2025 (4) TMI 1423 - AT - Income Tax

Trust registration rejection overturned due to inadequate opportunity to submit requested details under section 12A

Swargiya Tatya Bapat Smriti Samiti Versus The Commissioner of Income Tax (Exemption), Pune

ITAT Pune set aside CIT(E)'s rejection of trust's registration under section 12A. CIT(E) had denied registration solely for failure to submit requested ... Eligibility of Registration u/s 80G(5)/12A - HELD THAT:- The registration u/s 80G(5) is available to the Trust who are either registered under section 12A of the Act or 10(23C) of the Act. It is also noted that Assessee had filed necessary details along with provisional application for 12A registration. CIT(E) has rejected the registration of the assessee under section 12A of the Act, only on one ground that assessee failed to submit the details called-for. However, it is also a fact that primary details like, copy of trust deed, copy of financials were already available with the ld.CIT(E), and ld.CIT(E) has not commented on it. Respectfully following the decision of Torna Rajgad Parisar Samajonnati Nyas [2025 (1) TMI 1473 - ITAT PUNE] we set-aside the order of ld.CIT(E) to ld.CIT(E) for denovo adjudication. Ld.CIT(E) shall provide opportunity to the assessee. Grounds of appeal raised by the assessee are allowed for statistical purpose. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Appellate Tribunal (AT) in these appeals are:Whether the rejection orders passed by the Commissioner of Income Tax (Exemption), Pune, refusing registration under section 12A of the Income Tax Act, 1961 (the Act) are legally sustainable.Whether the rejection orders passed by the Commissioner of Income Tax (Exemption) refusing registration under section 80G(5) of the Act are tenable in law.Whether the assessee trust is eligible for registration under section 12A(1)(ac)(i) and section 80G(5) of the Act, given its historical registration and compliance with statutory requirements.Whether the Commissioner of Income Tax (Exemption) erred in rejecting the applications without properly considering the material on record, including previously granted registrations and details filed electronically.Whether the delay in filing the appeals before the ITAT is to be condoned.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Legality of rejection of registration under section 12A of the ActRelevant legal framework and precedents: Section 12A of the Income Tax Act provides for registration of trusts or institutions seeking exemption from income tax. Registration is a prerequisite for claiming exemption under various sections, including section 80G. The procedure involves filing an application with prescribed details, including trust deed and financials. The authority must consider the application and either grant or reject registration based on compliance with statutory requirements.The Tribunal relied on the precedent set in Torna Rajgad Parisar Samajonnati Nyas vs. CIT, where it was held that rejection of registration without proper consideration of material on record and without providing an opportunity for compliance is not sustainable.Court's interpretation and reasoning: The Tribunal noted that the assessee trust was originally registered under section 12A in 1998 and had maintained registration since then. The assessee had filed applications for provisional and permanent registration under section 12A after amendments in the Act. The Commissioner rejected the permanent registration application on the sole ground of non-submission of details.The Tribunal observed that the primary documents such as trust deed and financial statements were already in possession of the Commissioner, and the assessee had filed all necessary details electronically. The Commissioner did not comment on the sufficiency of these documents. Therefore, the rejection was deemed to be without proper consideration of the complete record.Key evidence and findings: The assessee produced the original 12A registration certificate from 1998, correspondence requesting duplicate certificates, and copies of provisional registration granted in 2021. The Tribunal found that the financial and trust deed details were available to the Commissioner and that the assessee had been filing regular returns.Application of law to facts: Given the historical registration and availability of documents, the rejection on grounds of non-submission of details was found to be unjustified. The Tribunal applied the principle from the Torna Rajgad case, emphasizing the need for the authority to consider all material and provide an opportunity for compliance before rejecting registration.Treatment of competing arguments: The Revenue defended the rejection, but the Tribunal found the arguments unconvincing as the Commissioner had not disputed the availability of documents or the filing of returns. The assessee's submissions were accepted as credible and supported by documentary evidence.Conclusions: The Tribunal set aside the rejection order under section 12A and remanded the matter to the Commissioner for de novo adjudication, directing that the assessee be given a fair opportunity to comply and present its case.Issue 2: Legality of rejection of registration under section 80G(5) of the ActRelevant legal framework and precedents: Section 80G(5) provides for registration of trusts eligible to issue certificates for donations that qualify for deduction under section 80G. Registration under section 80G(5) is granted only if the trust is registered under section 12A or section 10(23C). The registration can be granted for a fixed period or in perpetuity, subject to compliance.Court's interpretation and reasoning: The Tribunal noted that the assessee had been registered under section 80G(5) since 1998, with the registration extended in perpetuity by the Commissioner in 2012. The assessee also obtained renewal certificates for subsequent assessment years, including a renewal in 2022 for AY 2022-23 to AY 2026-27.The Tribunal observed that the rejection of the 80G(5) registration application dated 31.01.2024 was made without considering the continuous registration history and the fact that the assessee had inadvertently applied again. Since the 80G(5) registration depends on valid 12A registration, and the 12A registration matter was remanded for fresh consideration, the 80G(5) registration rejection was also set aside for de novo adjudication.Key evidence and findings: The Tribunal relied on the original 80G(5) registration certificate from 1998, the extension order dated 2012, and the renewal certificate issued in 2022. These documents established the assessee's continuous registration and eligibility.Application of law to facts: The Tribunal applied the legal principle that registration under section 80G(5) is contingent upon valid 12A registration. Since the 12A registration rejection was set aside, the 80G(5) registration rejection could not stand independently.Treatment of competing arguments: The Revenue supported the rejection, but the Tribunal found the assessee's submissions and documentary evidence more persuasive, emphasizing procedural fairness and consistency with prior registrations.Conclusions: The Tribunal set aside the rejection order under section 80G(5) and remanded the matter to the Commissioner for fresh adjudication, directing the Commissioner to provide the assessee an opportunity to file necessary documents and be heard.Issue 3: Condonation of delay in filing appealsThe assessee filed an affidavit seeking condonation of delay of 162 days in filing the appeals before the ITAT. The Tribunal examined the reasons provided and found them to constitute a reasonable cause for delay.The delay was accordingly condoned, allowing the appeals to be heard on merits.3. SIGNIFICANT HOLDINGSThe Tribunal held:'The ld.CIT(E) has rejected the registration of the assessee under section 12A of the Act, only on one ground that assessee failed to submit the details called-for. However, it is also a fact that primary details like, copy of trust deed, copy of financials were already available with the ld.CIT(E), and ld.CIT(E) has not commented on it.''In these facts and circumstances of the case, respectfully following the decision of ITAT in Torna Rajgad Parisar Samajonnati Nyas vs. CIT(supra), we set-aside the order of ld.CIT(E) to ld.CIT(E) for denovo adjudication. Ld.CIT(E) shall provide opportunity to the assessee.''Since we have set-aside the order of Ld.CIT(E) rejecting assessee's application for registration u/s. 12A of the Act, in the interest of justice, we set-aside the order u/s. 80G(5) of the ld.CIT(E) to ld.CIT(E) for denovo adjudication. Ld.CIT(E) shall provide opportunity to the assessee.'Core principles established include:Rejection of registration under sections 12A and 80G(5) must be based on proper consideration of all material on record.Where primary documents and financials are already available with the tax authorities, mere non-submission of additional details without opportunity to comply is not sufficient ground for rejection.Registration under section 80G(5) is contingent upon valid registration under section 12A; hence, decisions on 80G(5) registration are linked to the status of 12A registration.Tribunal's power to set aside orders and remit matters for fresh adjudication to ensure procedural fairness and compliance with statutory scheme.Delay in filing appeals can be condoned if reasonable cause is shown.Final determinations:The rejection orders under section 12A and section 80G(5) were set aside.The matters were remanded to the Commissioner of Income Tax (Exemption) for de novo adjudication with directions to provide the assessee an opportunity to file documents and be heard.The delay in filing appeals was condoned.The appeals were allowed for statistical purposes.