2025 (2) TMI 1140 - AT - Income Tax

ITAT restores case to CIT(Exemption) for fresh adjudication of Section 12A registration and Section 80G approval applications

Aress Foundation Bunglow Versus CIT (Exemption), Pune

ITAT PUNE restored the case to CIT(Exemption) after rejecting applications for registration under Section 12A and approval under Section 80G. The assessee ... Rejection of application seeking for registration u/s 12A as well as approval u/s 80G - submission of assessee that the various details were furnished before the CIT(Exemption), however, the same were not as per his requirement and if given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the CIT(E) to his satisfaction - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(Exemption) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details. Denial of approval u/s 80G - Since we have already restored the issue of registration u/s 12A to the file of the Ld. CIT(E) for adjudication afresh, therefore, we deem it proper to restore the issue of approval u/s 80G also to his file for fresh adjudication. Appeals filed by the assessee are allowed for statistical purposes. The issues presented and considered in the legal judgment are as follows:1. Whether the rejection of the application for registration under section 12A of the Income Tax Act, 1961, and approval under section 80G of the Act by the Commissioner of Income Tax-Exemptions ('CIT(E)') was justified.2. Whether the CIT(E) erred in rejecting the application without properly considering the submissions made by the appellant.Detailed Analysis:The Appellate Tribunal considered the grounds raised by the assessee in both appeals challenging the rejection of their application for registration under section 12A and approval under section 80G of the Income Tax Act. The Tribunal reviewed the facts of the case, where discrepancies were noted in the charitable activities claimed by the assessee. The CIT(Exemption) rejected the application based on the discrepancies observed, including inconsistencies in financial statements, lack of credible evidence supporting charitable activities, and failure to provide necessary documentation.In response to the rejection, the assessee argued that they could substantiate their case with additional evidence and requested an opportunity to do so. The Tribunal considered the submissions made by both parties and the documents presented in the paper book. The Tribunal acknowledged that while the details provided by the assessee were not in line with the CIT(E)'s requirements, there was a possibility for the assessee to rectify the deficiencies and provide satisfactory evidence.The Tribunal, in the interest of justice, decided to remand the issue back to the CIT(Exemption) with directions to grant the assessee a final opportunity to submit the required details. The Tribunal emphasized that the assessee must comply with the CIT(E)'s requests without seeking adjournments. Failure to do so would allow the CIT(Exemption) to make a decision based on the available information. The Tribunal allowed the grounds raised by the assessee for statistical purposes, indicating that the appeals were allowed without providing substantive relief at that stage.Significant Holdings:The Tribunal's decision to remand the issue back to the CIT(Exemption) for further consideration and granting the assessee a final opportunity to substantiate their case highlights the importance of providing adequate evidence and documentation to support claims for registration under section 12A and approval under section 80G of the Income Tax Act. The Tribunal's emphasis on compliance with the CIT(E)'s requirements underscores the need for transparency and accuracy in charitable activities to ensure eligibility for tax benefits under the Act.Final Determinations:The Tribunal allowed both appeals filed by the assessee for statistical purposes, indicating that the rejection of the application for registration under section 12A and approval under section 80G was not final. The Tribunal directed the CIT(Exemption) to reconsider the applications in light of the additional evidence that the assessee could provide, emphasizing the importance of meeting the necessary requirements and providing credible documentation to support their claims.Overall, the Tribunal's decision focused on procedural fairness and the opportunity for the assessee to rectify deficiencies in their application, highlighting the importance of compliance and transparency in matters related to tax exemptions for charitable activities under the Income Tax Act.