Help Foundation Vs CIT (E) (ITAT Jodhpur)
Jodhpur ITAT: Cancellation of Provisional U/s12A/80G Registration Cannot Automatically Follow Rejection of Final Registration-Specific Notice and Opportunity Required
The Jodhpur ITAT set aside the CIT(E)’s orders rejecting final registration under Section 12AB and approval under Section 80G, while also directing fresh consideration of the cancellation of the Foundation’s existing provisional registration and provisional 80G approval.
The CIT(E) had rejected Section 12AB registration mainly on two grounds: first, the Foundation was not registered under the Rajasthan Public Trust Act, 1959; and secondly, sufficient documents had allegedly not been furnished to verify the genuineness of its activities. The deficiencies noted included details of income and expenditure, supporting bills and vouchers, grants, TDS, payments to persons specified under Section 13(3), bank transactions, accounts and documents concerning the premises. The CIT(E) simultaneously cancelled the provisional registration granted on 31.05.2024.
Since Section 12AB registration had been rejected, the CIT(E) consequentially rejected the Section 80G application and also cancelled the provisional 80G approval granted on 11.06.2024.
Before the Tribunal, the assessee pointed out that it had subsequently obtained registration under the Rajasthan Public Trust Act. It also contended that compliance with another law is relevant under Section 12AB only where such compliance is material for achieving the objects of the trust or institution. According to the assessee, the CIT(E) had not demonstrated how absence of State registration affected its charitable objects or rendered its activities non-genuine.
An important additional contention concerned cancellation of the existing provisional registrations. The assessee argued that the notices issued by the CIT(E) never specifically proposed cancellation of the provisional Section 12A registration or Section 80G approval. Rejection of an application for final registration and cancellation of an already existing provisional registration were distinct actions, and cancellation could not automatically follow without independent consideration and a specific opportunity of hearing.
The ITAT found that the subsequent State registration as well as the disputed factual material concerning accounts, bank transactions, vouchers, declarations and activities required examination by the CIT(E). It therefore granted the assessee one more effective opportunity and restored both the Section 12AB and Section 80G applications for fresh adjudication.
Significantly, on cancellation of the provisional registrations, the Tribunal specifically directed that the issue must be decided afresh only after issuing a specific notice to the assessee and granting reasonable opportunity to respond to the proposed cancellation. Separate, reasoned orders were directed to be passed. The Tribunal expressed no opinion on ultimate eligibility under Sections 12AB or 80G.
Cases Discussed
