Introduction: The Income Tax Appellate Tribunal (ITAT) Pune recently addressed the case of Kai Vaijanath Channappa Darde Vaidyakiya Research Centre’s appeal. The appellant sought registration under section 12A(1)(ac) of the Income Tax Act, which was rejected by the Commissioner of Income Tax (Exemption), Pune (CIT(E)). This article explores the details of the case and the ITAT’s decision to remit the matter back to CIT(E) for de-novo consideration.
1. Background of the Case: Kai Vaijanath Channappa Darde Vaidyakiya Research Centre filed an application seeking regular/final registration under section 12AB of the Income Tax Act. The application was made in accordance with section 12A(1)(ac)(vi) of the Act.
2. CIT(E)’s Rejection: The registering authority, i.e., CIT(E), rejected the application in the absence of sufficient evidence to establish the genuineness of the activities of the assessee.
3. Opportunity to Rectify Deficiencies: The appellant was given an opportunity to rectify deficiencies in the application. Notices were served on the appellant, calling for compliance with the requirements.
4. The Principle of Natural Justice: The appellant’s representative pointed out that one of the notices fell on a non-working day (Saturday). However, the notices were not attended to by the appellant.
5. Purpose of Registration: It is essential to understand that the provisions for registration of trusts under section 12A/12AB and the granting of recognition under section 80G of the Act are rooted in the Directive Principles of State Policy enshrined in the Indian Constitution. These provisions aim to promote the welfare of society at large and ensure that benefits from charitable trusts are extended to the entire society.
6. Welfare Legislation: Income tax laws are welfare legislations rather than penal in nature. Therefore, considering the larger interest of justice and the objectives of these provisions, the ITAT Pune decided to provide the appellant with another opportunity to rectify the defects and shortcomings in the application.
7. De-Novo Consideration: The ITAT Pune set aside the impugned order and remitted the matter back to CIT(E) for de-novo consideration. The CIT(E) was instructed to conduct this reconsideration in three effective hearings, ensuring strict adherence to timelines.
8. Compliance and Unreasoned Adjournments: The appellant was reminded to ensure necessary compliance with the law and avoid seeking unreasoned adjournments.
Conclusion: The decision by ITAT Pune in the case of Kai Vaijanath Channappa Darde Vaidyakiya Research Centre vs. CIT(E) emphasizes the importance of providing genuine charitable trusts with opportunities to rectify deficiencies in their applications. The ITAT’s decision to remit the matter for de-novo consideration is based on principles of justice and the welfare nature of income tax laws. The case underlines the significance of adhering to the provisions for trust registration and recognition to ensure the socio-economic welfare of society as a whole. This ruling provides the appellant with another chance to meet the requirements and obtain registration under section 12A/12AB, contributing to the greater good of society.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal of the assessee is directed against the order of rejection by Commissioner of Income Tax (Exemption), Pune [for short ‘CIT(E)’] passed u/s 12A(1)(ac)(vi) of the Income-tax Act, 1961 [for short ‘the Act’] vide DIN & order No. ITBA/EXM/F/EXM45/2023-24/1 05531 6201(1) dt. 22/08/2023.
2. We have heard rival contention and perused the material placed on records and note that, the appellant vide Form No.10AB dt. 31/03/2023 made an application to the respondent under clause (iii) of section 12A(1)(ac) of the Act thereby seeking regular/final registration u/s 12AB of the Act. The aforestated 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.
3. We note also that, upon appellants failure to annexe required documents as contemplated u/r 17A(2) of IT- Rules, the Ld. CIT(E) by notice dt. 24/06/2023 accorded an opportunity to make good the deficiency in the application, when same remained futile. Following the principle of natural justice, a further notice dt. 24/07/2023 was also served on the appellant calling upon to comply with discrepancies, however this too remained unattended. The Ld. AR without disputing service of aforestated notices has pointed out that, 24/06/2023 falling on Saturday being non-working day.
4. It has to be appreciated that the purpose of the provisions for registration of trust u/s 12A/12AB and granting of recognition u/s 80G of the Act, derives their spirit from Directive Principles of State Policy enshrined in the Constitution of India. The Govt. of India makes every end eavour 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 of registration u/s 12A/12AB and granting of recognition u/s 80G of the Act enhance socio economic welfare of the society. Furthermore, Income Tax laws are welfare legislations and not penal in nature, therefore, in larger interest of justice with forgoing 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 Ld. CIT(E) for de-nova consideration, preferably in three effective hearings to the appellant assessee.
5. Needless to say that, the appellant assessee shall ensure necessary compliance in accordance with law and shall adhere to timeless strictly without seeking any unreasoned adjournment.
6. In result, the appeal is ALLOWED FOR STATISTCIAL PURPOSES.
U/r 34 of ITAT Rules, order pronounced in open court on this Tuesday 10th day of October, 2023.