Introduction: In a recent development, the Income Tax Appellate Tribunal (ITAT) Pune addressed an appeal related to the registration of Shree Jain Vidya Prasarak Mandal under Section 12AB of the Income-tax Act, 1961. The ITAT’s decision granted the trust another opportunity to provide essential evidence in support of their registration application. This article delves into the details of the case, the implications of the decision, and its significance for charitable trusts seeking registration.
1. Background of the Case: The appeal in question pertains to Shree Jain Vidya Prasarak Mandal’s application for registration under Section 12AB of the Income Tax Act. The registration process under this section is vital for charitable trusts as it allows them to enjoy tax exemptions and deductions, making it easier to carry out their philanthropic activities.
2. Ex-Parte Proceedings: Despite being served with a notice, no representative from the appellant, Shree Jain Vidya Prasarak Mandal, appeared before the ITAT Pune. Additionally, the appellant did not submit any application for adjournment. Consequently, the ITAT proceeded with the case under Rule 24 of the ITAT Rules, 1963, with the assistance of the Learned Departmental Representative (Ld. DR).
3. Registration Application Rejection: The appellant had submitted an application for regular/final registration under Section 12AB of the Act using Form No. 10AB dated September 28, 2022. However, the registering authority, the Commissioner of Income Tax (Exemption), Pune (CIT(E)), rejected the application. The rejection was based on the CIT(E)’s inability to establish the genuineness of the appellant’s activities due to the absence of supporting evidence.
4. Deficiency in Application: It is essential to note that the appellant failed to attach the required documents, as mandated by Rule 17A(2) of the Income Tax Rules. In response, the CIT(E) issued notices on March 3, 2023, and May 28, 2023, requesting the appellant to rectify the deficiencies. However, these notices remained unanswered.
5. The Purpose of Registration: The provisions for the registration of trusts under Section 12AB and the granting of recognition under Section 80G of the Act align with the Directive Principles of State Policy enshrined in the Constitution of India. These provisions aim to promote the welfare of society as a whole by facilitating the flow of benefits through charitable trusts. Therefore, they contribute to achieving the Directive Principles and enhancing socio-economic welfare.
6. Welfare-Oriented Legislation: Income Tax laws are framed as welfare legislations, focusing on the well-being of society rather than punitive measures. Given this perspective, the ITAT Pune considered the interests of justice and the broader societal welfare objectives.
7. ITAT’s Decision: While refraining from making a comment on the merits of the case, the ITAT Pune decided to provide the appellant with another opportunity to rectify the defects and shortcomings in their application for trust registration. The ITAT set aside the previous order and remitted the matter back to the CIT(E) for a fresh and comprehensive consideration. The decision emphasized that this should be done in a manner that ensures the appellant is heard effectively in two hearings.
8. Compliance and Timeliness: The ITAT also highlighted the importance of compliance with legal requirements and adherence to deadlines without seeking unreasonable adjournments.
Conclusion: The decision of the ITAT Pune to grant Shree Jain Vidya Prasarak Mandal another opportunity to provide essential evidence for trust registration under Section 12AB of the Income Tax Act reflects the broader welfare-oriented approach of income tax laws. Charitable trusts play a crucial role in contributing to the betterment of society, and these provisions aim to support their efforts. This decision underscores the significance of adhering to regulatory requirements and deadlines while ensuring that the principles of justice and societal welfare are upheld. It is a reminder that, in matters related to taxation, promoting the common good remains a key objective.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal is directed against the order of Commissioner of Income Tax (Exemption), Pune [for short ‘CIT(E)’] passed u/s 12AB of the Income-tax Act, 1961 [for short ‘the Act’] vide DIN & order No. ITBA/EXM/F/EXM45/2023-24/1053355732(1) dt. 31/05/2023.
2. Despite service of notice none appeared on behalf of assessee nor there placed any application for adjournment; therefore in the larger interest of justice we proceeded to adjudicate the issue u/r 24 of ITAT Rules, 1963 ex-parte with the able assistance of Ld. DR.
3. We note that, the appellant vide Form No.10AB dt. 28/09/2022 made an application to the respondent under clause (iii) of section 12(1)(ac) of the Act thereby seeking regular/final registration u/s 12AB of the Act. The afforested application by the impugned order is rejected by the registering authority Ld. CIT(E) for his failure to arrive at positive satisfaction about genuineness of activities of the assessee in the absence of evidences.
4. We also note that, upon appellants failure to annexe required documents as contemplated u/r 17A(2) of IT-Rules, the Ld. CIT(E) by notice dt. 03/03/2023 accorded an opportunity to make good the deficiency in the application, when same remained futile, further notice dt. 28/05/2023 was served calling upon to comply with discrepancies, however this too remained unattended.
5. It has to be appreciated that the purpose of the provisions for registration of trust u/s 12AB and granting of recognition u/s 80G of the Act, derives their spirit from the Directive Principles of State Policy enshrined in the Constitution of India. The Govt. of India makes every endeavour to provide welfare to one and all in the society at large, and in view thereof the registration for public charitable trusts are given in order to ensure that through these charitable trusts benefits flows to entire society, thus the Directive Principles of State Policy are achieved. These provisions for the trust registration u/s 12AB and granting of recognition u/s 80G of the Act enhance the socio economic welfare in the society. Furthermore, the Income Tax laws are welfare legislations and not penal in nature. Therefore, in the interest of justice and considering all the afore-stated observations, we are of the considered view that, the appellant deserves one more opportunity to make good the defects/shortcomings. In view thereof, without offering our comment on merits of the case, we set aside the impugned order and remit the matter back to the file of Ld. CIT(E) for de-nova consideration, preferably in two effective hearings to the appellant assessee.
6. Needless to say that, the appellant shall ensure necessary compliance in accordance with law and shall adhere to timeless strictly without seeking any unreasoned adjournment.
7. In result, the appeal is ALLOWED FOR STATISTCIAL PURPOSES.