Trust registration rejection overturned due to denial of hearing opportunity under section 12AB

ITAT Mumbai set aside CIT(E)'s rejection of trust's application under section 12AB r.w.s. 12A(1)(ac)(iii) and cancellation of provisional registration. CIT(E) found trust's activities not genuine due to inadequate proof of cowshed facilities, lack of documentary evidence regarding location, and bills from different state than trust's address. However, ITAT noted assessee was not given opportunity to address objections. Matter remanded to CIT(E) for fresh consideration with direction to provide hearing opportunity. Similarly, section 80G(5) application rejection was set aside for de novo adjudication as CIT(E) decided on technical grounds without merit analysis.

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Issues Involved:
1. Rejection of application u/s 12A(1)(ac)(iii) and cancellation of provisional registration u/s 12AB r.w.s. 12A(1)(ac)(vi).
2. Rejection of application u/s 80G(5)(iii) and cancellation of provisional registration u/s 80G(5)(iv).

Issue 1: Rejection of Application u/s 12A(1)(ac)(iii) and Cancellation of Provisional Registration u/s 12AB r.w.s. 12A(1)(ac)(vi)

The assessee challenged the order dated 24/07/2023, rejecting the application filed u/s 12A(1)(ac)(iii) and cancelling the provisional registration granted u/s 12AB r.w.s. 12A(1)(ac)(vi). The learned CIT(E) deemed the activities of the trust as not genuine, citing discrepancies such as lack of proper infrastructure for animal care, absence of documentary evidence regarding the cowshed's location, and bills from a distant location (Bharuch, Gujarat). The Tribunal found that the assessee was not given adequate opportunity to address these objections. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the learned CIT(E) for de novo adjudication, directing the assessee to substantiate its activities and expenditures.

Issue 2: Rejection of Application u/s 80G(5)(iii) and Cancellation of Provisional Registration u/s 80G(5)(iv)

The assessee contested the order dated 22/07/2023, rejecting the application filed u/s 80G(5)(iii) on the grounds of being filed beyond the stipulated time limit and cancelling the provisional registration u/s 80G(5)(iv). The learned CIT(E) noted that the application was filed after the deadline, which was six months from the date of provisional approval or commencement of activities. The Tribunal referred to a similar case (Shri Kailash Math Trust v. CIT(E)) and concluded that the time limit should be interpreted to apply only to trusts that had not commenced activities at the time of provisional approval. Since the assessee had already commenced activities, the application was deemed timely. The Tribunal set aside the impugned order and remanded the matter back to the learned CIT(E) for reconsideration on merits.

Conclusion:

Both appeals by the assessee were allowed for statistical purposes, with directions for de novo adjudication by the learned CIT(E).

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