2025 (3) TMI 616 - AT - Income Tax

Assessee gets final opportunity to substantiate section 80G registration application after initial rejection for non-response

Dr. Vikhe Patil Foundation Versus CIT (Exemption), Pune

ITAT Pune allowed the assessee's appeal for statistical purposes regarding rejection of section 80G registration. The CIT(E) had rejected the application ... Rejection of grant of registration u/s 80G - assessee's failure to respond to notices and discrepancies pointed out in the application process - HELD THAT:- Since the assessee did not furnish any explanation to the discrepancies communicated to it, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue back to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue on merit as per fact and law. Appeal filed by the assessee is allowed for statistical purposes. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this case were:1. Whether the application for registration under section 80G of the Income Tax Act, 1961, filed by the assessee trust, was valid given the discrepancies noted by the CIT(Exemption).2. Whether the CIT(Exemption) erred in rejecting the application based on the assessee's failure to respond to notices and discrepancies pointed out in the application process.3. Whether the CIT(Exemption) should have considered the assessee's application under the correct provisions of section 80G, despite the wrong code being selected by the assessee.4. Whether the CIT(Exemption) failed to follow the CBDT Circular No. 7 of 2024, which the assessee claimed covered their case.ISSUE-WISE DETAILED ANALYSIS1. Validity of the Application under Section 80GThe relevant legal framework involves section 80G of the Income Tax Act, which provides for deductions on donations to certain funds, charitable institutions, etc. The CIT(Exemption) identified discrepancies in the application, particularly concerning the trust's existing registration under section 12A and its claims under section 11, which purportedly rendered section 80G(5)(iv)(B) inapplicable.The Court noted that the assessee did not respond to the CIT(Exemption)'s notices, resulting in a presumption of non-compliance. The CIT(Exemption) concluded that the trust failed to demonstrate the genuineness of its activities and compliance with section 80G(5) conditions.2. Rejection of the Application Due to Non-ResponseThe CIT(Exemption) rejected the application after the assessee failed to address the discrepancies. The Tribunal considered whether this rejection was justified. The Tribunal's reasoning emphasized the importance of procedural compliance and the opportunity given to the assessee to clarify discrepancies. The lack of response led the CIT(Exemption) to conclude that the trust did not have supporting evidence for its claims.3. Consideration of the Correct Provisions of Section 80GThe assessee argued that the CIT(Exemption) should have considered the correct clause of section 80G(5) despite the wrong code being selected. The Tribunal acknowledged this argument, suggesting that procedural errors in filing should not necessarily invalidate an application if the substantive requirements are met.The Tribunal found that the CIT(Exemption) should have considered the merits of the application under the correct provisions, given the trust's prior registration under sections 12A and 80G.4. Non-Compliance with CBDT Circular No. 7 of 2024The assessee claimed that the CIT(Exemption) failed to follow CBDT Circular No. 7 of 2024, which purportedly covered their case. The Tribunal did not provide a detailed analysis of the circular but implied that procedural fairness required the CIT(Exemption) to consider all relevant guidelines and circulars.SIGNIFICANT HOLDINGSThe Tribunal held that:'In our opinion, since the assessee did not furnish any explanation to the discrepancies communicated to it, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue back to the file of the Ld. CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue on merit as per fact and law.'The Tribunal emphasized the principle of providing a fair opportunity to address discrepancies and errors. It concluded that the matter should be remanded to the CIT(Exemption) for reconsideration, allowing the assessee a final opportunity to present its case.The Tribunal directed the assessee to comply with procedural requirements and present its submissions without seeking adjournments, ensuring the CIT(Exemption) could make a determination based on the merits and applicable law.The appeal was allowed for statistical purposes, indicating a procedural resolution rather than a substantive determination on the merits of the application.