Shree Mevad Jangid Education Trust, Surat V. CIT(Exemption), Ahmedabad

ITA 238/SRT/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2321 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-05-2024
• Assessment Year: misc
• Appeal Filed On: 29-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: EMAIL OR OTHERWISE. THEREFORE
• Keywords: Charitable institution; Opportunity of being heard; Set aside
• Section: 11; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.238/SRT/2024 (Physical Hearing) Shree Mevad Jangid Education Trust, 391/92, Indira Nagar, Hira Baug, Varachha Road, Surat - 395006 Vs. The CIT (Exemption), Ahmedabad èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAXTS6390J (Appellant) (Respondent) Appellant by Shri Esmayeel Saherwala, CA Respondent by Shri Ritesh Mishra, CIT-DR Date of Hearing 06/05/2024 Date of Pronouncement 16/05/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal emanates from the order dated 25.09.2023 passed by the Learned Commissioner of Income-tax (Exemption), Ahmedabad [in short, “Ld. CIT(E)”], wherein the Ld. CIT(E) rejected assessee’s application for registration of Trust u/s 12AB of the Income-tax Act (in short, ‘the Act’) and also cancelled the provisional registration. 2. The grounds of appeal raised by the assessee are as under: “1. On the facts and circumstances of the case in law, the Ld. CIT(E), Ahmedabad has erred in concluding that all the charitable objects of the trust are for a particular was religious community or caste. 2. On the facts and circumstances of the case in law, the Ld. CIT(E), Ahmedabad is not justified in presuming that actual charitable activity is restricted to a particular religious community or caste, therefore the applicant would not be eligible for exemption u/s 11 of the Act. 2 ITA No.238/SRT/2024 Shree Mevad Jangid Education Trust 3. On the facts and in the circumstance of the case and in law, the Ld. CIT(E), Ahmedabad is not justified in presuming based only a singular expenditure incurred under head Tournament Cricket Expenses that the applicant would not be eligible for exemption u/ 11 of the Act. 4. On the facts and circumstances of the case and in law, the Ld. CIT(E), Ahmedabad has erred in interpreting and applying provisions of Section 13(1)(b) of the Act for concluding inapplicability of provisions of Sec. 11 and 12 of the Act. The Ld. CIT(E), Ahmedabad has further erred by not correctly interpreting the case laws r.w.s. 13(1)(b) for concluding ineligibility of exemption u/s. 11 of the Act. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(E), Ahmedabad has erred in not effectively providing adequate opportunity of being heard. 6. The appellant reserves the right to add, amend, replace or delete any grounds of Appeal before conclusion of the appeal. 7. The Appellant prays to quash the order of Ld. CIT(E), Ahmedabad and allow the eligibility for registration u/s 12A of the Act.” 3. The fact of the case in brief are that the assessee filed an application for registration/incorporation in Form No.10AB u/s 12A(1)(ac)(iii) of the Act on 20.03.2023. The assessee-trust had been granted order for provisional approval in Form No.10AC issued on 07.04.2022 under clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act for the period commencing from AY.2022-23 to AY.2024-25. In respect of the application filed by the assessee-trust in Form No.10AB, the assessee-trust was asked to file details/documents vide notice dated 19.07.2023 and 19.08.2023. In response to the said notices, the assessee filed its reply dated 02.09.2023 and submitted certain details/documents. In response to notice dated 19.09.2023, the assessee was intimated to explain as to why the present application filed Form No.10AB u/s 12A(1)(ac)(iii) should not be rejected and 3 ITA No.238/SRT/2024 Shree Mevad Jangid Education Trust also why the provisional registration should not be cancelled. Against the said notices, the assessee has not filed any response. The Ld. CIT(E) further provided opportunity to the assessee for compliance on or before 22.09.2023. In absence of requisite details, the provisional registration of assessee-trust was rejected by the Ld. CIT(E) on 25.09.2023 based on material available on record. 4. The Learned Authorized Representative (Ld. AR) submitted that order passed by the ld. CIT(E) is an ex parte order, as the assessee could not file relevant documents and evidences before the Ld. CIT(E). He stated that the show-cause notice was reflected on the e-portal of the Department and but was not served upon the assessee. Therefore, the assessee could not file the details asked for in the show cause notice. On merits, he stated that as per the trust deed, all the objects from number 1 to 14 are wholly for the benefit of human society and public at large. The founders and contributors of the trust being of a particular community have given the name of the trust but there is no restriction on beneficiaries of the trust. Further, there is no restriction on a non-community person becoming a member/trustee of the trust. He also submitted that the assessee is a charitable institution for promoting education, literature, health care, sports and art for economically deprived students, patients, handicap, senior citizen and women. 5. Regarding the observation of the Ld. CIT(E), as to how cricket tournament expenses are in consonance with the objects of the trust, the 4 ITA No.238/SRT/2024 Shree Mevad Jangid Education Trust Ld. AR submitted that it is well-settled that trust with objects of promotion of sports and games are covered under objects of general public utility and eligible for 12A approval. He further submitted that the decisions relied upon by the Ld. CIT(E) are not applicable to the facts and circumstances of the assessee. The Ld. AR also argued that the show-cause notice in its essence is grounded in the principle of providing fair opportunity to the tax payers. Any order passed without effective service of notice, is required to be set aside. The Ld. CIT(E) has merely reflected the show cause notice on e- portal, but it was not sent to the assessee by e-mail or otherwise. Therefore, the service of notice has not been ensured by the Ld. CIT(E). Further, the Ld. AR referred to the recent CBDT Circular No.7/2024 issued on 25.04.2024 which extended the time limit for availing of registration under section 10(23C), 12A/12AB as well as for approval under section 80G(5) up to 30.06.2024. Therefore, benefit for such extended period should be given to the assessee. Considering the additional benefit allowed by the CBDT Circular No.7/2024, dated 25.04.2024, the assessee is eligible for a fresh considering on merit before Ld. CIT(E) with a reasonable opportunity of being heard. 6. On the other hand, learned Commissioner of Income Tax – Departmental Representative (Ld. CIT-DR) for the Revenue supported the order of Ld. CIT(E). The Ld. CIT-DR submits that as per CBDT Circular 5 ITA No.238/SRT/2024 Shree Mevad Jangid Education Trust No.7/2024, dated 25.04.2024, the assessee is at liberty to file application afresh for seeking approval of registration of the assessee- trust. 7. WE have heard both the parties and perused the record. We find that the Ld. CIT(E) has decided the matter ex parte based on material available on record, in absence of any submission or adjournment request by the assessee. On the other hand, Ld. AR contended that assessee did not receive the show-cause notice as a result, he was not able to file various documentary evidences as called for Ld. CIT(E). The Ld. AR has contended before us that the assessee is ready to submit all the details and evidences needed by the Ld. CIT(E). He requested that an opportunity may be given to the assessee to present his case which is strong on merits. We find that the CBDT Circular No.7/2024, dated 25.04.2024 has also extended time limit up to 30.06.2024 for seeking approval and filing application etc. under section 10(23C), 12A/12AB and 80G(5). We also find that assessee could not persue his case before the Ld. CIT(E) by filing necessary evidences and documents. Hence, we are of the view that one more opportunity should be given to the assessee to file requisite documents and evidences before the Ld. CIT(E) and to plead its case before him. It is a settled law that the principles of natural justice require the affected party to be granted sufficient opportunity of being heard to contest his case. Therefore, in the interest of justice, we restore the matter to the file of the Ld. CIT(E) for de novo adjudication and to pass a speaking order after affording sufficient opportunity of being 6 ITA No.238/SRT/2024 Shree Mevad Jangid Education Trust heard to the assessee. The assessee is also directed to be more vigilant in persuing his case and file necessary documents and evidenced as needed by the Ld. CIT(E). For statistical purposes, the appeal of the assessee is treated as allowed. 8. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 16/05/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 16/05/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat