Trust gets second chance for registration after failing to respond to show cause notice under sections 12A/12AB

The ITAT Surat allowed the appeal against CIT(E)'s rejection of registration application under sections 12A/12AB. The assessee had filed Form 10AB with required documents including trust deed, registration certificate, audit report, and activity details. CIT(E) rejected the application as the assessee failed to respond to show cause notice dated 23/09/2023. ITAT held that since substantial rights were involved and the assessee had furnished prima facie requisite details, they deserved another opportunity for merit consideration. The matter was remanded to CIT(E) for fresh examination of objects and activities in accordance with law.

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Issues involved:
The judgment involves rejection of application for registration u/s 12A/12AB and approval of funds u/s 80G(5) of the Income Tax Act, 1961, based on various grounds raised by the assessee.

Rejection of Application for Registration u/s 12A/12AB:
The assessee's appeals were directed against the rejection of the application for registration under Section 12A/12AB of the Income Tax Act. The ld. CIT(E) rejected the application on the grounds that the actual activity did not align with the trust's objects, there was a significant application of funds towards religious activities, and inadequate verification of documentary evidence. The assessee contended that they were not provided with a fair opportunity to be heard and sought to quash the order of the ld. CIT(E). The Tribunal considered the delay in filing the appeal and ultimately allowed the appeal for the assessee to be reconsidered on merit, emphasizing the need for a fair hearing and compliance with procedural requirements.

Approval of Funds u/s 80G(5):
The application for approval under Section 80G(5) of the Act was rejected due to a delay in filing, as well as the absence of valid registration under Section 12A/12AB. The assessee argued for an extension of the time limit based on CBDT Circulars and cited relevant case law. The Tribunal acknowledged the delay in filing the appeal but allowed it, directing a reconsideration of the application in light of the extended time limit provided by CBDT Circulars. The matter of registration under Section 12A/12AB was also referred back to the ld. CIT(E) for fresh consideration and a lawful decision.

Conclusion:
Both appeals by the assessee were allowed for statistical purposes, with directions for reconsideration of the applications for registration u/s 12A/12AB and approval of funds u/s 80G(5) in accordance with the law. The Tribunal emphasized the importance of fair hearings, compliance with procedural requirements, and vigilance in making timely compliance.

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