Avishkar Shikshan Sanstha Vs CIT (Exemption) (ITAT Pune)
Pune: The Income Tax Appellate Tribunal (ITAT), Pune bench, has restored the application for registration under Section 12A of the Income Tax Act, 1961, filed by Avishkar Shikshan Sanstha, setting aside the earlier rejection order by the Commissioner of Income Tax (Exemption). However, the tribunal imposed a cost of Rs. 2,500 on the trust due to its persistent failure to respond to official inquiries.
The case, stemming from an appeal filed by Avishkar Shikshan Sanstha against the CIT(Exemption)’s order dated September 5, 2024, centred on the trust’s inability to furnish necessary details and clarifications during the registration process. The CIT(Exemption) had not only rejected the final application for 12A registration but also cancelled the provisional registration previously granted under Section 12AB of the Act.
According to the details of the case, Avishkar Shikshan Sanstha had applied for registration under Section 12A(1)(ac)(iii) by submitting Form 10AB on March 29, 2024. As part of the verification process, the CIT(Exemption)’s office issued a notice on May 24, 2024, requesting specific information and clarifications through the ITBA portal. The trust was initially asked to comply by June 10, 2024.
When no response was received, a second opportunity was provided via a letter dated July 12, 2024. This communication specifically asked the trust to show cause why its 12A application should not be rejected and the provisional 12AB registration cancelled due to the lack of compliance. Despite this explicit warning, the trust again failed to respond. The CIT(Exemption) noted in the final order that yet another opportunity was extended, which also went unheeded.
The CIT(Exemption)’s rejection order highlighted the trust’s failure to provide the details sought under Section 12AB(1)(b)(i) of the Act. These details are crucial for verifying the genuineness of the trust’s activities and ensuring compliance with relevant laws material to its stated objects. The CIT(Exemption) concluded that without the requested information, it was impossible to reach a satisfactory conclusion regarding the trust’s activities and compliance status. Citing sufficient opportunities granted and the apparent lack of supporting documents, the application was rejected and provisional registration cancelled.
Aggrieved by this decision, Avishkar Shikshan Sanstha approached the ITAT Pune. The trust raised several grounds of appeal, primarily arguing that it was not given sufficient opportunity to present the required documents, alleging a violation of the principles of natural justice. The trust also contended that the CIT(Exemption) did not consider its request to reopen the submission window and that the matter should have been decided on its merits, given the trust’s assertion of regular compliance with Income Tax provisions over the past two decades.
Before the ITAT, the counsel for the assessee trust submitted that the non-compliance was attributable to the preoccupation of the concerned Chartered Accountant handling the case. The counsel pleaded for one more chance, assuring the tribunal that the trust was now in a position to submit all necessary details and substantiate its case if the matter was sent back to the CIT(Exemption).
Representing the Revenue, the Departmental Representative (DR) strongly opposed the assessee’s plea. The DR pointed out that the secretary of the trust itself was a Chartered Accountant, suggesting that the trust was well aware of its obligations and the requirements of the law. The DR argued that the CIT(Exemption) had issued a well-reasoned order based on the consistent non-cooperation from the assessee and that the appeal should be dismissed. The DR further pressed for the imposition of significant costs on the assessee for its repeated non-compliance.
The ITAT, after hearing both sides and reviewing the CIT(Exemption)’s order and the submitted documents, acknowledged that the rejection and cancellation were direct consequences of the assessee’s admitted failure to comply with the notices. The tribunal considered the assessee’s submission that it was now ready to provide the details.
Balancing the need for statutory compliance with the principle of providing an opportunity to be heard, the ITAT deemed it appropriate to restore the matter to the file of the CIT(Exemption). This decision was made in the interest of justice, giving the assessee one final opportunity to furnish the requisite details.
The ITAT specifically directed the assessee to submit all called-for details on the appointed date without seeking any adjournment under any circumstances. The tribunal clarified that if the assessee again failed to comply, the CIT(Exemption) would be free to pass an appropriate order based on the available information and the law.
Recognising the persistent nature of the non-compliance and noting that the trust’s secretary is a Chartered Accountant expected to understand such procedures, the ITAT decided to impose a cost of Rs. 2,500 on Avishkar Shikshan Sanstha. The trust has been directed to deposit this amount within 30 days from the receipt of the ITAT’s order.
The tribunal thus allowed the grounds raised by the assessee, but only for statistical purposes, meaning the CIT(Exemption)’s order was set aside to allow a fresh decision after providing the directed final opportunity. The appeal was recorded as allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
