Smart Foundation, Ahmedabad V. The Commissioner of Income Tax (Exemption), Ahmedabad

ITA 313/AHD/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4605 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-12-2023
• Assessment Year: 2022-2023
• Appeal Filed On: 30-04-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non compliance
• Section: 32; 12AA; 10(23C)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o . 3 1 3/ A h d /2 0 23 ( A s se ss m e nt Y e a r : 20 22- 2 3 ) S m ar t F o u nd at io n , 5 , Pa ll a v A pa r t m en t, K a il a s h th So cie t y, B h a i R av n ath B r i s Sa me , Ma ni n ag a r , Ah me d a ba d - 38 0 0 08 V s .C o mm i s si o n er o f I n co m e Ta x ( Ex e m pt io n) , Ah me da bad [ P A N N o . AA Q T S4 3 2 3L ] (Appellant) .. (Respondent) Appellant by : Shri Prakash D Shah, A.R. Respondent by: Shri Sudhendu Das, CIT D.R. D at e of H ea r i ng 13.12.2023 D at e of P r o no u n ce me nt 20.12.2023 O R D E R PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption) (in short “Ld. CIT(E)”), Ahmedabad in DIN & Notice No. ITBA/EXM/F/EXM45/2022-23/1050379913(1) vide order dated 03.03.2023 passed for the Assessment Year 2022-23. 2. The assessee has raised the following grounds of appeal:- “1. That the Ld. CIT(E) has erred in law and fact by rejecting the application for registration under Section 12AB of the Act and therefore the ld. CIT(E) is to be directed to grant registration under Section 12AB of the Act. 2. That your appellant craves a leave to add, alter or amend any grounds at the time of hearing.” ITA No. 313/Ahd/2023 Smart Foundation vs. CIT(E) Asst. Year –2022-23 - 2 - 3. The brief facts of the case are that the assessee filed application for registration under Section 12AB of the Act, which was rejected by CIT (Exemptions) vide order dated 03.03.2023. The reason for rejecting the application for registration of trust filed by the assessee was that the assessee was given two notices of hearing dated 10.12.2022 and 03.01.2023 and both the notices remained un-complied with. Accordingly, CIT(Exemptions) rejected the application filed by the assessee with the following observations: “9. In spite of specific requisitions, the applicant/assessee has not submitted the requisite details. Therefore, no verification of the objects as per the constitution/deed the activities could be carried out. Thus, the genuineness of the activities does not get established, due to non compliance by the applicant/assessee. Section 12AB makes, it very clear that before granting registration under this section, the Commissioner has to satisfy himself about the genuineness of the activities of the trust or institution and also he has to verify that these activities are in consonance with the objects of the trust or institution. Further, he has to ensure that other laws material for the purpose of achieving objects are complied with. Reliance in this regard is also placed on the judgment delivered by the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Ujjain Vs Dawood Bohara Jamat Civil Appeal No. 2492 of 2014, wherein the Hon'ble Apex Court while adjudicating similar provisions u/s. 12AA of the Act has held as under: "Section 12AA lays down the procedure to be followed by the Commissioner for grant or refusal of application for registration made under Section 12A. According to procedure so laid down, the Commissioner shall call for documents and information and conduct an enquiry to satisfy himself of the genuineness of the institution and upon reaching satisfaction of the charitable or religious nature of the objects and the authenticity of the activities of the institution, he would grant the registration. If he is not satisfied of the aforesaid, the request made in the application may be declined." 10. Further, while adjudicating similar provisions u/s 10(23C) of the Act, the Hon'ble Supreme Court in the case of M/s New Noble Educational Society in Civil Appeal No. 3795 of 2014 has held as under. "While considering applications for approval under Section 10(23C), the Commissioner or the concerned authority as the case may be under the second proviso is not bound to examine only the objects of the institution. To ascertain the genuineness of the institution and the manner of its functioning, the Commissioner or other authority is free to call for the audited accounts or other such documents for recording satisfaction where the society, institution or institution genuinely seeks to achieve the objects which it professes. The ITA No. 313/Ahd/2023 Smart Foundation vs. CIT(E) Asst. Year –2022-23 - 3 - observations made in American Hotel (supra) suggest that the Commissioner could not call for the records and that the examination of such accounts would be at the stage of assessment. Whilst that reasoning undoubtedly applies to newly set up charities, institutions etc. the proviso under Section 10(23C) is not confined to newly set up institutions - it also applies to existing ones. The Commissioner or other authority is not in any manner constrained from examining accounts and other related documents to see the pattern of income and expenditure." 11. As discussed above, the applicant/assessee has failed to file documentary evidences to enable me to satisfy about the genuineness of its activities and to verily these activities are in consonance with its objects. 12. Looking to the above facts, I am unable to arrive at the satisfaction of the genuineness of the activities. Hence, the present application filed in Form No. 10AB for the registration u/s. 12AB of the IT. Act, 1961, is rejected.” 4. The assessee is in appeal before us against the aforesaid order passed by CIT(Exemptions). The Counsel for the assessee submitted before us that firstly, the email ID to which the notices were sent by the CIT(Exemptions) were incorrect. The assessee submitted that the notices were sent to the email ID of one Shri Pinkesh Shah, who is one of the trustees of the assessee trust. Whereas, in the application form the correct email as [e-mail], which is mentioned at Page 4 of Form 10AB. Secondly, the Counsel for the assessee submitted that only two notices of hearing were sent by the Ld. CIT(Exemptions) and therefore the proceedings were completed in a very summary manner, without giving adequate opportunity of hearing to the assessee to present its case on merits. Accordingly, the Counsel for the assessee submitted that in view of the fact that the assessee was never in receipt of notice issued by CIT(Exemptions) and further, the proceedings were also completed only after giving two notices of hearing, in interest of justice the matter may be restored to the file of CIT(Exemptions) for de novo consideration, after giving due opportunity of hearing to the assessee. ITA No. 313/Ahd/2023 Smart Foundation vs. CIT(E) Asst. Year –2022-23 - 4 - 5. In response, the Ld. DR placed reliance on the observations made by CIT(Exemptions) in his order. 6. We have heard the rival contentions and perused the material on record. On going to the facts of the case, we observe that the notices which were sent by CIT(Exemptions) were sent to a different email ID as mentioned in the form 10 AB filed by assessee. Accordingly, the assessee had genuine reasons as to why he could not cause appearance on the dates mentioned in the notices. Secondly, it is further observed that CIT(Exemptions) gave only two notices of hearing to the assessee and the proceedings were completed within a very short span of time. Therefore, in the interest of justice, looking into the facts of the instant case, the matter is being restored to the file of CIT(Exemptions) for fresh consideration, after giving due opportunity of hearing to the assessee. 7. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 20/12/2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL)ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 20/12/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आयु त / Concerned CIT 4. आयकर आयु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad