SURAT SEWA FOUNDATION,SURAT V. CIT(EXEMPTION), AHMEDABAD

ITA 735/SRT/2024

AI Insights

The case involves two appeals by Surat Sewa Foundations against the orders of the Commissioner of Income-tax (Exemption), Ahmedabad, which rejected the applications for registration under sections 12A and 80G of the Income Tax Act. The Tribunal found that the CIT(E) had not considered the merits of the case due to non-compliance with procedural requirements by the assessee. However, it was determined that the principles of natural justice were violated as the assessee was not given adequate opportunity to present its case. The Tribunal thus remitted the matter back to the CIT(E) for a fresh examination on merits, subject to certain conditions including the payment of costs.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 40256 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Other Referred Cases: FI Foundation vs. CIT(E)
• Laws Referred To: Income-tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: NILISHA SHAH
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reasonable cause; Principle of natural justice
• Section: 250; 12A; 80G

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.646 & 735/SRT/2024 (Hybrid Hearing) Surat Sewa Foundations, 302, 3rd Floor, Pragati Tower, B/h Daxeswar Mandir, Pandesara S.O., Pandesara - 394221 Vs. The CIT(Exemption), Ahmedabad èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ABHCS4135K (Appellant) (Respondent) Appellant by Ms. Nilisha Shah, CA Respondent by Shri Ravi Kant Gupta, CIT(DR) Date of Hearing 30/12/2024 Date of Pronouncement 31/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: These two appeals emanate from the order dated 05.04.2024 and 03.04.2024 passed by the learned Commissioner of Income-tax (Exemption), Ahmedabad [in short “the CIT(E)”], wherein CIT(E) rejected assessee’s application filed in Form No.10AB u/s 12A(1)(ab)(ii) of the Income-tax Act (for short ‘the Act’) and also cancelled the provisional registration u/s 80G of the Act. Since the assessee as well as the assessment year in these two appeals are same, with the consent of the both parties, the appeals are clubbed and heard together and are decided by passing a common order for the sake of convenience and brevity. 2 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation 2. The grounds of appeal raised by the assessee in ITA No.646/SRT/2024 are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the Id. CIT(Exemption) has erred in rejecting the application for registration u/s. 12AB of the Income Tax Act, 1961 when assessee was prevented from reasonable cause for not complying with notices issued by CIT(E). 2. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 3. The fact of the case in brief are that the assessee filed an application for registration/incorporation in Form No.10AB u/s 12A(1)(ac)(iii) of the Act on 27.10.2023. The assessee-trust had been granted order of provisional approval in Form No.10AC on 16.02.2022 under clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act for the period commencing from AY.2022-23. In respect of the application filed by the assessee-trust in Form No.10AB, the assessee-trust was asked by CIT(E) to file details and documents vide notice dated 15.12.2023 and 09.03.2024 respectively. In response to the said notices, the assessee neither filed any response nor sought any adjournment. In absence of the requisite details, the CIT(E) decided the case based on materials available on record. At para 6.1, the CIT(E) has mentioned that self- certified copies of annual accounts and note on activities of the applicant had not been furnished by the assessee. Therefore, the CIT(E) could not verify the objects as well as activities of the assessee-trust. The CIT(E) at para 10 of his order has stated that assessee failed to file documentary evidences to enable him to satisfy about: (i) genuineness of the activities of the trust or 3 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation institutions, (ii) that the activities of trust or institutions are in consonance with the objects of the trust or institution and (iii) that other laws material for the purpose of achieving objects are complied with. Hence, the application filed in Form No. 10AB u/s 12A(ac)(iii) of the Act was rejected and provisional registration granted on 16.02.2022 was also cancelled. 4. Aggrieved by the order of CIT(E), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) submitted a paper book giving various details containing 70 pages including the Memorandum of Association, Article of Association, Certificate of Incorporation, order for provisional registration in Form No.10AC, copy of certified financial statements for AY.2022-23, Form No.10B for AY.2022-23, copy of certified financial statements for AY.2023-24, Form No.10BB for AY.2023-24, details of immovable property and identity proof of directors etc. She submitted that the assessee was incorporated on 01.12.2021. She also submitted that construction is going on and business of the assessee has not commenced. It was further submitted that other details had also been uploaded in the Income-tax Portal. Since the case has been decided without considering the merit of the case, the ld. AR requested that the matter may be set aside to the file of CIT(E) for considering the case on merit. The ld. AR of the assessee submitted that the ex parte order by CIT(E) is clearly violative of the principles of natural justice. She, therefore, requested that in the interests of justice, one 4 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation more opportunity should be given to the assessee to plead its case on merit before the CIT(E). 5. On the other hand, learned Commissioner of Income-tax - Departmental Representative (ld. CIT-DR) for the revenue did not have any objection if the matter is remitted back to the file of the CIT(E) for fresh adjudication. He, however, stated that appropriate cost may be imposed on the assessee. 6. We have head both parties and perused the materials available on record. The CIT(E) issued two notices on 15.12.2023 and 09.03.2024 but there was no compliance from the assessee. The CIT(E) has observed that the assessee failed to file documentary evidence to enable him to satisfy about the genuineness of the activities of the trust and whether the activities are in consonance with the objects of the trust. The ld. AR has contended before us that the assessee is ready to submit all details and evidences needed by the CIT(E) and one more opportunity may be given to the assessee. We find that assessee could not pursue his case before the CIT(E) by filing necessary evidences and documents. Hence, we are of the view that one more opportunity should be given to the assessee to file relevant documents/evidences and to plead his case before the CIT(E). It is settled law that principles of natural justice requires that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much into the merits of the case, in the interest of justice, we restore 5 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation the matter back to the file of CIT(E) for de novo adjudication and to pass a speaking order after hearing the assessee subject to payment of cost of Rs.10,000/- (Rupees ten thousand only) by the assessee to the credit of the “Gujarat High Court Legal Aid Authority” within 2 weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(E) and remit the matter back to the file of CIT(E) with a direction to pass de novo order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the CIT(E) by not seeking adjournment without valid reasons. With these directions, the grounds of appeal are allowed for statistical purposes. 7. In the result, appeal of the assessee is allowed for statistical purpose. ITA No.735/SRT/2024: 8. The appeal filed by the assessee is barred by limitation by 27 days in terms of provisions of section 253(3) of the Act. The assessee has filed an affidavit giving reasons for delay in filing the appeal of appeal before the Tribunal. In the affidavit, the assessee stated that CIT(E) has passed order u/s 250 of the Act on 03.04.2024. The appeal filed before this Tribunal was required to be filed within 60 days, i.e. on or before 02.06.2024. However, the assessee filed the appeal on 29.06.2024. Therefore, there is a delay of 27 days. The ld. AR submitted that the CBDT had extended the time limit for filing the application for registration u/s 12A and approval u/s 80G till 30.06.2024 vide 6 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation Circular No.7 of 2024, dated 25.04.2024. They decided initially not to file an appeal before the Tribunal and to file new Form 10AB for approval u/s 80G(5) of the Act. However, they were advised to file the appeal belatedly as abundant caution. Therefore, the appeal was filed belatedly on 29.06.2024. They also filed the new Form 10AB on 28.06.2024 for approval u/s 80G(5) of the Act which was also rejected as assessee’s application for registration u/s 12AB was already rejected. Thereafter, they were in the process of filing appeal against the new order rejecting application for approval u/s 80G(5) of the Act. The ld. AR requested to condone the delay in filing appeal before the Tribunal as the assessee has filed the appeal before the expiry of the due date of 30.06.2024 as per Circular No.7 of 2024, dated 25.04.2024. She also submitted that the delay was neither intentional nor deliberate. 9. On the other hand, the learned Commissioner of Income-tax - Departmental Representative (ld. CIT-DR) for the revenue submitted assessee has failed to explain ‘sufficient cause’ for the delay; hence, delay should not be condoned. 10. We have heard both the parties on this preliminary issue and find that there is a delay of 27 days. We find that assessee was neither negligent nor deliberate in filing the present appeal before the Tribunal. The CBDT Circular No.7/2024 had extended the time for approval up to 30.06.2024. The reasons given in the affidavit for condonation of delay would constitute “sufficient 7 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation cause” for delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing. 11. The grounds of appeal raised by the assessee in ITA No.735/SRT/2024 are as follows: “1. On the facts and in circumstances of the case as well as law, the Id. CIT(Exemption) has erred in rejecting assessee's application u/s 80G(5) filed on 27.10.2023 on the ground that assessee didn't file the application before 30.09.2022 when the assessee has filed the application in time as per the extension granted till 30.09.2023 as per circular no.6/2023 dated 20.05.2023. 2. Even otherwise, the Id. CIT(Exemption) has erred in rejecting application us 80G(5) filed on 27.10.2023 when the assessee was under honest belief that extension was granted till 30.09.2023 as per circular no. 6/2023 dated 29 05.2023. 3. It is therefore prayed that the CIT(Exemption) should be directed that order passed u/s 80G(5) of the IT Act, 1961 may please be set aside to the file of CIT(Exemption) with appropriate direction. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 12. Facts of the case are that assessee had filed Form No.10AB u/s 80G(5) of the Act on 27.10.2023. The date of registration in this case was 01.12.2021. The applicant had been granted provisional approval on 16.12.2022 in Form No.10AC under clause (vi) of first proviso to section 80G(5) of the Act for the period commencing from AY.2022-23. Vide notice dated 12.01.2024, the CIT(E) intimated the applicant that the date of commencement of activities should be six months prior to date of filing of Form 10AB. He requested as to why the application filed in section 80G(5)(iii) in Form 10AB should not be treated as not filed and be not rejected. The appellant did not file any response to the above notice of the CIT(E). Thereafter, the CIT(E) observed 8 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation that appellant was required to file application in Form 10AB on or before 30.09.2022, which it failed to submit. As the application was not filed before 30.09.2022 within the extended time limit as per Circular No.8 of 2022, the application was rejected without going into the merits of the case. The provisional approval was also cancelled. 13. Aggrieved by the order of CIT(E), the assessee-trust has filed appeal before the Tribunal. The ld. AR submitted that as the assessee-trust was granted provisional approval, it was required to file the application for final approval at least six months prior to expiry the period of provisional approval or within six months of commencement of its activities, whichever is earlier, as per the first proviso to section 80G(5) of the Act. As the assessee-trust did not comment the activity, it was required to file application for approval u/s 80G(5) before 30.09.2024, as it was granted approval till AY.2024-25. Therefore, the application filed on 27.10.2023 was in time. Without prejudice to the above, the ld. AR submitted that subsequent to the Circular No.8/2022, Circular No.6/2023, dated 24.06.2023 was issued extending the date till 30.09.2023. But, there was confusion that the extension does not apply to application for approval u/s 80G of the Act. However, after the order passed by CIT(E), a fresh Circular No.7/2024 was issued on 25.04.2024, extending the date till 30.06.2024. The ld. AR submitted that para 4.1 of the said Circular (supra) is applicable in case of the assessee-trust which extends time for making fresh application up to 30.06.2024. She submitted that assessee-trust 9 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation has already made application u/s 80G(5) and the CIT(E) has rejected such application before issuance of the above Circular No.7/2024 (supra) solely on the ground that application was furnished after the permissible time. The fresh application was required to be filed on or before 30.06.2024. The assessee did not file the fresh application as the matter was pending before the Tribunal. The ld. AR submitted that the application filed earlier should be treated as fresh application filed before 30.06.2024 as per the intent and spirit of the Circular No.7/2024 (supra). She relied on the decision of ITAT, Chandigarh in case of FI Foundation vs. CIT(E), (2024) 166 taxmann.com 124 (Chandigarh – Trib). 14. On the other hand, ld. CIT-DR for the revenue relied on the order of the CIT(E). 15. We have considered rival submissions and perused the materials available on record. We have also carefully perused Circular No.7/2024 (supra). The CIT(E) rejected the application in Form No.10AB u/s 80G(5) of the Act vide his order dated 03.04.2024. Subsequently, Circular No.7/2024, dated 25.04.2024 was issued by the CBDT, extending the time limit up to 30.06.2024. The ld. AR has relied on the above Circular (supra) and requested that the benefit extended by the said Circular (supra) should be granted to the assessee-trust. For ready reference, para 4.1 of the trust is reproduced below: “4.1 Further, in cases where any trust, institution or fund has already made an application in Form No.10AB, and where the Principle Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular, solely on ground of the fact that the application was 10 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation furnished after the due date or that the application has been furnished under the wrong section code, it may furnish a fresh application in Form 10AB within the extended time provided in para 3(ii) i.e., 30.06.2024”. 16. The assessee was required to file fresh application before 30.06.2024. The ld. AR submitted that the assessee did not file application as the matter was pending before the Tribunal. She requested that the application filed earlier may be treated as the application filed before 30.06.2024 as per the intent and spirit of Circular No.7/2024, dated 25.04.2024. For this reliance was placed on the decision of ITAT, Chandigarh in case of FI Foundation (supra). In the said decision, the application has been rejected vide order dated 19.03.2024 before the issuance of the Circular No.7/2024 (supra). However, the Tribunal observed that going by the intent and spirit of the above Circular (supra) issued by the CBDT and submission made by the assessee, the application of the assessee deserves to be examined on merits and cannot be dismissed as barred by limitation. There is no reason as to why the above decision would not be applicable to the facts of the instant appeal, which are similar. Hence, following the above decision, the matter is remitted to the file of CIT(E) to admit the application of the assessee-trust as filed within the stipulated period and examine the same on merits as per law after granting reasonable opportunity of being heard to the assessee. The assessee is also directed to be more vigilant in pursuing his case and file necessary documents and evidenced as needed by the CIT(E). For statistical purposes, the appeal of the assessee is treated as allowed. 11 ITA Nos.646 & 735/SRT/2024 Surat Sewa Foundation 17. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced on 31/12/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 31/12/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "