2025 (4) TMI 322 - AT - Income Tax

Trust registration applications under sections 12A and 80G restored after President's death from terminal illness prevented compliance

Rotary Association of Dombivali Saudamini Versus Commissioner of Income Tax (Exemptions), Pune

ITAT Mumbai set aside CIT(E)'s rejection of trust's registration applications under sections 12A and 80G. The trust failed to comply with notices sent to ... Rejecting the Registration u/s.12A and certificate u/s.80G - CIT(A) rejected this application because of non-compliance of the notices issued by him calling for various details - As submitted that the notices were sent by e-mail to the e-mail ID of the President of the assessee trust, who was unable to attend to the same due to her illness as she was undergoing medical treatment for breast cancer at the relevant time. Eventually, she passed away on 02/01/2025. HELD THAT:- As submitted that the non-compliance of the notices was due to circumstances, and it was purely unintentional. Under these circumstances we find it there was a reasonable cause in not able to file the appeal in time. Assessee could not attend to the notices issued from the office of CIT (E) as it was sent on personal email of the President of the assessee trust and due to her terminal illness the notice went unnoticed, accordingly the order u/s.12AB passed by ld. CIT (E) is set aside and is restored back to him for deciding it afresh, after considering the assessee’s application and giving due opportunity of hearing to the assessee. CIT (E) rejecting the assessee's fresh application u/s.12A(1)(ac)(iii) because the provisional registration u/s.12AB was already cancelled and in absence thereof, no registration u/s.12AB could be granted -Once we have set aside the order u/s.12AB wherein its provisional registration u/s.12AB has been cancelled then, the very basis of 12AB order dated 13/11/2024 will not survive and become infructuous. Since we have already restored the matter to the file of the ld. CIT (A) to decide the issue of registration of 12AB, therefore, this appeal is infructuous, however, CIT(E) will decide assessee’s application filed and accordingly, this appeal is also set aside and ld. CIT(E) may decide accordingly. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:1. Whether the delay in filing the appeal against the order dated 01/02/2024, which rejected the application for regular registration under Section 12AB and cancelled the provisional registration, can be condoned.2. Whether the rejection of the application for regular registration under Section 12AB by the CIT(E) due to non-compliance with notices was justified.3. Whether the rejection of the application for approval under Section 80G(5) was appropriate, considering the circumstances of non-compliance with notices.4. The impact of setting aside the order dated 01/02/2024 on subsequent orders dated 13/11/2024, which were based on the cancellation of provisional registrations and approvals.ISSUE-WISE DETAILED ANALYSIS1. Delay in Filing the AppealRelevant legal framework and precedents: The Tribunal considered the principles of natural justice and the circumstances under which delays in filing appeals can be condoned. The legal framework allows for condonation of delay if a reasonable cause is demonstrated.Court's interpretation and reasoning: The Tribunal noted the reasons for the delay, which included incorrect legal advice and the illness of the President of the trust. The Tribunal found these reasons to be valid and justified under the circumstances.Key evidence and findings: The affidavit of Mrs. Jayashree Uday Karve and medical documents related to the President's illness were pivotal in demonstrating the reasonable cause for the delay.Application of law to facts: The Tribunal applied the principles of condonation of delay, finding that the circumstances presented constituted a reasonable cause for the delay.Treatment of competing arguments: The Tribunal considered the procedural lapses and the impact of personal circumstances, ultimately deciding in favor of condonation.Conclusions: The delay in filing the appeal was condoned, allowing the appeal to be admitted for adjudication on its merits.2. Rejection of Application for Regular Registration under Section 12ABRelevant legal framework and precedents: The legal requirement for compliance with notices and the process for obtaining regular registration under Section 12AB were central to this issue.Court's interpretation and reasoning: The Tribunal found that the non-compliance was due to the illness of the President and was unintentional. The Tribunal emphasized the need for a fair opportunity to be given to the assessee to comply with the requirements.Key evidence and findings: The Tribunal relied on the medical documentation and the affidavit to establish the unintentional nature of the non-compliance.Application of law to facts: The Tribunal applied the principles of natural justice, deciding that the rejection was premature without providing a fair chance to the assessee.Treatment of competing arguments: The Tribunal considered the procedural requirements and balanced them against the assessee's circumstances, favoring a more equitable approach.Conclusions: The order rejecting the application for regular registration was set aside, and the matter was remanded for fresh consideration.3. Rejection of Application for Approval under Section 80G(5)Relevant legal framework and precedents: The legal standards for obtaining approval under Section 80G(5) and the consequences of non-compliance with procedural requirements were considered.Court's interpretation and reasoning: Similar to the reasoning for Section 12AB, the Tribunal found that the non-compliance was due to reasonable causes and that the assessee should be given another opportunity to comply.Key evidence and findings: The Tribunal again relied on the affidavit and medical evidence to support its decision.Application of law to facts: The Tribunal applied the principles of fairness and equity, deciding that the rejection was not justified under the circumstances.Treatment of competing arguments: The Tribunal weighed the procedural requirements against the need for fairness, deciding in favor of the assessee.Conclusions: The rejection of the application for approval under Section 80G(5) was set aside, and the matter was remanded for reconsideration.4. Impact of Setting Aside the Order Dated 01/02/2024Relevant legal framework and precedents: The Tribunal considered the effect of setting aside an order on subsequent orders that rely on the initial decision.Court's interpretation and reasoning: The Tribunal found that once the initial order was set aside, the subsequent orders based on its findings became infructuous.Key evidence and findings: The Tribunal's decision to set aside the initial order led to the conclusion that the basis for the subsequent orders no longer existed.Application of law to facts: The Tribunal applied the principle that an order without a valid basis cannot stand.Treatment of competing arguments: The Tribunal focused on the logical sequence of decisions, determining that the subsequent orders must be reconsidered.Conclusions: The subsequent orders were set aside, and the matters were remanded for fresh consideration.SIGNIFICANT HOLDINGSThe Tribunal held that:- 'Under these circumstances, we find there was a reasonable cause in not being able to file the appeal in time.'- The principles of natural justice require that the assessee be given a fair opportunity to comply with procedural requirements, especially when non-compliance is due to reasonable and documented causes.- Setting aside an initial order necessitates reconsideration of subsequent orders that depend on the initial decision.The final determinations on each issue resulted in the setting aside of the orders dated 01/02/2024 and 13/11/2024, with directions for fresh consideration by the CIT(E), ensuring due process and fair opportunity for the assessee. All appeals were allowed for statistical purposes.