Case Law Details
Mahesh Shikshan Sanstha Vs CIT (ITAT Pune)
Introduction: The Income Tax Appellate Tribunal (ITAT) Pune recently addressed the case of Mahesh Shikshan Sanstha Vs Commissioner of Income Tax (Exemption) regarding the rejection of an application under section 12A(1)(ac)(vi) of the Income-tax Act. The rejection was based on the failure of the appellant to respond to notices issued under IT Rules 17A(2). This article delves into the details of the case, the arguments presented, and the ITAT’s directive for re-adjudication.
Detailed Analysis: The appeal arose from the rejection order by the Commissioner of Income Tax (Exemption), Pune, under section 12A(1)(ac)(vi) of the Income-tax Act. The appellant, Mahesh Shikshan Sanstha, sought regular/final registration under section 12AB of the Act through Form No.10AB. The rejection was primarily due to the appellant’s failure to submit the required documents as mandated by rule 17A(2) of the Income Tax Rules.
The CIT(E) issued notices on two occasions, first on 15/06/2023 and later on 24/07/2023, providing opportunities for the appellant to rectify the deficiencies. However, the appellant did not comply with these notices, leading to the rejection of the application by the registering authority.
The appellant, represented by the Learned Authorized Representative (AR), argued non-compliance based on specific reasons and requested an additional opportunity. The AR emphasized the importance of registration for public charitable trusts, aligning with the Directive Principles of State Policy.
The ITAT Pune considered the welfare nature of Income Tax laws and the societal benefits derived from charitable trusts. Acknowledging the spirit of these provisions, the tribunal granted the appellant another chance to rectify the defects and shortcomings. The ITAT set aside the impugned order and remitted the matter back to the CIT(E) for de-nova consideration, preferably in three effective hearings.
Conclusion: In a decision focused on ensuring justice and adherence to socio-economic welfare principles, the ITAT Pune allowed the appeal for statistical purposes. The directive for re-adjudication provides the appellant with another opportunity to address the deficiencies and pursue the desired registration under the relevant sections of the Income-tax Act. This case highlights the importance of compliance and the tribunal’s commitment to upholding the welfare spirit of tax laws.
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 055450380(1) dt. 26/08/2023
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. We note that, upon appellants failure to annexe required documents as contemplated u/r 17A(2) of IT‑ Rules, the Ld. CIT(E) by notice dt. 15/06/2023 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. This situation constrained the registering authority Ld. CIT(E) to reject the application for his failure to arrive at positive satisfaction about genuineness of activities of the assessee, which in our considered view proceedings were flawless.
3. Per contra, the Ld. AR after solidifying the facts, has sufficiently spelt-out the reasons of non-compliance and prayed for one effective opportunity in the matter.
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 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 Thursday 09th day of November, 2023.
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