2025 (3) TMI 81 - AT - Income Tax

Tribunal Overturns Rejection of Tax Benefits; Orders Fresh Review for Compliance with Section 12A and 80G.

Apna Charitable Trust Versus The CIT (Exemption) New Income Tax Office, Ahmedabad

The Appellate Tribunal set aside the orders of the Commissioner of Income Tax (Exemption), Ahmedabad, which rejected applications for renewal of ... Applications filed by the assessee for renewal of registration u/s 12A(1)(ac)(iii) and approval u/s 80G(5)(iii) - non-compliance by the assessee - HELD THAT:- It is evident from the record that the assessee filed its response on 21.08.2024, within the due date mentioned in the CIT(E)'s notice. CIT(E) ignored this submission and erroneously rejected the application citing non- compliance. Such an approach violates natural justice, as the assessee's submission should have been duly considered before passing an adverse order. In case of approval u/s 80G(5)(iii) also the assessee filed a detailed submission on 21.08.2024, complying with the notice dated 09.08.2024. CIT(E), however, did not examine the documents submitted and rejected the application on incorrect factual grounds. Given that the documents were submitted, the rejection was without proper verification. Appeals of the assessee are allowed for statistical purposes. The issues presented and considered in this legal judgment involve the rejection of applications by the Commissioner of Income Tax (Exemption), Ahmedabad for renewal of registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii) of the Income Tax Act, 1961. The core legal questions revolve around whether the rejection of the applications by the CIT(E) was justified based on alleged non-compliance by the assessee.In the detailed analysis, the Appellate Tribunal considered the relevant legal framework under Sections 12A and 80G of the Income Tax Act, 1961, which govern the registration and approval processes for charitable trusts. The Tribunal examined the submissions made by the assessee in response to the notices issued by the CIT(E) and found that the assessee had provided all the required information and documents within the specified timelines.The Court's interpretation and reasoning focused on the fact that despite the timely compliance by the assessee, the CIT(E) rejected both applications on grounds of non-compliance. The Tribunal noted that the rejection orders did not adequately consider the submissions filed by the assessee on 21.08.2024, leading to an erroneous rejection. The Tribunal emphasized the importance of natural justice and proper verification of documents before passing adverse orders.Key evidence and findings included the submissions made by the assessee on 21.08.2024, which included detailed information on the trust's activities, financial statements, audit reports, and other relevant documents. The Tribunal found that the CIT(E) had ignored these submissions and had not properly verified the documents before rejecting the applications.The application of law to facts involved the Tribunal setting aside the orders of the CIT(E) and restoring both matters back to his file for fresh adjudication. The Tribunal directed the CIT(E) to duly consider the assessee's submissions and decide the matters afresh after granting an opportunity of hearing to the assessee.The significant holdings of the judgment include the Tribunal's decision to allow both appeals of the assessee for statistical purposes, emphasizing the importance of due consideration of submissions and adherence to principles of natural justice in administrative decisions.In conclusion, the Tribunal found that the rejection of the applications by the CIT(E) was unjustified and ordered a fresh adjudication of the matters, highlighting the need for proper verification and consideration of submissions in administrative proceedings related to registration and approval of charitable trusts under the Income Tax Act, 1961.