AUSTINS EDUCATIONAL SOCIETY,JODHPUR V. .CIT(EXEMPTION), JAIPUR

ITA 282/JODH/2024

AI Insights

The case involves the Austin Educational Society appealing against the decision of the CIT (Exemption), Jaipur, which had rejected their application for registration under section 10(23C) of the Income Tax Act, 1961. The CIT (Exemption) had found the society ineligible for registration due to issues related to profitability, benefits to trustees, and non-registration under the Rajasthan Public Trust Act, 1959. The tribunal noted that the society had not been given a proper opportunity to present their case and thus restored the matter for a fresh decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31840 (ITAT-JODHPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2024-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH OJHA
• Assessee Lawyers: RAJENDRA JAIN
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 10; 10(23C)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 282/Jodh/2024 Assessment Year: 2024-25 Austin Educational Society 2, Shakti Nagar, Jodhpur. [PAN: AACTA5350R] (Appellant) Vs. The CIT Exemption Jaipur (Respondent) Appellant by Sh. Rajendra Jain, Adv. Respondent by Sh. Rajesh Ojha, CIT Date of Hearing 22.10.2024 Date of Pronouncement 17.12.2024 ORDER Per:DR. S. Seethalakshmi, JM: This appeal filed by assessee is arising out of the order of the Learned Commissioner of Income Tax (Exemption) (in short ‘’ld.CIT(E), Jaipur dated 31.03.2024 for the assessment year 2024-25 2. In this appeal, the assessee has raised following grounds: - “1. That on the facts and in the circumstances of the case, the order passed by ld CIT(Exemption) is bad in law and bad in facts. 2. That on the facts and in the circumstances of the case, the Id CIT(Exemption)grossly erred in rejecting the application for grant of registration u/s 10(23C) of the Act, particularly when the appellant trust fulfilled all the conditions for granting of registration as per provision of law. I.T.A. No. 282/Jodh/2024 Austins Educational Society 2 3. That on the facts and in the circumstances of the case, the Id CIT(Exemption)grossly erred in recording the observation and allegation for rejecting the application for grant of registration u/s 10(23C) of the Act is contrary to material on record and also against the principle of natural justice. 4. That on the facts and in the circumstances of the case, the Id CIT(Exemption)grossly erred in not appreciating the facts the object of appellant trust that solely for educational/charitable purposes and not for purposes of profit, while rejecting the application for grant of registration u/s 10(23C) of the Act. 5. That on the facts and in the circumstances of the case, the Id CIT(Exemption)grossly erred in holding the appellant trust giving benefit to the specified person by violating under clause (a) of section 12AB(4) of the Act. 6. That on the facts and in the circumstances of the case, the Id CIT(Exemption)grossly erred in holding the appellant trust is doing activities of highly profitable nature and cannot be said to be conducting charitable activities without appreciating the facts and legal position in right perspective and judicious manner. 3. Brief fact of the case is that the assessee filed online application on 29-09-2023 in Form No. 10AB seeking approval u/s 10(23C) of the Income Tax Act, 1961. A notice dated 01.12.2023 was issued at the e- mail/address provided in the application requiring the assessee to submit certain documents/explanations by 12.12.2023. In response, assessee filed reply on which was examined and found some discrepancies for which a A show cause letter was given on 13.03.2024 fixing the case on 19.03.2024. In response ld. AR of the assessee attended and filed part reply, however, further some queries were raised vide note sheet entry dated 19.03.2024 fixing the case on 26.03.2024. In response assessee filed reply on 26.03.2024 but the reply of the applicant with annexure was examined and the ld. CIT(E) did not find eligible for the registration. It is noteworthy to mention that the ld. CIT(E) rejected the I.T.A. No. 282/Jodh/2024 Austins Educational Society 3 claim of registration u/s 12AB of the Act for which relevant details are mentioned are as under:- “in present case too applicant is generating huge surplus and profit that further is being applied in construction of school building and benefit is going in the hands of land owners. Hence, the application of the applicant for registration u/s 10(23C) is liable to be rejected on the ground of profitability and benefit to members and related persons which is also non genuine activity. 4. In view of above discussion assessee's claim of registration section 12AB is liable to be rejected and thus being rejected on following grounds: -  Non registration under Rajasthan Public Trust Act, 1959.  Construction on land owned by trustees and siphoning off funds for benefit of trustees  Profitability. 05. Further 10(23C)(b)(B) of the Income Tax Act, 1961 also state that if CIT is not satisfied has to pass order rejecting such application and also cancelling its approval. Thus, it is clarified that applicant's provisional registration under clause (iv) of first proviso to clause (23C) of section 10 of the Income Tax Act, 1961 dated 16.09.2022 is also being cancelled. Further assessee has failed to give proper justification for regularization of provisional registration, thus with this order provisional registration is also lapsed and cancelled.” 4. During the course of hearing, the ld.AR of the assessee submitted assessee may be provided one more opportunity to advance his submissions before the ld. CIT(E) as the earlier counsel could not properly pursue the case before the ld. CIT(E) and also could not submit the desired information.. 5 On the other hand, the ld. DR supported the order of the ld. CIT(E). 6. We have heard both the parties and perused the materials available on record. It is noted that the ld.CIT(E) had given opportunity to the assessee to I.T.A. No. 282/Jodh/2024 Austins Educational Society 4 submit complete details/ information but the assessee had failed to give proper justification before him. Hence, in this situation, the ld. CIT(E) rejected the claim of registration u/s 12AB of the Act on the following grounds:-  Non Registration under Rajasthan Public Trust Act, 1959  Construction on land owned by Trustees and siphoning off funds for benefit of trustees.  Profitability The Bench noticed that it is an admitted fact that the earlier counsel did not furnish the details as sought by the Department and thus the according to the ld.CIT(E), the assessee had failed to justify the genuineness of the activities of the society . The Bench has noticed that the ld.AR of the assessee has filed the following documents concerning the issue in question (supra). S. No. Particulars Pages 1. Copy of registration under Rajasthan Public Trust Act, 1959. 1 2. Copy of letter dated 26/03/2024 submitted to the CIT Exemption. 2-12 3. Copy of audited Financial statement of A.Y. 2023-24 & 2022-23 13-31 4. Copy of MOU. 32-35 5. Copy of Newspaper cutting. 36 From these submissions, it is found that the assessee trust has been granted registration by the Office of Assistant Commissioner, Devsthan Vibhag, Jodhpur w.e.f. 29-05-2024. However, the Bench feels that one more opportunity should be provided to contest the case before the ld. CIT(E) and the lis between the parties has to be decided on merits so that nobody’s rights could be scuttled I.T.A. No. 282/Jodh/2024 Austins Educational Society 5 down without providing opportunity of being heard to the assessee. Hence, the matter is restored to the file of the ld. CIT(E) to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes. 7. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by ld. CIT(E) independently in accordance with law. 8 In the result, the appeal of the assessee is allowed for statistical purposes Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Rathod Kamlesh Jayantbhai) (DR. S. Seethalakshmi) Accountant Member Judicial Member Dated 17/12/2024 *Santosh Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order "