Facts of the Case

The assessee, SRJB Memorial Trust, is a charitable trust based at English Bazar, Malda. The trust filed an application for regular registration under Section 12A(1)(ac)(vi) of the Income-tax Act for Assessment Year 2025-26. The CIT (Exemption) issued notices seeking compliance, including submission of an amended trust deed and a notarized affidavit. Although the assessee complied with most of the directions, the notarized affidavit could not be filed due to non-availability of the main trustees. On this ground alone, the CIT (Exemption) rejected the application for regular registration. The assessee filed an appeal before the Tribunal with a delay of 61 days, explaining the reasons for the delay.

Issues Involved

Whether the delay of 61 days in filing the appeal deserved to be condoned, whether rejection of the application for regular registration under Section 12A solely on account of non-filing of a notarized affidavit was justified, and whether the assessee ought to have been granted one more opportunity in the interest of natural justice.

Petitioner’s Arguments

The assessee submitted that the delay in filing the appeal was due to bona fide and genuine reasons and deserved to be condoned. On merits, it was argued that the trust had substantially complied with the directions issued by the CIT (Exemption) and that the failure to file the notarized affidavit was purely due to practical difficulties arising from non-availability of the trustees. It was contended that rejection of registration on such a technical ground without granting further opportunity was unjust and contrary to principles of natural justice. The assessee prayed for restoration of the matter to the file of the CIT (Exemption) for fresh consideration.

Respondent’s Arguments

The Revenue did not object to the condonation of delay in filing the appeal. It was also submitted that the matter could be restored to the file of the CIT (Exemption) for fresh adjudication, subject to compliance by the assessee with the directions issued.

Court Order / Findings

The ITAT Kolkata condoned the delay of 61 days in filing the appeal, holding that the reasons explained by the assessee were bona fide and genuine. On merits, the Tribunal observed that the application for regular registration was rejected merely because the notarized affidavit was not filed due to non-availability of trustees. The Tribunal held that the ends of justice would be served if the matter was restored to the file of the CIT (Exemption) with a direction to decide the application afresh after affording reasonable opportunity of hearing to the assessee. The assessee was also directed to comply with all requirements as may be directed by the CIT (Exemption).

Important Clarification

The Tribunal clarified that denial of registration to a charitable trust on account of procedural or technical non-compliance, without granting adequate opportunity to cure the defect, is contrary to principles of natural justice. Authorities are expected to adopt a fair and reasonable approach while dealing with applications for registration under beneficial provisions of the Act.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The delay in filing the appeal was condoned, and the matter relating to registration under Section 12A was restored to the file of the CIT (Exemption), Kolkata for fresh adjudication after providing reasonable opportunity of hearing to the assessee.

Source Link- https://itat.gov.in/public/files/upload/1768297902-nA4KZV-1-TO.pdf

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