OP Dargar Foundation Vs CIT-Exemption (ITAT Jaipur)
ITAT directs reconsideration of Trust Registration application considering Curable nature of issues
Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has directed the Commissioner of Income Tax (Exemption) [CIT(E)] to reconsider the application for registration under Section 12AB of the Income Tax Act, 1961, filed by OP Dargar Foundation. The Foundation had appealed against the CIT(E)’s order dated February 24, 2024, which rejected its application for registration and consequently cancelled its provisional registration under Section 12A and provisional approval under Section 80G.
A preliminary issue addressed by the ITAT was a significant delay of 164 days in filing the appeals. The Foundation attributed the delay to confusion surrounding recent changes in trust-related laws and uncertainty regarding the appropriate legal recourse – whether to re-apply or file an appeal. After seeking legal counsel, the appeals were filed. The ITAT, citing the Supreme Court’s decision in Collector, Land Acquisition vs. Mst. Katiji & Others (167 ITR 471 SC), adopted a liberal approach towards condonation of delay. It accepted the Foundation’s explanation as “sufficient cause,” noting that the assessee gains no benefit from delay, and condoned the 164-day delay, allowing the appeals to be heard on merits.
The CIT(E) had rejected the Foundation’s application primarily on three grounds. Firstly, the application form (Form 10AB) was deemed incomplete as required documents, specifically the latest audited balance sheet (which was reportedly not finalized at the time), were not attached. Secondly, the Foundation failed to furnish proof of registration under the Rajasthan Public Trust Act, 1959 (RPT Act). Thirdly, due to non-compliance with multiple notices requesting documents and explanations, the CIT(E) concluded that the genuineness of the Foundation’s charitable activities could not be verified.
In reviewing the merits, the ITAT focused on the nature of the deficiencies pointed out by the CIT(E). The Tribunal noted the Foundation’s submission that it had subsequently applied for registration under the RPT Act and the matter was pending with state authorities. It also acknowledged the Foundation’s willingness to submit the previously unavailable audited balance sheet. Crucially, the ITAT characterized these grounds for rejection – the pending RPT Act registration and the incomplete form/details – as “curable in nature.”
Considering these factors, and noting that the Departmental Representative did not object to remanding the case, the ITAT decided against ruling on the merits of the registration itself. Instead, invoking the principles of natural justice, the Tribunal set aside the CIT(E)’s order and remanded the matter back for fresh consideration. The CIT(E) has been directed to decide the application afresh after providing the Foundation a proper opportunity to be heard and submit the necessary documents and clarifications. The ITAT stipulated that the Foundation must cooperate with the proceedings and refrain from seeking frivolous adjournments. The appeals were thus allowed “for statistical purposes,” indicating the case is returned for re-evaluation rather than being decided finally by the Tribunal.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
