KURNIV FOUNDATION ,MUMBAI V. COMMISSIONER OF INCOME TAX (EXEMPTION) , MUMBAI

ITA 4805/MUM/2024

AI Insights

The case involves Kurniv Foundation, a charitable trust, which appealed against the decisions of the Commissioner of Income Tax (Exemption) rejecting its registration under Section 12AB and cancelling its registration under Section 80G of the Income-tax Act, 1961. The primary contention was that the trust was engaged in charitable activities outside India, which was not permissible under the provisions applicable for the registrations sought. The trust argued that it only conducts activities within India and provided evidence to support this claim. The Tribunal found that the trust was not given adequate opportunity to respond to the show cause notice and that there was a reasonable cause for the non-compliance due to the travel of one of the trustees. Consequently, the Tribunal remanded the matter for fresh consideration.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471362 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: misc
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BISWANATH DAS
• Assessee Lawyers: PRAKASH JOTWANI
• Keywords: Set aside; Opportunity of being heard; Reasonable cause; Charitable institution; Cancellation of registration
• Section: 12; 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA Nos. 4805 & 4806/MUM/2024 Assessment Years: NA Kurniv Foundation Flat No.3, 39 Marine Chambers, 4th floor, Sir Vitthaldas Thackersey Marg Opp Gol Masjid, Mumbai 400020 Vs. Commissioner of Income-tax (Exemption), Mumbai Room No. 601, 6th floor, MTNL TE Building, Cumballa Hill, Pedder Road, Mumbai-400026. PAN NO. AAETK 0656 L Appellant Respondent Assessee by : Mr. Prakash Jotwani Revenue by : Mr. Biswanath Das, CIT-DR Date of Hearing : 17/03/2025 Date of pronouncement : 17/03/2025 ORDER PER OM PRAKASH KANT, AM The Captioned appeals filed by the assessee are directed against two separate orders, both dated 24.07.2024, passed by the Ld. Commissioner of Income-tax (exemption), Mumbai in relation to registration of the assessee trustee u/s 12 AB and section 80G of the Income-tax Act, 1961[in short ‘The Act’] respectively. As issue- in-dispute involved in both the appeals are connected same were heard together and disposed of consolidated order for 2. Grounds raised in ITA No. 4805/Mum/2024 are reproduced as under:- “1. The learned CIT(Exemptions) has erred in rejecting the registration of the appellant, being a charitable trust on the pretext that it is engaged in doing charitable activities outside India. 2. The learned CIT(Exemptions) has failed to grant the appell opportunity to describe the trust's objectives and explain that it does charitable activities only in India and does not apply any of its funds outside India. 3. The learned CIT(Exemptions) erred in providing less than three business days to comply being questioned for the first time since its formation. 4. The learned CIT(Exemptions) failed to take into consideration the numerous documents, photos, videos, etc. filed in the form of evidences in support of the trusts charitable objectives while responding to previous notices issued from the office of the learned CIT(Exemptions). The Appellant craves leave to amend, add or alter the Grounds of Appeal at or before hearing of the appellant. 3. Briefly stated, facts of the case are that the application in prescribed form No. 10AB of the I 1962 [In short ‘The Rules’] Act. The Ld. Commissioner of Income verification of the prescribed form found that area of the operation of charitable activity of Commissioner of Income ITA Nos. 4805 & 4806/MUM/2024 in both the appeals are connected same were heard together and disposed off by way of this for sake of convenience. Grounds raised in ITA No. 4805/Mum/2024 are reproduced The learned CIT(Exemptions) has erred in rejecting the registration of the appellant, being a charitable trust on the pretext that it is engaged in doing charitable activities outside India. 2. The learned CIT(Exemptions) has failed to grant the appell opportunity to describe the trust's objectives and explain that it does charitable activities only in India and does not apply any of its funds 3. The learned CIT(Exemptions) erred in providing less than three business days to comply with a notice on the objectives of the trust were being questioned for the first time since its formation. 4. The learned CIT(Exemptions) failed to take into consideration the numerous documents, photos, videos, etc. filed in the form of evidences rt of the trusts charitable objectives while responding to previous notices issued from the office of the learned CIT(Exemptions). The Appellant craves leave to amend, add or alter the Grounds of Appeal at or before hearing of the appellant.” ated, facts of the case are that the assessee filed an rescribed form No. 10AB of the Income tax Rules, 1962 [In short ‘The Rules’] seeking registration u/s 12 AB of the he Ld. Commissioner of Income-tax (exemption) after of the prescribed form found that area of the operation charitable activity of assessee included India and Commissioner of Income-tax (exemption) asked the assessee to Kurniv Foundation 2 4805 & 4806/MUM/2024 in both the appeals are connected, therefore, by way of this Grounds raised in ITA No. 4805/Mum/2024 are reproduced The learned CIT(Exemptions) has erred in rejecting the registration of the appellant, being a charitable trust on the pretext that it is engaged in 2. The learned CIT(Exemptions) has failed to grant the appellant an opportunity to describe the trust's objectives and explain that it does charitable activities only in India and does not apply any of its funds 3. The learned CIT(Exemptions) erred in providing less than three with a notice on the objectives of the trust were 4. The learned CIT(Exemptions) failed to take into consideration the numerous documents, photos, videos, etc. filed in the form of evidences rt of the trusts charitable objectives while responding to previous notices issued from the office of the learned CIT(Exemptions). The Appellant craves leave to amend, add or alter the Grounds of assessee filed an ncome tax Rules, seeking registration u/s 12 AB of the tax (exemption) after of the prescribed form found that area of the operation abroad. The Ld. the assessee to explain as why the application of the registration should not be rejected in view of the operation of the activities outside of the broader of the Indian territory, part of the assessee (exemption) rejected the application observing as under: “As per provision of section 11(1) of the IT Act, 1961 exemptions subject to the grant of registration is accorded to income i.e. applied for charitable purpose for India. The above referred clauses in you trust proposed to apply public charitable funds received beyond Indian Shores. In view of the same, this application for grant of registration is not maintainable and the same is rejected. 4. Before us, the learned counsel for the assessee submits that show cause notice was issued to the assessee on 18.07.2024, providing an opportunity to respond by 22.07.2024. The counsel referred to the show cause notice issued by the learned Commissioner of Income Tax (Exemption), available on page 68 of the paper book. Additionally, he cited the affidavit of the trustees on page 137, highlighting that the assessee was given less than three business days to respond. During this period, one of the trustees was traveling abroad, making it impractical to submit a timely response. The learned counsel further referred to pages 113 the paper book, demonstrating that the assessee had duly modified its objectives to restrict its activities within India. In light of these circumstances, he requested that the assessee be opportunity to appear before the learned Commissioner of Income Tax (Exemption) and present its case. ITA Nos. 4805 & 4806/MUM/2024 why the application of the registration should not be rejected in view of the operation of the activities outside of the n territory, but in view of the no response on the part of the assessee, the Ld. Commissioner of Income tion) rejected the application observing as under: As per provision of section 11(1) of the IT Act, 1961 exemptions subject to the grant of registration is accorded to income i.e. applied for charitable purpose for India. The above referred clauses in you trust proposed to apply public charitable funds received beyond Indian Shores. In view of the same, this application for grant of registration is not maintainable and the same is rejected. Before us, the learned counsel for the assessee submits that show cause notice was issued to the assessee on 18.07.2024, providing an opportunity to respond by 22.07.2024. The counsel referred to the show cause notice issued by the learned Commissioner of Income Tax (Exemption), available on page 68 of ook. Additionally, he cited the affidavit of the trustees on page 137, highlighting that the assessee was given less than three business days to respond. During this period, one of the trustees was traveling abroad, making it impractical to submit a timely response. The learned counsel further referred to pages 113 the paper book, demonstrating that the assessee had duly modified its objectives to restrict its activities within India. In light of these circumstances, he requested that the assessee be granted another opportunity to appear before the learned Commissioner of Income Tax (Exemption) and present its case. Kurniv Foundation 3 4805 & 4806/MUM/2024 why the application of the registration should not be rejected in view of the operation of the activities outside of the no response on the the Ld. Commissioner of Income-tax tion) rejected the application observing as under: As per provision of section 11(1) of the IT Act, 1961 exemptions subject to the grant of registration is accorded to income i.e. applied for charitable purpose for India. The above referred clauses in your trust proposed to apply public charitable funds received beyond Indian Shores. In view of the same, this application for grant of registration is not maintainable and the same is rejected.” Before us, the learned counsel for the assessee submits that a show cause notice was issued to the assessee on 18.07.2024, providing an opportunity to respond by 22.07.2024. The counsel referred to the show cause notice issued by the learned Commissioner of Income Tax (Exemption), available on page 68 of ook. Additionally, he cited the affidavit of the trustees on page 137, highlighting that the assessee was given less than three business days to respond. During this period, one of the trustees was traveling abroad, making it impractical to submit a timely response. The learned counsel further referred to pages 113-130 of the paper book, demonstrating that the assessee had duly modified its objectives to restrict its activities within India. In light of these granted another opportunity to appear before the learned Commissioner of Income 5. We have considered the rival submissions and examined the relevant records. It is evident that the application for registration under Section 12AB was primarily rejected due to non by the assessee. Before us, the learned counsel for the assessee has explained the circumstances that led to the failure to respond to the show cause notice. In our view, there was a reasonable caus this non-compliance. Furthermore, the learned counsel has submitted that the assessee has already modified its objectives to restrict charitable operations within the territory of India, and a copy of this modification has been placed on record. In t of substantive justice, we find it appropriate to set aside the order of the learned Commissioner of Income Tax (Exemption) and remand the matter for reconsideration, taking into account the assessee's submissions. Needless to say, the assessee opportunity to be heard. Accordingly, the grounds raised in the appeal are allowed for statistical purposes 6. The appeal, ITA No. 4806/Mum/2024, has been filed against the cancellation of registration under Section 80G of the Act. The learned Commissioner of Income Tax (Exemption) rejected the application for registration under Section 80G on the grounds that registration under Section 12AB was denied to the assessee. Since we have remanded the issue of registration under Section 12AB to the learned Commissioner of Income Tax (Exemption) for reconsideration, we find it appropriate to similarly remand the ITA Nos. 4805 & 4806/MUM/2024 We have considered the rival submissions and examined the relevant records. It is evident that the application for registration Section 12AB was primarily rejected due to non by the assessee. Before us, the learned counsel for the assessee has explained the circumstances that led to the failure to respond to the show cause notice. In our view, there was a reasonable caus compliance. Furthermore, the learned counsel has submitted that the assessee has already modified its objectives to restrict charitable operations within the territory of India, and a copy of this modification has been placed on record. In t of substantive justice, we find it appropriate to set aside the order of the learned Commissioner of Income Tax (Exemption) and remand the matter for reconsideration, taking into account the assessee's submissions. Needless to say, the assessee shall be granted a fair opportunity to be heard. Accordingly, the grounds raised in the appeal are allowed for statistical purposes. The appeal, ITA No. 4806/Mum/2024, has been filed against the cancellation of registration under Section 80G of the Act. The learned Commissioner of Income Tax (Exemption) rejected the application for registration under Section 80G on the grounds that stration under Section 12AB was denied to the assessee. Since we have remanded the issue of registration under Section 12AB to the learned Commissioner of Income Tax (Exemption) for reconsideration, we find it appropriate to similarly remand the Kurniv Foundation 4 4805 & 4806/MUM/2024 We have considered the rival submissions and examined the relevant records. It is evident that the application for registration Section 12AB was primarily rejected due to non-compliance by the assessee. Before us, the learned counsel for the assessee has explained the circumstances that led to the failure to respond to the show cause notice. In our view, there was a reasonable cause for compliance. Furthermore, the learned counsel has submitted that the assessee has already modified its objectives to restrict charitable operations within the territory of India, and a copy of this modification has been placed on record. In the interest of substantive justice, we find it appropriate to set aside the order of the learned Commissioner of Income Tax (Exemption) and remand the matter for reconsideration, taking into account the assessee's shall be granted a fair opportunity to be heard. Accordingly, the grounds raised in the The appeal, ITA No. 4806/Mum/2024, has been filed against the cancellation of registration under Section 80G of the Act. The learned Commissioner of Income Tax (Exemption) rejected the application for registration under Section 80G on the grounds that stration under Section 12AB was denied to the assessee. Since we have remanded the issue of registration under Section 12AB to the learned Commissioner of Income Tax (Exemption) for reconsideration, we find it appropriate to similarly remand the matter of registration under Section 80G for fresh adjudication. Accordingly, the grounds of appeal are allowed for statistical purposes. 7. In the result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open Court on (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 17/03/2025 Disha Raut Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA Nos. 4805 & 4806/MUM/2024 registration under Section 80G for fresh adjudication. Accordingly, the grounds of appeal are allowed for statistical both the appeals of the assessee are allowed for Order pronounced in the open Court on 17/03/2025. Sd/- RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Kurniv Foundation 5 4805 & 4806/MUM/2024 registration under Section 80G for fresh adjudication. Accordingly, the grounds of appeal are allowed for statistical both the appeals of the assessee are allowed for /03/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "