I PROGRESS FOUNDATION AURANGABAD,AURANGABAD V. CIT EXEMPTION, PUNE

ITA 855/PUN/2024

AI Insights

The case involves two appeals by Progress Foundation against the orders of the Commissioner of Income Tax (Exemption), Pune, which rejected the foundation's applications for registration under sections 12A and 80G of the Income Tax Act, 1961. The rejections were primarily based on non-compliance with procedural requirements and lack of sufficient documentation to prove the genuineness of the foundation's charitable activities. The Tribunal found that the assessee was not given adequate opportunity to present its case and decided to remand the matter back to the CIT(E) for a fresh evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47133 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: ABHAY SHASTRI
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Charitable institution; Tangible material
• Section: 11; 12AA; 12A; 12; 10(23C); 80G

Judgement Text

" आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.1187 & 855/PUN/2024 I Progress Foundation, 22/1, Mayur Complex, N-6, CIDCO, Aurangabad-431001 PAN : AABAI4359L Vs. CIT (Exemption), Pune अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Abhay Shastri Department by : Shri Amol Khairnar Date of hearing : 14-01-2025 Date of Pronouncement : 11-04-2025 आदेश / ORDER PER ASTHA CHANDRA, JM : Two appeals filed by the assessee are directed against the two separate order(s) both dated 05.03.2024 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed before him in Form No. 10AB u/s 12A(1)(ac)(iii) and section 80G(5)(iii) of the Income Tax Act, 1961 (the “Act”) filed on 30.09.2023. For the sake of convenience both the appeals were heard together and are being disposed of by this common order. ITA No. 1187/PUN/2024 2. The assessee has raised the following grounds of appeal :- “1. The Learned CIT(E) erred in rejecting the application under Section 12AA solely on limitation grounds, disregarding the merits of the case. 2. The Learned CIT(E) failed to provide adequate opportunity for the appellant to present evidence demonstrating the genuineness of charitable activities and compliance with Section 12A provisions violating the principles of natural justice. 3. The Learned CIT(E) disregarded the welfare-oriented intent of the Income Tax Act, 1961, and the purpose of Section 12A, which is to promote charitable activities benefiting society. 2 ITA Nos.1187 & 855/PUN/2024 4. The Learned CIT(E)'s decision conflicts with the Directive Principles of State Policy within the Constitution of India. These principles highlight the legislative intent to support charitable trusts for the public good. 5. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc in the interest of natural justice.” 3. Briefly stated, the facts of the case are that on receipt of the assessee’s application filed in Form No. 10AB u/s 12A(1)(ac)(iii) of the Act along with annexures thereto, with a view to verify the genuineness of the activities of the assessee etc., the Ld. CIT(E) issued notice on 01.12.2023 through ITBA portal which was duly served on the assessee requesting the assessee to upload certain information/clarification such as date of commencement of activity, date of expiry of provisional registration, details of any other law applicable for achievement of objectives and the proof of compliance of said law, proof of identity of main trustees / managing trustees / directors / trustees / secretary, list of donors, note on activities carried out in the last three years/inception etc. under the provisions of section 12AB of the Act. The compliance was sought by 18.12.2023. On verification of the details/documents filed by the assessee, the Ld. CIT(E) noticed certain discrepancies were communicated vide issue of another notice dated 23.02.2024. The said discrepancies reproduced below : \"(i) The complete reply to the notice is not furnished. Vide letter dt. 18/12/2023, you had sought 10 days' time However, no compliance has been made as yet. Thus, you have failed to comply with the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961. (ii) As per the provisions of Rule 17A(2)(k) of the Income Tax Rules, 1962, the application in Form No.10AB shall be accompanied by note on activities giving details of activities actually carried out. However, it is seen that you have furnished note on activity without giving the details of actual activities carried out by the turst / institution. Thus, you have failed to comply with the provisions of Rule 17A(2)(k) of the Income Tax Rules, 1962. Furnish date/place of each activity, details of beneficiaries, experts who rendered services etc. (iii) You were specifically requested vide the initial notice itself to furnish the supporting credible evidence in respect of activities undertaken. However, you have not furnished the same. Thus, you have failed to comply with the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961. In absence of any such tangible material in respect of proof of activities being carried out it is not possible to arrive at any conclusion about the genuineness of activities and also to ascertain as to whether the activities are in line with the objects of the trust / institution. Furnish bills/invoices of expenditure on each activity, photographs, cuttings, copies of applications from beneficiaries, if any, other supporting documents. (iv) Furnish year-wise lists of donation with details full name, address, PAN of donors, date & mode of donation, amount, receipt no. issued. Copies of receipts issued. \" 3 ITA Nos.1187 & 855/PUN/2024 3.1 The assessee was requested to show cause as to why the application should not be rejected and why the registration granted under section 12AB of the Act should not be cancelled in the event of failure to comply by the due date i.e. 01.03.2024. However, the assessee neither submitted explanation to the said show cause notice nor availed the opportunity of being heard. The Ld. CIT(E), therefore, observed that since, the assessee has not furnished any explanation to the discrepancies communicated to it, it is presumed that the assessee has nothing to say in the matter. The Ld. CIT(E), hence proceeded to pass the impugned order rejecting the application of the assessee and cancelling the provisional registration granted to the assessee by observing as under : “4. Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of section 12AB(1)(b)(i) of the Income Tax Act, 1961 as well as the provisions of Rule 17A(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is unable to draw any satisfactory conclusion about the genuineness of activities of the assessee and compliance of requirements of any other law for the time being in force by the assessee as are material for the purpose of achieving its objects. 5. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 27/05/2021 under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act, 1961 is hereby cancelled.” 4. Dissatisfied, the assessee is in appeal before the Tribunal. 5. The Ld. AR submitted that there was no intentional non-appearance before the Ld. CIT(E). As can be seen from the order of the Ld. CIT(E), adequate opportunity of hearing was not granted to the assessee to present its case before him. He submitted that given an opportunity the assessee is in a position to submit all the requisite details/documentary evidence before the Ld. CIT(E) in support of its application and respond to various discrepancies noticed by the Ld. CIT(E). He, therefore, prayed that the matter may be set aside to the file of the Ld. CIT(E) to adjudicate the same afresh after affording one more opportunity of being heard to the assessee. 6. The Ld. DR conceded to the above proposition of the Ld. AR. 7. We have considered the rival submissions and perused the records. It is an admitted fact that due to non-compliance to the notice issued by the Ld. CIT(E) asking for certain details, he rejected the application for 4 ITA Nos.1187 & 855/PUN/2024 grant of registration and also cancelled the provisional registration granted earlier. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case by filing all the relevant details before the Ld. CIT(E). Considering the totality of the facts and in the circumstances of the assessee’s case, we are of the view that it would be judicially expedient and in the interest of justice and fair play if the matter is restored back to the file of Ld. CIT(E) to consider the assessee’s application for registration u/s 12A(1)(ac)(iii) of the Act afresh and decide the matter on merits, in accordance with facts and law after allowing one more opportunity of being heard to the assessee and present its case. The assessee shall provide the requisite support in terms of submitting the relevant details/documentary evidence as may be required/ called upon on the appointed date, failing which the Ld. CIT(E) shall be at liberty to pass appropriate order as per law. We order accordingly. 8. In the result, the appeal of assessee is treated as allowed for statistical purposes. ITA No. 855/PUN/2024 9. The facts as narrated above in ITA No. 855/PUN/2024 are identical to ITA No. 1187/PUN/2024 except that the assessee is seeking registration u/s. 80G of the Act in this appeal which has been rejected by the Ld. CIT(E). Since, the Ld. CIT(E) has rejected the grant of registration u/s 12 of the Act and cancelled the provisional registration granted earlier, he refused to grant approval u/s 80G of the Act. The Ld. CIT(E) rejected the assessee’s application for registration u/s 80G of the Act and cancelled the provisional registration granted earlier without going into the merits by observing as under : “3.9 Considering the above facts, the present application filed in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act is liable to be rejected without going into the merits since the assessee has not filed the present application within the time limit allowed under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961. 4. As per the condition vide clause (i) of section 80G(5) of the Income Tax Act, 1961, the approval is available only if the income of the institution or fund is not be liable to inclusion in its total income under the provisions of section 11 and 12 or clause (23AA) / clause (23C) of section 10 of the Income Tax Act, 1961. Exclusions for the said condition are detailed in clause (a), (b) and (c) of proviso to clause (i) of section 80G(5) of the Act. Therefore, the institution / fund is required to be regularly registered / approved either under section 5 ITA Nos.1187 & 855/PUN/2024 12AB or 10(23AA) or 10(23C) of the Income Tax Act, 1961 or the institution / fund shall be a Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants. 4.1 In the instant case it is noticed that the assessee is neither regularly registered u/s 12AB read with section 12A(1)(ac)(i) / 12A(1)(ac)(iii) nor having regular approval under section 10(23C) read with clause (i) / (iii) of first proviso to the said section and the case is not covered under the exclusions provided vide proviso to clause (i) of section 80G(5) of the Act. The assessee is not approved under section 10(23AA) of the Act. The assessee is also not a Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants. In fact, the application of the assessee in form No.10AB for registration u/s 12AB filed under the provisions of section 12A(1)(ac)(iii) of the Act has been rejected vide order dated 05/03/2024. Therefore, the condition (i) of section 80G(5) of the Income Tax Act, 1961 is also not fulfilled in this case. 5. In view of the above, the application filed by the assessee is hereby rejected without going into the merits of the case and the provisional approval granted on 19/01/2023 under clause (iv) for first proviso to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.” 10. Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal : “1. The Learned CIT(E) erred in rejecting the application under Section 80G solely on limitation grounds, disregarding the merits of the case. The decision contravenes principles of justice and fairness. 2. The Learned CIT(E) failed to provide adequate opportunity for the appellant to present evidence demonstrating the genuineness of charitable activities and compliance with Section 80G provisions violating the principles of natural justice. 3. The Learned CIT(E) disregarded the welfare-oriented intent of the Income Tax Act, 1961, and the purpose of Section 80G, which is to promote charitable activities benefiting society. 4. The Learned CIT(E)'s decision conflicts with the Directive Principles of State Policy within the Constitution of India. These principles highlight the legislative intent to support charitable trusts for the public good. 5. The Learned CIT(E) has erred in considering registration/approval status of assessee trust u/s 12AB read with section 12A(1)(ac)(i)/12A(1)(ac)(iii). 6. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc in the interest of natural justice.” 11. The Ld. AR made similar submissions before us as are made in the above ITA No. 1187/PUN/2024. Since, the facts and submissions in ITA No. 855/PUN/2024 are similar to ITA No. 1187/PUN/2024, the findings given by us while deciding the appeal of assessee in ITA No. 1187/PUN/2024 would mutatis mutandis apply to ITA No. 855/PUN/2024, 6 ITA Nos.1187 & 855/PUN/2024 as well. Accordingly, the matter is restored to the file of the Ld. CIT(E) to decide the same afresh on merits. The appeal of assessee is therefore allowed for statistical purposes. 12. To sum up, both the appeals of the assessee in ITA Nos. 1187 and 855/PUN/2024 are allowed for statistical purposes. Order pronounced in the open court on 11th April, 2025. Sd/- Sd/- (R.K. Panda) (Astha Chandra) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 11th April, 2025. रदि आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune "