Case Law Details
Adimata Shakti Praishthan Vs CIT (ITAT Pune)
Introduction: The Income Tax Appellate Tribunal (ITAT) Pune has issued a significant ruling in the case of Adimata Shakti Praishthan against the Commissioner of Income Tax (Exemption). The appeal concerns the rejection of an application for registration under Section 12AB of the Income Tax Act. This article provides an in-depth analysis of the case and its implications.
Detailed Analysis: The appellant filed an application for registration under clause (iii) of Section 12A(1)(ac) of the Income Tax Act, seeking final registration under Section 12AB of the Act. However, the registering authority, the Commissioner of Income Tax (Exemption) (CIT(E)), rejected the application. The rejection was based on the authority’s inability to establish the genuineness of the appellant’s activities due to a lack of evidence and non-compliance with communicated discrepancies.
The appellant had previously failed to provide the required documents, leading to a notice from the CIT(E) to rectify the deficiencies. The appellant complied with this notice. However, discrepancies were still identified, and the appellant was issued another notice to clarify these issues. Unfortunately, the appellant claimed non-receipt of this notice and did not respond.
The ITAT emphasized the importance of provisions for the registration of trusts under Sections 12A/12AB and the granting of recognition under Section 80G of the Act. These provisions aim to facilitate the welfare of society in line with the Directive Principles of State Policy enshrined in the Indian Constitution. The ITAT noted that these provisions are designed to ensure that benefits flow to the entire society through charitable trusts.
Income tax laws are considered welfare legislations, and the objective is not punitive. Therefore, the ITAT concluded that the appellant deserves another opportunity to address the defects and shortcomings in the application. As a result, the ITAT set aside the impugned order and remanded the matter back to the CIT(E) for de-novo consideration.
The ITAT also highlighted the appellant’s commitment to attend to the communicated discrepancies and ensure compliance with the law. The appellant undertook to adhere to timelines without seeking unreasoned adjournments.
Conclusion: The ITAT’s decision to direct de-novo consideration of the registration application under Section 12AB is significant. It underscores the importance of providing charitable trusts with opportunities to rectify discrepancies and comply with the law. This ruling aligns with the welfare-oriented nature of income tax laws and the overarching objective of benefiting society. The case will continue with a fresh evaluation by the CIT(E).
FULL TEXT OF THE ORDER OF ITAT PUNE
The present appeal u/s 253(1)(c) of the Income-tax Act, 1961 [‘the Act’] is filed against the DIN & order No. ITBA /EXM /F/EXM45/ 2023-24/1 054413218(1) dt. 18/07/2023 assed by the Commissioner of Income Tax (Exemption), Pune [‘CIT(E)’] u/s 1 2A(1 )(ac) vi) of the Act.
2. We have heard rival contention and perused the material placed on records and note that, the appellant vide Form No.10AB dt. 31/01/2023 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 and compliance of discrepancies communicate.
3. We also note that, upon appellants failure to annexe required documents as contemplated u/r 17A(2)(k) of IT- Rules, the Ld. CIT(E) by notice dt. 13/04/2023 accorded an opportunity to make good the deficiency in the application, the assessee complied accordingly. After considering the submission of the appellant, certain discrepancies were noticed and for the reason by a notice dt. 07/07/2023 the appellant was again called upon to cure the defects and clarify the discrepancies; however this remained unattended for the good reason of non-receipt of notice by the appellant.
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 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 of registration u/s 1 2A/1 2AB 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. Before we depart, it necessitated us to place on record the oral statement of the Ld. AR made during the course of physical hearing that, appellant undertakes to attend the discrepancies communicated and ensure necessary compliance in accordance with law so has to assist this remand proceedings and also undertakes to adhere to timelines 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 Friday 13th day of October, 2023.
