KUKARVADA JAIN SANGH, MUMBAI V. COMMISSIONER OF INCOME TAX (EXEMPTION) , MUMBAI

ITA 3012/MUM/2022

AI Insights

The case involves Kukarvada Jain Sangh, which appealed against the decision of the Commissioner of Income Tax (Exemptions), Mumbai, who rejected their application for registration under section 12AB of the Income Tax Act, 1961. The CIT(E) was not satisfied with the genuineness of the trust's activities as the financials showed expenditure for religious purposes while the trust claimed to be charitable. The Tribunal found that the CIT(E) did not provide adequate opportunity for the assessee to comply with the requirements, leading to the setting aside of the CIT(E)'s order and restoration of the application for further consideration.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299496 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 06-02-2023
• Assessment Year: 2022-2023
• Appeal Filed On: 27-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM AND SHRI AMARJIT SINGH, AM आयकर अपील सं/ I.T.A. No. 3012/Mum/2022 (निर्धारण वर्ा / Assessment Year: 2022-23) Kukarvada Jain Sangh 23-B-16 Akash Co. Op Housing Society, Zalawad Nagar Ashok Chakravarty Road Ka Mumbai-400101. बिधम/ Vs. CIT(E), Mumbai R. No. 601, 6 th Floor, Cumballa Hill, MTNL TE Building, Peddar Road, Dr. Gopalrao Deshmukh Marg, Mumbai-400026. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAFTS0766G (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 07/02/2023 घोषणा की तारीख /Date of Pronouncement: 27/02/2023 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the action of the Ld. Commissioner of Income Tax (Exemptions), Mumbai dated 29.10.2022 rejecting the application for grant of registration u/s 12AB of the Income Tax Act, 1961 (hereinafter “the Act”). 2. None appeared for the assessee. The grounds of appeal of the assessee are as under: - “1. The commissioner of Income (Exemption) Mumbai has earned in law and on facts, in rejecting the application in form 10AB u/s 12AB of the Income Tax Act, 1961, on non satisfaction of genuineness of the activities of the trust. 2. The CIT(Exemption) has erred in law, in over looking and in summarily rejecting and not considered, the tangible material Assessee by: None Revenue by: Shri Nimesh Yadav (DR) ITA No. 3012/Mum/2022 A.Y.2022-23 Kukarvada Jain Sangh 2 submitted during the proceeding u/s 12AB of Income Tax Act, 1961.” 3. From the perusal of the grounds of appeal, it is discerned that the assessee is aggrieved by the action of the Ld. CIT(E) rejecting the application for registration u/s 12AB of the Act on the ground that he was not satisfied with the genuineness of the activity of the trust. According to the assessee, the Ld. CIT(E) has overlooked the material submitted by it during the proceedings. 4. Brief facts as noted by the Ld. CIT(E) is that the applicant had been issued provisional registration u/s 12AB of the Act by the CPC. And thereafter, it had filed an application in Form no. 10AB seeking registration u/s 12AB of the Act. According to the Ld. CIT(E), he found that the Form no. 10AB was not complete, since all the documents required to be filed along with the ibid Form was not furnished. Therefore, he issued notice dated 07.10.2022 requesting the assessee to file complete set of documents as per Rule 17A(2) of the Income Tax Rules, 1962 (hereinafter “the Rules”). According to the Ld. CIT(E), pursuant to the notice, the assessee had filed certain submission dated 11.10.2022. But, again Ld CIT(E) was not satisfied with the response of assessee, so, he again issued show cause notice on 20.10.2022 which according to him has not been complied by the assessee. Further, according to the Ld. CIT(E), a perusal of the application Form no. 10AB filed by the assessee would reveal that the nature of activities of the trust has been stated to be charitable at Sr. ITA No. 3012/Mum/2022 A.Y.2022-23 Kukarvada Jain Sangh 3 No. 3. But, a perusal of the expenditure made by it on the objects of the trust reveals it was for religious purpose. According to the Ld. CIT(E), registration u/s 12AB of the Act can be granted in terms of the provisions of Section 12AB(1)(b) of the Act, only after being satisfied about the objects of the trust or institution and the genuineness of activities, and also in compliance to any other law for the time being in force as are material for the purposes of achieving its objects. And since the assessee was unable to satisfy the requirement of law as afore-stated, and the limitation to decide the application expires on or before 31.10.2022, he had no other choice but to reject the application seeking registration under section 12AB of the Act. From the afore-stated action of the Ld. CIT(E), it is discerned that the Ld. CIT(E) had first issued notice on 07.10.2022 calling for furnishing of certain documents/details from assessee. However, having taking note of some deficiency in the clarification/explanation given by assessee, the Ld. CIT(E) again issued another notice/show cause notice dated 20.10.2022 which according to Ld. CIT(E) was not complied by assessee. Therefore, the Ld. CIT(E) was of the opinion that he could not satisfy himself about the genuineness of the activities of assessee and pointed out some (Serial no. 3 of Form 10AB which shows nature of activity of the trust as charitable whereas financials shows that expenditure is for religious purpose). And since assessee could not respond to the show cause notice dated 20.10.2022, the Ld. CIT(E) was of the opinion that he could not satisfy himself as to the genuineness of the assessee and as required ITA No. 3012/Mum/2022 A.Y.2022-23 Kukarvada Jain Sangh 4 by Section 12AB(1)(b) of the Act. And since the limitation period to decide the application was expiring on 31.10.2022, he rejected the application of assessee trust. We do not countenance the impugned action of Ld CIT(E) and note that the entire process/action on the application/Form 10AB took place in the month of October, 2022, though application was filed by assessee earlier; and the Ld CIT(E) taking into consideration the assessee’s failure to comply with the show cause notice dated 20.10.2022, has passed the impugned order dated 29.10.2022, citing non-compliance on the part of assessee. Therefore, we are of the opinion that assessee didn’t get proper opportunity before Ld CIT(E), so, we set aside the order of the Ld. CIT(E) and direct the assessee to file reply to the show cause notice dated 20.10.2022 and the assessee is at liberty to file documents/explanation/details as required by law to enable the Ld. CIT(E) to take an informed decision on its application for grant of registration u/s 12AB of the Act. The assessee to dispel the doubts/contradiction pointed out by the Ld. CIT(E) in the impugned order. And we clarify that by our action, we are not expressing any view on merits about the action of Ld CIT(E) in respect of assessee’s application for registration u/s 12 AB of the Act. In the light of the discussion, we restore the application back to the file of Ld. CIT(E) with a direction to the Ld. CIT(E) to decide the same in accordance to law, after giving proper opportunity to the assessee. ITA No. 3012/Mum/2022 A.Y.2022-23 Kukarvada Jain Sangh 5 5. In the result, the appeal filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on 27/02/2023. Sd/- Sd/- (AMARJIT SINGH) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 27/02/2023. Vijay Pal Singh, (Sr. PS) आदेश की प्रनिनिनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीिीय अनर्करण, मुंबई / ITAT, Mumbai