Shree Mahalakshmi Welfare and Charitable Trust, Surat V. CIT (Exemption), Ahmedabad

ITA 256/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7250 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-05-2024
• Assessment Year: misc
• Appeal Filed On: 05-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Period of limitation; Condonation of delay
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No. 255 & 256/Srt/2024 (Assessment Year –2024-25) (Hybrid hearing) Shree Mahalakshmi Welfare & Charitable Trust, 11/497, Nagarsheth Ni Pole, Vadachauta, Surat. PAN No. ABBTS 8397 L Vs. C.I.T.(Exemptions), Ahmedabad. Appellant/ Assessee Respondent/ Revenue Assessee represented by Shri Oanali Seherwala, C.A. Department represented by Shri Ashish Pophare, CIT-DR Appeal instituted on 06/03/2024 Date of hearing 08/05/2024 Date of pronouncement 13/05/2024 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by the same assessee are directed against the separate order of the learned Commissioner of Income Tax (Exemptions), Ahmedabad [in short, the ld. CIT(E)] in rejecting the application for registration under Section 12A/12AB of the Income Tax Act, 1961 (in short, the Act) and approval of funds under Section 80G(5) of the Act dated 27/09/2023 and 29/09/2023 for the Assessment Year (AY) 2024-25. Facts in both these appeals are common, thus both the appeals are taken up together and are decided by this common order to avoid the conflicting decision. For appreciation of facts, we take ITA No. 255/Srt/2024 as a lead case. In this appeal, following grounds of appeal have been raised by the assessee. “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(E), AHMEDABAD is not justified in presuming that actual activity is not in ITA No. 255 & 256/Srt/2024 Shree Mahalakshmi Welfare & Charitable Trust Vs CIT(E) 2 consonance with objects/ objectives of the trust, therefore the applicant would not be eligible for exemption U/s.11 of the Act. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(E), AHMEDABAD has erred in concluding that out of total expenditure of Rs.1454627/-, there is an application of fund of Rs.1258500/- towards the religious activities. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(E), AHMEDABAD has erred in not verifying documentary evidences and casually concluding based only on an inadvertent classification error that all actual activities of trust are religious in nature for period of 17/09/2020 to 31/03/2022. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(E), AHMEDABAD has erred in not ensuring that adequate opportunity of being heard is provided to appellant. 5. The Appellant reserves the right to add, amend, replace or delete any grounds of Appeal before conclusion of the appeal. 6. The Appellant prays to quash the order of Ld CIT(E), Ahmedabad and allow the eligibility for registration U/s.l2A of the Act.” 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee fairly submits that from the date of rejection of application under Section 12A of the Act, there is delay of filing appeal before the Tribunal. The application of assessee under section 12A was rejected vide order dated 27.09.2023 and this appeal was filed on 05.03.2024. The assessee has filed affidavit of Bhadarak Ramesh Chandra Nagarath in explaining the sufficient cause for condoning the delay. In fact, the assessee has not received physical copy of order or soft copy on registered e- mail in rejecting the application of assessee-trust for registration. The assessee trust was unaware of such order till last week of January, 2024 when the office bearer checked the portal under e-proceedings link through tax consultant, came to know about dismissal/rejection of their application. From the date of knowledge of rejection of application, the assessee filed appeal within prescribed period of limitation. There is no intentional or deliberate delay in filing appeal ITA No. 255 & 256/Srt/2024 Shree Mahalakshmi Welfare & Charitable Trust Vs CIT(E) 3 before the Tribunal. The assessee has good case on merit and is likely to succeed if the matter is considered on merit. 3. On merit, the ld. AR of the assessee submits that the application of assessee for registration Under Section 12A/12AB of the Act was rejected by the ld. CIT(E) by taking view that in response to show cause notice dated 23/09/2023, the assessee has neither filed any submission nor sought any adjournment. The ld. CIT(E) also rejected/cancelled provisional registration granted vide order dated 12/05/2022, which was valid up to A.Y. 2025-26. The ld. AR of the assessee submits that in fact no notice as mentioned in the impugned order was served upon the assessee. The notices if any was issued only through ITBA portal which was never served on the assessee. The assessee has furnished complete details while filing application in Form 10AB on 02/03/2023. The ld. AR of the assessee submits that the assessee also filed copy of trust deed, copy of registration with Charity Commissioner, copy of registration certificate issued earlier under Section 12A, audit report and details of activities. Copies of all such evidences is placed on record. The ld. AR of the assessee submits that the assessee has good case on merit and is likely to succeed if the application of assessee is considered on merit. The ld. AR of the assessee while making his submission prayed that their appeal may be allowed. 4. In support of grounds of appeal raised in ITA No. 256/Srt/2024, the ld. AR of the assessee submits that there is similar delay in filing appeal before Tribunal. The assessee has filed similar affidavit of Bhadarak Ramesh Chandra Nagarath in explaining the sufficient cause for condoning the delay. The ld AR for the assessee submits that application for approval under Section 80G(5) of the Act was ITA No. 255 & 256/Srt/2024 Shree Mahalakshmi Welfare & Charitable Trust Vs CIT(E) 4 rejected by the ld. CIT(E) on two counts i.e. firstly that application in Form 10AB for approval under section 80G(5) is filed on 30/03/2023 and as per CBDT Circular No. 8/2022, the assessee was required to file such application on or before 30/09/2022 and secondly there is no valid registration under Section 12A/12AB of the Act which is prerequisite for grant of approval under Section 80G of the Act. The ld AR for the assessee submits that so far as first objection is concerned, CBDT has already issued a Circular No.7/2024, wherein the time limit for seeking approval under section 80G(5) has been extended upto 30.06.2024, thus similar relaxation may be allowed to the assessee. So far as second objection regarding registration under section 12A/12AB is concerned, again the rejection of such application the assessee has already filled appeal before this Tribunal, which is subject matter of ITA No. 256/Srt/2024. To support his various submission, on the issuance notice through ITBA portal, the ld. AR of the assessee relied upon the decision of Hon'ble Punjab & Haryana High Court in Munjal BCU Centre of Innovation and Entrepreneurship Vs CIT(E) (2024) 160 taxmann.com 629 (P&H). The assessee has also filed copy of CBDT Circular No. 7/2024. 5. On the other hand, the learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the revenue on the issue of condonation of delay would submit that he left the decision on the discretion of the Bench. On merit of the case, the ld. CIT-DR for the revenue supported the order of ld. CIT(E). The ld. CIT-DR for the revenue submits that the assessee was given sufficient and reasonable opportunity to the assessee for making submission to prove the object and activities of the Trust. The assessee failed to respond such notices. The assessee has applied for registration under section 12A as well as for approval ITA No. 255 & 256/Srt/2024 Shree Mahalakshmi Welfare & Charitable Trust Vs CIT(E) 5 under section 80G(5) on ITBA portal, so the ld AR for assessee cannot take plea that he was not aware of such notices. The notices are served through e-mail provided at the time of filing application online. The objection of the assessee about the service of notice of ld CIT(E) is not correct. Since the object and activities is not examined by the ld. CIT(E), therefore, in case, if this Bench consider that the assessee deserve any opportunity, the matter may be restored to the file of ld. CIT(E) to consider the object of assessee-trust and its activities and to pass order only thereafter. The assessee may be directed to be more vigilant in future for making compliance in time. 6. We have considered the rival submissions of both the parties and perused the record carefully. Firstly, we are considering the plea of condonation of delay. Before us, the ld. AR of the assessee vehemently submitted that neither the physical copy of impugned order was received nor it was received on registered e-mail. To support such submission, the assessee has filed affidavit of Bhadarak Ramesh Chandra Nagarsheth, one of the trustee of the assessee trust. Considering the fact that the delay is neither intentional nor deliberate or there is no inordinate delay in filing this appeal. The assessee is not going to be benefitted by filing appeal belatedly. Considering the submission of ld. AR of the assessee and facts of the case, the delay in filing appeal from the date of impugned order, is condoned. Now adverting on merit of the case. 7. We find that at the time of filing application for registration in Form 10AB as per Rule 17A, the assessee furnished required details. In addition to, the assessee also filed copy of trust deed, the registration certificate with Charity Commissioner, old registration certificate under Section 12A, audit report and ITA No. 255 & 256/Srt/2024 Shree Mahalakshmi Welfare & Charitable Trust Vs CIT(E) 6 details of activities on 30/03/2023, as per acknowledgment placed on record. Thus, prima facie, the assessee has furnished certain details to substantiate the object and activities. However, the facts remained the same that the ld. CIT(E) rejected the application by taking view that despite issuing show cause notice dated 23/09/2023, the assessee neither filed any submission nor sought any adjournment. Considering the fact that the substantial right of assessee are involved in the present appeal and the assessee has prima facie furnished certain requisite details, therefore, in our view, the assessee deserve one more opportunity for considering their case on merit and examine the object and activities of the assessee and pass order in accordance with law. Needless to direct that before passing the order, the ld. CIT(E) shall grant a fair and reasonable opportunity of hearing to the assessee. The assessee is also directed to be more vigilant in making compliance in time and not raise a technical issue of non-service of physical notice as the assessee may be very well aware that in a new regime, the application is filed electronically, the show cause notice as well as the compliance is mandatorily be made only through ITBA Portal. Hence, ground No. 1, 2 to 5 are allowed for statistical purpose. 8. So far as ground No.2 is concerned, we find that such ground of appeal is not emanating from the order impugned before us. Moreover, no submission was made against this ground of appeal. Thus, ground No. 2 of the appeal is dismissed. 9. Ground No. 6 of the appeal relates to quashing of order of ld CIT(E) and allowing registration under section 12A. Considering the facts that we have restore the appeal to the file of lf CIT(E) to consider the application afresh and examine the ITA No. 255 & 256/Srt/2024 Shree Mahalakshmi Welfare & Charitable Trust Vs CIT(E) 7 object and activities of the assessee and pass order in accordance with law. Hence, this ground of appeal have become infructuous and demised as such. In the result, this appeal of assessee is allowed for statistical purposes only. 10. So far as grounds of appeal raised in ITA No. 256/Srt/2024 are concerned, we find that there is similar delay in filing this appeal as in ITA No. 256/Srt/2024, which we have already allowed in earlier paras of this order. Therefore, similar delay in filing of this appeal is also allowed with similar directions. 11. On merits, we find the application under Section 80G(5) of the Act was rejected on two counts firstly it was not filed on or before 30/09/2022 as per the extended time period allowed by CBDT in its Circular No. 08/2022, and secondly there is no valid registration under Section 12A/12AB of the Act. We find that the CBDT in its recent Circular No. 7/2024 has extended the time limit for filing application under Section 80G(5) of the Act up to 30/06/2024, therefore, such relaxation is also allowed to the assessee. So far as the other objection of ld. CIT(E) regarding registration under Section 12A/12AB of the Act is concerned, as we have restored such corresponding appeal to the file of ld. CIT(E), therefore, such objection would not survive. Hence, this appeal is also restored back to the file of ld. CIT(E) to reconsider it afresh and pass order in accordance with law. 12. In the result, both these appeals of the assessee are allowed for statistical purposes only. Order announced in open court on 13 th May, 2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: /05/2024 *Ranjan ITA No. 255 & 256/Srt/2024 Shree Mahalakshmi Welfare & Charitable Trust Vs CIT(E) 8 Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Surat