World welfare Health Federation Vs CIT (ITAT Jaipur)
ITAT Jaipur restored the matter back to CIT(E) as application for registration u/s. 12AB of the Income Tax Act was rejected solely due to alleged non-genuineness of the activities as charitable nature of activities of assessee not disputed.
Facts- The assessee, World Welfare Health Federation, filed an application in Form No. 10AB seeking registration u/s. 12AB of the Income Tax Act, 1961. Thereafter, a letter/ notice was issued at the e-mail/address provided in the application requiring the applicant to submit certain documents/explanations.
In response to the same, the applicant furnished a response which was duly examined and not found tenable. Since it is a limitation matter, the case is decided on the basis of material placed on record and application of the applicant in Form 10AB for registration u/s. 12A is liable to be rejected. Being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee was deprived of the justice to be decided the merits of the registration on account of the shortage of time and the application was dismissed considering that aspect as main and the reasons for denial was only to consider the activities were genuine or not and therefore, considering the peculiar set of facts on hand and without going into the merits of the case it is imperative that the assessee should be given a fair chance to present the merits for registration. In view of the matter, the bench feels that the assessee should be give one more chance to contest the merits of the case before ld. CIT(E) and assessee is directed to produce all the relevant details as may be require by the ld. CIT(E) so as to consider the application for registration of the assessee trust. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be decided by the ld. CIT(E) independently in accordance with law.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal is filed by assessee and is arising out of the order of the Commissioner of Income Tax Exemption, Jaipur dated 28/03/2023 [here in after (CIT(E))].
2. In this appeal, the assessee has raised following grounds: –
“1. That the Ld. CIT(Exemption) has erred in appreciating the complete facts and holding the activities of the assessee-trust as ‘ingenuine’ for rejecting the application u/s 12AB. Rejection order is based on conjectures and surmises.
2. That the Ld. CIT(Exemption) failed in affording the reasonable opportunity of being heard before rejecting the application for registration u/s 12AB. No show cause notice before the rejection of the application was issued to the assessee.
3. That the ld. CIT(Exemption) has not given adequate time for submitting responses to notices u/s 133(6). Notices were issued on 24/03/2023 (Friday) to three parties and without waiting for their responses, the order of rejection was issued on 28/03/2023 (Tuesday) in a hurried manner.
4. Appellant craves the right to add, alter, modify or amend in any manner the grounds of appeal on or before the hearing.”
3. Succinctly, the fact as culled out from the records is that the application in Form No. 10AB seeking registration u/s 12AB of the Income Tax Act, 1961 was filed by the applicant online on 22.09.2022. Thereafter, a letter/notice No. ITBA/EXM/F/EXM43/2022-23/1048185640(1) dated 23.12.2022 was issued at the e-mail/address provided in the application requiring the applicant to submit certain documents/explanations by 09.01.2023. In response to the same, the applicant furnished its reply on 13.01.2023 which was duly examined and few discrepancies were found. Thereafter, a show cause letter was issued vide letter/notice No. ITBA/EXM/F/EXM43/2022-23/1050653174(1) dated 12.03.2023 requesting to submit the response by 16.03.2023. In response to the above, the applicant requested for adjournment. Hence, in view of principle of natural justice, another opportunity was provided to the applicant vide letter/notice No. ITBA/EXM/F/EXM43/2022-23/1050874693(1) dated 17.03.2023 requesting to submit the response by 20.03.2023. In response to the same, the applicant furnished a response on 20.03.2023 which was duly examined and not found tenable. Since it is a limitation matter, the case is decided on the basis of material placed on record and application of the applicant in Form 10AB for registration u/s 12A is liable to be rejected based on the reasons given in the order of the ld. CIT(E) order. The main issue based on which the registration was rejected is reiterated here in below :
“The above summon was duly delivered on the email-id of Shiven Bhandari ( [email protected]) on 24.03.2023 at 6.23PM. However, Dr. Shiven Bhandari, Director didn’t appear before the undersigned on 27.03.2023. Therefore, it can be concluded that the salary given to Dr. Shiven Bhandari, Director is not justifiable in any way as he has not been doing any significant work. Further, Dr. Shiven Bhandari is a renowned doctor and has other good sources of income. In spite of this fact, huge amounts are being paid to him. As it has already been accepted by the applicant that no other charitable work is being done by the applicant and the same is also visible from the accounts furnished by the applicant as discussed in 2.1 above, the question of paying such a high salary to the Director does not arise. It is further concluded that the impugned institution has been established only for providing services to various business such as Sun Pharmaceutical Limited, Vedic Lifesciences Pvt. Ltd. Etc. for which Dr. Shiven Bhandari, Director is taking enormous amounts as salary. This whole act of the institution is completely against the spirit of a charitable institution and thus the applicant is not eligible for registration u/s 12AB on the ground of in genuineness of activities.
4. In view of above discussion at length, applicant’s claim of registration under section 12AB is being rejected on following grounds:-
