DURGA DEVI SOHAN LAL KHATRI CHARITABLE TRUST , Ajmer V. The CIT Exemption, JAIPUR

ITA 327/JPR/2023

AI Insights

The case involves two appeals filed by the Durga Devi Sohan Lal Khatri Charitable Trust against the orders of the CIT(Exemption), Jaipur, which rejected the trust's applications for registration under sections 12AB and 80G of the Income Tax Act, 1961. The CIT(Exemption) had rejected these applications on grounds including the non-registration of the trust under the Rajasthan Public Trust Act and doubts regarding the genuineness of the trust's activities. The tribunal found that the trust was not given adequate opportunity to present its case or submit necessary documents, leading to the decision to restore the matter to the CIT(Exemption) for a re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132441 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-09-2023
• Assessment Year: misc
• Appeal Filed On: 18-05-2023
• Other Referred Cases: New Noble Education Society
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Non compliance
• Section: 80G; 10(23C)

Judgement Text

vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA No. 326 & 327/JPR/2023 Durga Devi Sohan Lal Khatri Charitable Trust, Ajmer-305001. cuke Vs. The CIT-Exemption, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.:AAATD 4425 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :Shri Ankur Singh Shekhawat- Proxy jktLo dh vksjls@Revenue by: Shri Arvind Kumar (CIT) lquokbZ dh rkjh[k@Date of Hearing :13/09/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 18/09/2023 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. These are two appeals filed by the assessee against two different orders of the Learned Commissioner of Income Tax (Exemption), Jaipur [herein after referred to as “Ld.CIT(E)] both dated 20.03.2023 and 20.04.2023 passed under section 12AB and 80G of the Income Tax Act, 1961 respectively. 2. The grounds of appeal raised by the assessee in both the appeals are as under:- ITA No. 326/JPR/2023 U/s 12AB of I.T. Act, 1961 2 ITA No. 326 & 327/JPR/2023 Durga Devi Sohan Lal Khatri Charitable Trust “1. On the facts and circumstances of the case, the Ld. CIT (Exemption) grossly erred in law and facts by rejecting the application of Appellant for registration under Section 12AB on the ground of mere non registration of trust under Rajasthan Public Trust Act without making any observation on materiality of such non compliance on achievement of the objects of the trust. Further, such rejection was made on the basis of erroneous interpretation of Honorable Supreme Court Judgment in the case of New Noble Education Society. The fact that Appellant has already made an application for the desired registration was also ignored. It is thus hereby prayed for quashing the rejection order so passed and order for grant of registration. 2. On the facts and circumstances of the case, the Ld. CIT(Exemption) grossly erred in law and facts by rejecting application under Section 12AB on the ground of non satisfaction about the genuineness of activities of the trust by ignoring the submissions made by the Appellant and on the basis of reasons that are not connected with genuineness of activities of trust. Further, no proper opportunity of being heard was provided to Appellant for submitting additional documents. It is thus hereby prayed for quashing the rejection order so passed and order for grant of registration. 3. On the facts and circumstances of the case, the Ld. CIT(Exemption) grossly erred in law and facts by rejecting the application for registration under Section 12AB of the Appellant on ground of non genuineness of activities, compliances and non registration under RPT Act when it was an admitted fact that the trust has not commenced its activities yet. Hence, it is hereby prayed for quashing the rejection order so issued. 4. The Appellant hereby craves the leave to add, delete, amend or abandon any grounds of this appeal at the time of or before the hearing of the case.” ITA No. 327/JPR/2023 U/s 80G of I.T. Act, 1961 “1. On the facts and circumstances of the case, the Ld. CIT(Exemption) has grossly erred in law and facts by rejecting the application of Appellant seeking exemption under Section 80G on the ground of rejection of Appellant's application for registration under Section 12AB when such rejection was itself not as per provisions of law. It is hereby thus prayed for quashing the said rejection order and direct for accepting the application so made by the Appellant. 2. On the facts and circumstances of the case, The Ld. CIT(Exemption) grossly erred in rejecting the application made by the Appellant for seeking exemption under Section 80G without affording reasonable opportunity of being heard to 3 ITA No. 326 & 327/JPR/2023 Durga Devi Sohan Lal Khatri Charitable Trust the Appellant. It is thus hereby prayed for quashing the said rejection order so made as it was against the principles of natural justice. 3. The Appellant hereby craves the leave to add, delete, amend or abandon any grounds of this appeal at the time of or before the hearing of the case.” 3. Apropos to the grounds so raised by the assessee in ITA No. 326/JPR/2023, the ld. CIT(E) rejected the assessee’s claim of registration 12AB of the Act by observing as under:- “However, even after giving sufficient opportunities, the applicant has failed to submit the following details:-  Note on charitable activities undertaken by trust.  Source of acquisition of property by the trust. In the absence of such documents/details, it could not be determined whether the applicant is genuinely carrying out charitable activity as per its objects. 3.2 Application under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961 is to be filed in cases where provisional registration had already been granted, (a) at least prior to 8 months before the expiry of the said provisional registration or (b) within 6 months from the date of commencement of its activities whichever is earlier. On perusal of the form 10AC (order for provisional registration) furnished by the applicant, it is seen that such registration has been granted from the AY. 2023-24 to 2025-26 which implies that provisional registration in case of the applicant is valid till FY 2024-25. Thus, the applicant doesn't fall under the criteria mentioned in (a) above. Further in its reply dated 06.02.2023, the applicant has mentioned the following:- “There were no activities during the desired period." Hence, it is clear that the applicant has not yet commenced its activities. The same can also be derived from the Income and Expenditure Accounts furnished by the applicant where no expenses have been incurred. Thus, the applicant also fails criteria (b) cited above and thus is ineligible for registration u/s 12AB of the Act. To furnish clarification on the same, the applicant was asked to file the 4 ITA No. 326 & 327/JPR/2023 Durga Devi Sohan Lal Khatri Charitable Trust following details vide this office letter dated 15.03.2023 which is reproduced as under:- "On perusal of the documents submitted by you is seen that the trust is 20 years old and no charitable activities have been done by the trust except acquisition of two properties. Please give details of both properties their photo and purpose for which same is being used. Explain the same and why the application filed by you should not be rejected" However, even after giving sufficient opportunities, the applicant has failed to submit the clarification on the above and thus failed to justify its claim of registration u/s 12A8 of the Act. Therefore, applicant's claim of registration u/s 12AB is also liable to be rejected on ground of not proving its genuineness of activity, 04. In view of above discussion at length, applicant's claim of registration under section 12AB is being rejected on following grounds: -  Non-registration with RPT ACT, 1959.  Genuineness of activities and non-compliance.” 4. Apropos to the ground so raised by the assessee in ITA No. 327/JPR/2023, the ld. CIT(E) rejected the assesee’s claim of exemption u/s 80G of the Act by observing as under:- “1. The applicant filed online application online on 04.10.2022 in Form No. 10AB for seeking exemption u/s 80G of the Income Tax, 1961. 2. As per rule 11AA of the Income Tax Rule, 1962, the registration u/s 12A/12AA or notification u/s 10(23C) is a precondition for granting approval u/s 80G of the I.T. Act, 1961. Vide this office order No. ITBA/EXM/F/EXM45/2022-23/1050990260(1) dated 20.03.2023 the applicant society/trust/samiti has been denied registration u/s 12AB. Therefore, it is not eligible for exemption u/s 80G of the IT Act, 1961. 3. In view of above discussion, the application in form No. 10AB seeking exemption u/s 80G is rejected. The applicant is, however, at liberty to apply afresh after completing the requisite details.” 5 ITA No. 326 & 327/JPR/2023 Durga Devi Sohan Lal Khatri Charitable Trust 5. During the course of hearing, the ld. AR of the assessee in both the appeals mainly submitted that the assessee if given an opportunity will be able to satisfied the queries/ issues raised / details to be submitted and thus in both the case the ld. AR of the assessee prayed that one more chance of presenting the case of the assessee be given. 6. Per contra, the ld. DR relied on the orders of the ld. CIT(E) and objected to the prayer of the ld. AR of the assessee. 7 We have heard the rival contentions and perused material available on record. The Bench noted that ld. CIT(E) has rejected the applications of the assessee u/s 12AB and u/s 80G(5) of the Act as narrated above in the respective orders that the applicant failed to submit the details called for. From the order we have persuaded that the details required are note on the activity and the source of property for 12AB and as regards the registration of 80G the same was rejected as the assessee was not granted the registration u/s. 12AB. Thus, ongoing through afore said query we are of the considered view that if the assessee be given a chance can submit the details and therefore, considering the request of the ld.AR of the assessee we are restoring the matter to the file of the CIT(E) with direction to grant opportunity of being heard in respect of both the applications of the assessee. The Bench does not want to go into merit of the case but it is 6 ITA No. 326 & 327/JPR/2023 Durga Devi Sohan Lal Khatri Charitable Trust imperative that the assessee must be provided adequate opportunity of being heard by the ld. CIT(E). In this view of the matter, the Bench feels that the assessee should be given one more chance to contest the case before the ld. CIT(E) and the assessee is directed to produce all the relevant papers concerning both the applications so filed before the ld. CIT(E) to settle the dispute raised hereinabove. 8. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. CIT(E) independently in accordance with law. In the result, the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open court on 18/09/2023. Sd/- Sd/- ¼jkBksMdeys'kt;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 18 /09/2023 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Durga Devi Sohan Lal Khatri Charitable Trust, Ajmer. 2. izR;FkhZ@ The Respondent- CIT, Exemption ,Jaipur. 7 ITA No. 326 & 327/JPR/2023 Durga Devi Sohan Lal Khatri Charitable Trust 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File ITA No. 326 &327/JPR/2023) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar