RAINBOW SOCIETY FOR DIFFERENTLY ABLED, LUCKNOW V. Commissioner Of Income Tax (Exemptions), Lucknow

ITA 12/LKW/2023

AI Insights

The case involves the Rainbow Society for Differently Abled, which appealed against the decision of the CIT(E) rejecting their application for registration under section 12A of the Income Tax Act, 1961. The CIT(E) had treated the application as 'non-est' and 'rejected' due to non-compliance with requests for additional information and documents. The ITAT found that the CIT(E) had not provided adequate opportunity for compliance, as the notice and the compliance date were too close together, and the final order was served after the deadline for a fresh application had passed. Both parties agreed that the matter should be reconsidered on its merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113232 (ITAT-LUCKNOW)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 25-07-2023
• Assessment Year: misc
• Appeal Filed On: 12-01-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Set aside
• Section: 12A

Judgement Text

I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.12/Lkw/2023 Assessment Year: N.A. Rainbow Society for Differently Abled, B-66, Sector-B, Aliganj, Lucknow. PAN:AAEAR7803B Vs. CIT (Exemptions), Lucknow. (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) This appeal has been filed by the assessee against impugned order dated 27/09/2022 of learned Commissioner of Income Tax (Exemption) [“CIT(E)” for short]. Grounds of appeal are as under: “1. That The Ld. Commissioner (Exemption) was wrong in rejecting the application u/s 12A(1)(ac)(iii) filed on Form No.10AB and holding that the application of the appellant Society be treated as non-est. Appellant by Shri S. C. Agrawal, Advocate. Respondent by Shri S. H. Usmani, CIT (DR) Date of hearing 26/07/2023 Date of pronouncement 27/07/2023 I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 2 2. That the Ld. CIT(E) was wrong in rejecting the application u/s 12AB(i)(ii)B of the Act as he had all the document/ material regarding genuineness of the activities of the Society as well as charitable nature along with commencement of the activities inasmuch as Society was carrying out the activities even before the grant of provisional registration. 3. That the Ld. CIT(E) was wrong in holding that the application for grant of registration is not maintainable in view of CBDT Circular No. 8 of 2022 dated 31.03.2022. 4. That the Ld. CIT(E) is wrong in rejecting the application for grant of registration and at the same time observing that 'no adverse inference is drawn against the assessee. 5. That the Ld. CIT(E) rejected the application for grant of registration vide order dated 27.09.2022 as the assessee is not well versed in operation of e-mail communications and is not technology savvy, neither could response letter dated 29.07.2022 and 11.08.2022 nor could seek adjournment resulting into rejection of application by the Ld. CIT(E) and passing the adverse order under appeal causing injury to the appellant Society. 6. That the action of the Ld. CIT(E) is against the circumstances of the case and also against facts and law.” (A.1) Subsequently, during appellate proceedings in Income Tax Appellate Tribunal (“ITAT” for short), ground No. 5 of appeal was withdrawn by the assessee. Hence, this ground is dismissed as withdrawn. (A.2) The assessee filed application in Form 10AB for registration u/s 12A of the Income Tax Act, 1961 (“IT Act” for short). The learned CIT(E) treated the assessee’s application for registration u/s 12A of the IT Act as “non-est’ and also “rejected”. Before passing the aforesaid impugned order dated 27/09/2022, the learned CIT(E) issued letter dated 29/07/2022 directing the assessee to submit details/information on many points. The compliance date vide impugned order dated 27/09/2022, as intimated by learned CIT(E) I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 3 to the assessee, was on or before 11/08/2022. The relevant portion of the letter is reproduced as under: "Sir/Madam/M/s, Subject: Proceeding u/s 12A(1)(ac)(iii) The hearing for the above noted application no. has been fixed on 11/08/2022 at 11:00 AM in my office. Please refer to your application in form 10AB. 2. In this regard, it is observed that aforesaid application is filed under the provisions of section 12A(1)(ac)(iii) of the Income-tax Act (hereinafter mentioned as Act). These provisions are applicable in respect of trust /institution registered u/s. 12AB and the period of said provisional registration is due to expire within six month or within six months of commencement of its activities, whichever is earlier" 3. Accordingly, you are directed to submit following details /information. •Copy of Form no. 10A filed in the financial year 2021-22 for the grant of registration. • Copy of Order received by you in Form no. 10AC. 4. Please submit a note on activities conducted since inception / during last three years & till 30.06.2022 5. A note specifying the main area of your charitable/ religious activities and a Projection/ plan for the main charitable/ religious activities to be undertaken in the next two years. 6. Please attach a certified copy of the Trust Deed/ Memorandum of association. 7. A declaration that no part of the income of the Trust/ Society/ Non Profit Company enures, directly or indirectly for the benefit of any person specified in section 13(1)(c) of the Income Tax Act, 1961 and that no part of the income or property of the Trust/ Society/Company was ever used or applied for the benefit of any person specified in I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 4 section 13(1)(c)of the Income Tax Act, 1961, duly signed by the Authorized Signatory. 8. Please attach a 'No Objection Certificate' from the owner of the premises from which you are operating along with proof of his ownership. 9. Please file an undertaking that there will be no infringement to the 1st proviso to section 2(15) of the Income Tax Act, 1961. 10. Please furnish telephone number and e-mail address of assessee society/trust/company. 11. Please quote the order no. of the last rejection order, if any and explain the change in facts and circumstances of the case since the last rejection order. Also attach a copy of the same. 12. Please specify the category of charitable purposes provided in section 2(15) of the Income-Tax Act, 1961 in which your case falls, i.e., whether your objective is relief of the poor/ education/ yoga/ medical relief/ preservation of environment (including watersheds, forests and wildlife)/ preservation of monuments or places of artistic/ historic interest/ advancement of any other object of general public utility/ religious activities. 13. A copy of certificate issued in Form No. 10AC. 14. A certificate to the fact that all the requirements of law has been complied with which are essential for the purpose of achieving the objects of society /trust or company. 15. Please justify your claim for registration u/s 12A(1)(ac)(iii) of the Income tax Act and please provide the bank statement of last three years & till 30.06.2022/since inception & till 30.06.2022. 16. Please furnish the details of donations including corpus donations received and made giving name, address, PAN of the donors of the last three years & till 30.06.2022/since inception & till 30.06.2022 along with donation receipts. I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 5 17. Please provide financial statement i.e. balance sheet and income & expenditure a/c for & till 30.06.2022/since inception & till 30.06.2022. 18. Please submit a confirmation that none of the objects of the Trust deed/Memorandum of association/ Memorandum of article of the Trust/ Society/ Charitable Company or any other charitable institution is in the nature of trade business or commerce. 19. Details of remuneration/ re-imbursement if any drawn by the Trustee/ Member/Director against the services provided by them to the Trust/Society/Company. Details of business/source of income of the Trustees/ Members/Directors. 20. Details of vehicles owned by the Trust/Society/Company along with ownership proof and also furnish the documentary evidences to substantiate the charitable activities carried out by you in the recent past. In the absence of such sufficient evidences it will be presumed that you have not carried out any charitable activity which you claimed to have undertaken. 21. If during the course of proceedings for grant of registration/ exemption it is found that some of the objects of the applicant (Trust/Society/Charitable/ Company/ institution and etc.) are in the nature of business activity, your application for registration u/s 12AB may be liable for rejection in the absence of sufficient explanation on record. You are requested to furnish aforesaid details/information on or before 11.08.2022. at 11:00 AM either personally or through Authorized Representative or through email before the undersigned to present your case.” (A.2.1) A reminder was issued by the learned CIT(E) on 11/08/2022, fixing the date of compliance on 18/08/2022. In the absence of any reply from the assessee’s side, the learned CIT(E) treated the assessee’s application for registration as “non-est” and also as “rejected”. The learned CIT(E) further observed that the assessee could, in view of CBDT Circular No. 8 of 2022, dated 31/02/2022 file fresh application by 30/09/2022 (without suffering I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 6 any adverse impact). The relevant portion of the order of learned CIT(E) is reproduced as under: “3. As the application has been submitted under sub clause (iii) of 12A(1)(ac), and accordingly an enquiry letter requiring such documents and information was sent to verify the genuineness of the activities as well as charitable nature and commencement of the activities. In absence of any reply charitable object and genuineness of the charitable activities of the assessee trust could not be proved. In view of the above application filed by assessee is treated as "non-est". 4. Moreover, in view of CBDT circular no. 8 of 2022 dated 31.03.2022, assessee can file fresh application by 30.09.2022 (without suffering any adverse impact). Accordingly the application filed by the assessee is treated as non-maintainable and for statistical purpose the application filed by the assessee is treated as 'rejected'. However, no adverse inference is drawn against the assessee.” (B) Aggrieved, the assessee has filed the present appeal in ITAT against the aforesaid impugned order dated 27/09/2022 of learned CIT(E). In the course of appellate proceedings, the learned Counsel for the assessee filed written submissions, the relevant portion of which is reproduced as under: “It is respectfully submitted as under :- 1. Vide order dated 27.09.2022 u/s 12AB(1)(ii)(B) of IT Act rejected the application dated 30.03.2022 on Form No.10AB u/s 12A(1)(ac)(iii) on the ground that letters dated 29.07.2022 and 11.08.2022 issued by CIT(E), Lucknow seeking certain clarifications from the assessee were not responded nor any adjournment was sought and therefore according to Ld. CIT(E), Lucknow in the absence of any reply charitable objects and genuineness of the charitable activity of the Trust could not be proved. It is submitted that reply could not be filed by the assessee as per the facts narrated in the Affidavit of the Secretary of the Society. I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 7 2. The contention of the Ld. CIT(E) that in the absence of any reply the charitable objects and activity could not be proved is not correct proposition of law inasmuch as there was no compliance admittedly of the letters issued but it cannot be said that genuineness and charitable activities are not proved for the simple reason that no document as desired could be filed. Further, the observation that the application filed by the assessee is treated as "non-est" is not as per law. The relevant part of Section is reproduced below :- "(B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard; A reading of the law as quoted above makes it clear that Ld. CIT(E), Lucknow did not hold an authority to say that application is treated as "non-est". Similarly, the observation of the Ld. CIT(E), Lucknow in para 4 of the order that application filed by the assessee be treated as "non-maintainable" is also not in accordance with the law. 3. It may also be noted that provisional registration dated 24.03.2021 is still a valid document mentioning in clause 9(c) which provides that in case the activities of the Society are not genuine the provisional certificate is liable to be withdrawn. In other words it cannot be said that the activities of the appellant Society are not genuine. In view of the above noted facts and law it is respectfully prayed that the Hon'ble Tribunal be pleased to set-aside the impugned order and pass appropriate order to Ld. CIT(E), Lucknow to consider the application dated 30.03.2022 filed by the appellant Society on Form No.10AB to decide the issue on merits as per law.” (B.1) At the time of hearing before us, learned Counsel for the assessee placed reliance on the aforesaid written submissions. (B.2) On perusal of records, at the time of hearing before us, it was noticed by us that the impugned order dated 27/09/2022 of learned I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 8 CIT(E) was served on the assessee on 18/11/2022. As the date of service of order was well beyond 30/09/2022, the observation of learned CIT(E), in paragraph 4 of her impugned order dated 27/09/2022, already reproduced in foregoing paragraph (A.2) of this order, that the assessee could file fresh application by 30/09/2022, was of little solace to the assessee and provided no succour to the assessee. The opportunity to file fresh application by 30/09/2022, as stated by learned CIT(E) in her impugned order dated 27/09/2022, was communicated to the assessee on 18/11/2022 (well after aforesaid 30/09/2022), and was meaningless, the opportunity being impossible to be availed of. Further, there were only six days between aforesaid notice dated 11/08/2022 and compliance date of 18/08/2022. Eventually, the impugned order was passed by learned CIT(E) much later, on 27/09/2022. If the order was to be passed by her on 27/09/2022, it was possible for her to provide better opportunity to the assessee for compliance. Learned CIT (D.R.) for Revenue, in view of the foregoing, expressed no objection to the assessee’s prayer, for setting aside the impugned order of learned CIT(E) to reconsider the assessee’s application dated 30/03/2022 filed by the assessee in Form-10AB, for deciding afresh, the issue regarding registration u/s 12A of the IT Act on merits as per law. (B.2.1) Accordingly, in the specific facts and circumstances of the present case, and as representatives of both the sides are in agreement with this, we set aside the impugned order dated 27/09/2022 of learned CIT(E) and we direct the learned CIT(E) to reconsider the assessee’s application dated 30/03/2022 filed in Form-10AB, for deciding afresh, the issue regarding registration u/s 12A of the IT Act, on merit, in accordance I.T.A. No.12/Lkw/2023 Assessment Year: N. A. 9 with law, after providing reasonable opportunity to the assessee. All the grounds of appeal, other than ground 5 of appeal, are treated as disposed off in accordance with the aforesaid direction. (E) In the result, the appeal is partly allowed for statistical purposes. (Order pronounced in the open court on 27/07/2023) Sd/. Sd/. (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:27/07/2023 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., Assistant Registrar