VARDHMAN CHARITABLE TRUST,AHMEDABAD V. THE CIT(EXEMPTION), AHMEDABAD

ITA 2127/AHD/2024

AI Insights

The case involves Vardhman Charitable Trust, which appealed against the decision of the Commissioner of Income Tax (Exemption), Ahmedabad, rejecting their application for final registration under Section 12AB of the Income Tax Act, 1961, and cancelling the provisional registration. The Trust argued that the CIT(E) erred in law and on facts by not appreciating their inability to respond to notices due to sufficient cause and by ignoring the evidence on record. The Tribunal found that while the Trust's late filing of Form 10AB and non-response to notices were procedural lapses, the CIT(E) also committed a procedural error by not considering the documents already submitted. The Tribunal decided to remand the matter back to the CIT(E) for a fresh evaluation, emphasizing the need for a fair assessment that considers all materials submitted.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29707 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. P. SINGH
• Assessee Lawyers: S.N. DIVATIA; SAMIR VORA
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Charitable institution; Procedural lapse
• Section: 12AA; 12A

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “सी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD \u0015ी टी.आर. से\u0018\u0019ल क ुमार, \u0011ाियक सद\u001b एवं \u0015ी मकरंद वसंत महादेवकर, लेखा सद\u001b क े सम!। ] ] BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.2127/Ahd/2024 िनधा \u000fरण वष\u000f /Assessment Year : - Vardhman Charitable Trust 158, Hariganga Society Opp. CMC Odhav Road Ahmedabad – 382 415 बनाम/ v/s. The CIT(Exemption) Ahmedabad – 380 015 \u0013थायी लेखा सं./PAN: AABTV 2612 E (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Shri S.N. Divatia, AR & Shri Samir Vora, AR Revenue by : Shri A.P. Singh, CIT-DR सुनवाई की तारीख/Date of Hearing : 20/02/2025 घोषणा की तारीख /Date of Pronouncement: 21/02/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as \"CIT(E)\"] dated 13.11.2024, rejecting the application for final registration under Section 12AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) and cancelling the provisional registration granted under Section 12A(1)(ac)(vi) of the Act. ITA No.Vardhman Charitable Trust vs. CIT(E) Asst. Year : - 2 Facts of the Case: 2. The assessee is a public charitable trust, duly constituted on 20.11.2018, and registered under the Gujarat Public Trust Act, 1950. It was previously registered under Section 12AA of the Act and was granted provisional registration under Section 12A(1)(ac)(vi) of the Act on 27.10.2021 in Form 10AC. The trust applied for final registration under Section 12A(1)(ac)(iii) of the Act by filing Form 10AB on 29.06.2024. The CIT(E) issued notices on 22.08.2024 and 14.10.2024 seeking details and documents regarding the establishment and activities of the trust. However, the assessee failed to respond to these notices. The CIT(E), therefore, rejected the application for registration and also canceled the provisional registration, citing non- compliance. 3. The assessee preferred appeal before us against the order of CIT(E) with following grounds of appeal: 1.1 The order passed by U/s.12AB passed on 30.03.2024 by CIT(Exem), Ahmedabad rejecting the application for registration of the appellant trust u/s 12A(1)(ac)(iii) of the Act and cancelling the provisional registration is wholly illegal, unlawful and against the principles of natural justice. 2.1 The Id. CIT(Exem), has grievously erred in law and or on facts in not appreciating that the appellant could not file response to the notices issued by the respondent for sufficient cause. 3.1 The Id. CITExem), has grievously erred in law and or on facts in rejecting the application for registration u/s 12AB of the Act holding that the genuineness of the activities of the trust and its consonance with the objects could not be verified.The CITE) has failed to taken into consideration the copy of audited annual accounts and other documents produced along with the application for registration. ITA No.Vardhman Charitable Trust vs. CIT(E) Asst. Year : - 3 3.2 That the in the facts and circumstances of the Id. CIT(Exem), ought not to have rejected the application for registration by ignoring the evidence on record with the application for registration. It is, therefore, prayed that the rejection of the application for registration and cancellation of the provisional registration by the CIT(Exem), may kindly be deleted. 4. During the course of the appellate proceedings before us, the Authorized Representative (AR) submitted that the assessee had filed Form 10AB along with necessary documents, including the registration certificate, PAN card, trust deed, past 12A certificate, and audit reports for the last three years. The AR contended that the CIT(E) erred in rejecting the application without discussing the documents already submitted. 5. The AR also contended that the assessee erroneously filed Form 10AB instead of Form 10A and that the CIT(E) should have considered this as a procedural mistake and granted an opportunity for rectification. 6. On the other hand, the Departmental Representative (DR) did not object to the matter being restored to the CIT(E) for reconsideration. 7. The Finance Act, 2020, introduced a structured procedure for the registration and re-registration of trusts and institutions under Section 12A of the Act. The following table summarizes the applicable provisions, forms, and timelines: Section Applicable Form Purpose Deadline 12A(1)(ac)(i) Form 10A Re-registration for existing trusts registered under old 12AA 31.03.2022 ITA No.Vardhman Charitable Trust vs. CIT(E) Asst. Year : - 4 12A(1)(ac)(vi) Form 10A Provisional registration for newly formed trusts Valid for 3 years 12A(1)(ac)(iii) Form 10AB Application for final registration after provisional registration At least 6 months before expiry or within 6 months of commencement of activities 7.1. In the present case, the assessee was granted provisional registration on 27.10.2021, and it was required to file Form 10AB by 26.04.2024 (six months before expiry). However, the application was filed late on 29.06.2024. While the delay is not substantial, the failure to respond to notices issued by the CIT(E) contributed to the rejection of registration. 8. We have considered the submissions of both parties and examined the records. It is evident that the assessee filed Form 10AB late, beyond the prescribed due date. The CIT(E) issued two notices, which remained unanswered by the assessee. The CIT(E), however, did not discuss or examine the documents already submitted by the assessee along with Form 10AB. The DR did not object to remanding the matter back to the CIT(E) for fresh consideration. 8.1. We note that as per the provisions of Section 12A(1)(ac) of the Act, the correct form for final registration after obtaining provisional registration under Section 12A(1)(ac)(vi) of the Act is Form 10AB, and not Form 10A. The assessee had already been granted provisional registration, and therefore, Form 10AB was the appropriate form to be filed for final registration. The ITA No.Vardhman Charitable Trust vs. CIT(E) Asst. Year : - 5 contention of the AR that Form 10A should have been filed is misplaced and does not hold merit. 8.2. We also note that the CIT(E) has committed a procedural lapse by not addressing the evidence that was already on record before rejecting the application. The mere non-response to notices cannot be the sole basis for rejection if relevant documents were available in the assessment file. A fair assessment would require an evaluation of all materials submitted before reaching an adverse conclusion. 8.3. At the same time, the assessee's failure to respond to notices caused unnecessary delays in the proceedings. Non-cooperation with the regulatory authority is not a practice that can be condoned without consequences. To balance the equities, we find it just and appropriate to impose a cost of Rs.10,000/- on the assessee for its non-responsiveness, while setting aside the order of the CIT(E). 8.4. In light of the above findings, we set aside the order of the CIT(E) dated 13.11.2024 and restore the matter back to the CIT(E) for fresh consideration. The CIT(E) is directed to pass a reasoned order after considering all material on record and after giving proper opportunity of being heard to the assessee. The assessee is directed to cooperate with the CIT(E) in proceedings and ensure timely compliance with any further queries and deposit a cost of ₹10,000 to the Income Tax Department for failure to respond to notices. ITA No.Vardhman Charitable Trust vs. CIT(E) Asst. Year : - 6 9. The appeal of the assessee is allowed for statistical purposes. pronounced in the Open Court on 21st February, 2025 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 21 /02/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की \"ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. \"%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT 4. आयकर आयु& ) अपील ( / The CIT€, Ahmedabad. 5. िवभागीय \"ितिनिध , अिधकरण अपीलीय आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स%ािपत \"ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 21.2.2025 2. Date on which the typed draft is placed before the Dictating Member. : 21.2.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 21.2.2025 7. Date on which the file goes to the Bench Clerk. : 21.2.2025 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : "