assessee to submit the relevant details and documents, but no response was received. In such circumstances, the CIT(E) had no option but to reject the application due to lack of evidentiary support.

Court Order / Findings

The Income Tax Appellate Tribunal, Delhi Bench, examined the records and considered the submissions made by the Departmental Representative.

The Tribunal noted that the assessee had pleaded that it was not aware of the requirements and that the notices were not received. The assessee had also requested that an opportunity be provided to present its case before the CIT(E).

Upon careful consideration, the Tribunal observed that the interest of justice would be served if the matter is remanded back to the file of the CIT(E).

Accordingly, the Tribunal set aside the impugned order and remanded the matter to the CIT(E) with directions to pass a speaking order after granting adequate opportunity of being heard to the assessee.

Thus, the appeal of the assessee was allowed for statistical purposes.

Important Clarification

The Tribunal did not grant the registration directly. Instead, it restored the matter to the CIT(E) to reconsider the application after providing the assessee with a proper opportunity to submit documents and explain its case.

This decision reinforces the principle that adequate opportunity of hearing must be granted before rejecting applications for trust registration.

 Link to download the order -  https://itat.gov.in/public/files/upload/1735632883-GjMDQr-1-TO.pdf

 

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