Case Law Details
Vidhyanagar Jain Society Vs CIT (Exemption) (ITAT Ahmedabad)
In the case of Vidhyanagar Jain Society Vs CIT (Exemption) (ITAT Ahmedabad), the Income Tax Appellate Tribunal (ITAT) addressed the issue of provisional registration under Section 12AB of the Income-tax Act. The Commissioner of Income-tax (Exemption) had rejected the society’s application for registration due to non-submission of required documents. Despite multiple notices, the documents were not provided due to unavoidable circumstances, including health issues and travel commitments of trustees. The ITAT found that the CIT(E) had not adequately verified the trust’s activities due to the lack of submitted documents. Acknowledging the difficulties faced by the trust, the ITAT remanded the matter back to the CIT(E) for reconsideration, instructing the CIT(E) to provide a fresh opportunity for the trust to submit necessary documents and to decide on the merits of the application.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The Assessee is in appeal before us against the order passed under section 12AB/(1)(b)(ii) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) dated 26-02-2024 passed by the Commissioner of Income-tax (Exemption) [hereinafter referred to as “CIT(E)”] on the following grounds:
“Ground No.1: Unavoidable Circumstances
The assessee, in good faith, applied for registration under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A with commissioner of Income Tax (Exemptions) [‘CIT (Exemptions)’], Ahmedabad in Form 10AB. However, due to unforeseen and unavoidable circumstances beyond the control of the assessee, the required documents could not be submitted within the stipulated timeframe despite receiving two hearing notices from the Ld. CIT (Exemptions) dated 20/11/2023 and 15/12/2023 respectively.
Ground No.2: Compliance Efforts
It is pertinent to note that the assessee diligently responded to the notices received and expressed the intent to comply with the document submission requirements in the past whenever required. However, due to the nature of the unavoidable circumstances, timely submission became unfeasible in the present case.
Ground No 3: No Prejudice to Revenue
The delay in document submission did not cause any prejudice to the revenue or impede the tax administration process. The assessee is committed to fulfilling all necessary obligations and ensuring compliance with applicable tax laws. Further, assessee is religious trust carrying out religious activities in accordance with objects specified in the trust indenture. Further, an assessee is also undertaking genuine activities and transactions. Failure to respond to the notices issued by Ld. CIT (Exemptions) should not be resulted in the assumption that activities of the assessee is not genuine and not in accordance with the object clause of the trust indenture.
Ground No 4: Request for Leniency
The assessee humbly requests the Income Tax Appellate Tribunal to exercise leniency and consider the extenuating circumstances that led to the non-submission of documents. The delay was beyond the control of the assessee, and it is imperative to provide an opportunity for rectification.
Ground No 5: Interest of Justice
Remanding the matter back to the CIT (Exemptions) would serve the interest of justice by affording the assessee an opportunity to rectify the deficiencies in the application process and present the necessary documents for registration under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A.
Ground No 6: Legal Precedent
It is pertinent to note that in Kalyan Riverside Charitable Foundation vs CIT (Exemption) Pune (I.T.A No.1055/Mum/2023), Honorable Mumbai ITAT ordered to remand back the similar matter to CIT (Exemption). Citing these precedents, the assessee urges the Income Tax Appellate Tribunal to consider the present appeal favorably.
Ground No 7: Procedural Compliance
The assessee asserts that all other procedural requirements were duly fulfilled, except for the submission of documents within the specified timeframe. The appeal is made in accordance with the provisions of the Income Tax Act and relevant appellate procedures.”
2. In view of the foregoing grounds, the Ld. Authorised Representative (AR) of the assessee requested that the matter may be remanded back to the file of Ld. Commissioner of Income Tax (Exemption) for reconsideration in light of the grounds presented hereinabove. He also contended that the matter may be heard on merits before the Ld. CIT(E).
3. The Ld. Departmental Representative (DR) contented that the assessee was given opportunity by the Ld. CIT (E) to submit necessary documents by issuing notices twice on 20-11-2023 and 15-12-2023 and assessee neither filed any submission nor sought any adjournment.
4. The Ld.AR was asked to explain the unavoidable circumstances because of which the required documents could not be submitted before the Ld.CIT(E). The Ld.AR in writing submitted that Mr. Bharatkumar Jaswantrai Shah, Trustee was dealing with the health issues and another Trustee Mr. Nileshbhai Kiritbhai Shah was unavailable due to travel commitments spanning approximately one and half months.
5. We have noted that the assessee is granted provisional registration in Form 10AC on 05-04-2023. The Ld.CIT(E) could not verify the genuineness of the activities of the assessee. We have given thoughtful consideration to the peculiar facts and circumstances of the case. No doubt that the Ld.CIT(E), before deciding the application filed by the Appellant, gave appropriate opportunity to the appellant to substantiate its case, however he could not decide on the merit in the absence of supported material and/ or non-production and non-explaining of documents and activities carried out by the assessee. The Ld.DR did not object to referring the matter back to the file of Ld.CIT(E) for fresh adjudication on merit.
5.1. Hence, for the just decision of case and for the ends of substantial justice, we set aside the order of the Ld.CIT(E) and remand the matter back to the file of the Ld.CIT(E) for deciding afresh, after affording reasonable opportunity of being heard to the Assessee. The Assessee is also directed to co-operate with the proceedings and to file the relevant documents before the Ld.CIT(E). In case of default, the assessee shall not be entitled for any leniency.
6. In the result, the appeal of the Assessee is treated as allowed for statistical purposes.
Order pronounced in the Open Court on 25 July, 2024 at Ahmedabad.
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