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Dnyanagan Education Society Vs CIT Exemption (ITAT Pune)
Dnyanagan Education Society, a trust, applied for registration under Section 12A(1)(ac)(iii) of the Income Tax Act by submitting Form No. 10AB on September 29, 2023. The Commissioner of Income Tax (Exemptions) issued notices via the ITBA portal to verify the trust’s genuineness, but discrepancies were identified in its submissions. A final notice on February 29, 2024, required the trust’s response by March 7, 2024. The trust failed to meet this deadline, leading to the rejection of its application. In its appeal to the Income Tax Appellate Tribunal (ITAT), the trust argued that it was not granted a reasonable opportunity to respond, requesting the case be remanded for fresh consideration.
ITAT Pune acknowledged that the trust was given less than a week to comply, contrary to the Central Board of Direct Taxes’ guidelines mandating a minimum 15-day response time for notices under Section 142(1). Citing the Delhi High Court’s precedent in the Dauphin Travel Marketing Pvt. Ltd. case, ITAT held that the insufficient response time violated principles of natural justice. Consequently, ITAT deemed the CIT (Exemptions)’s approach unfair and remanded the case for fresh evaluation, ensuring compliance with the law. The decision emphasizes procedural fairness in tax proceedings.
The case was represented by CA Kishor Phadke (Assisted by CA Saurabh Jadhav)
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee directed against the order of the CIT (Exemptions), dated 11.03.2024 denying registration u/s.12AB r.w.s.12A(1)(ac)(vi) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’).
2. Brief facts of the case are that the assessee is a Trust, filed application in Form No.10AB dated 29.09.2023 seeking registration u/s.12A(1)(ac)(iii) of the Act. On receipt of the said application, the ld. CIT (Exemptions), in order to verify the genuineness of activities of the assessee trust, issued notice through ITBA portal on 29.11.2023 calling for certain information/clarification. The assessee trust furnished the requisite information. Thereafter, the CIT(Exemptions) issued another notice to the assessee trust through ITBA portal on 29.02.2024 pointing out certain discrepancies in the information so furnished, fixing the compliance date 07.03.2014. The assessee trust could not furnish any explanation in compliance to the said notice. In the circumstances, the ld. CIT(Exemptions) drew inference that he is unable to draw any satisfactory conclusion about the genuineness of activities of the assessee and compliance of requirements of any other law, rejecting the application filed by the assessee trust.
3. Being aggrieved, the assessee trust is in appeal before the Tribunal in the present appeal.
4. At the outset, the ld. Authorized representative submits that the assessee trust was not given reasonable opportunity for compliance. Therefore, in the interest of justice, it is prayed for remand of the matter to the file of CIT (Exemptions) for denovo consideration of the application.
5. The ld. DR submits that the appellant trust did not comply with the notices despite giving ample opportunity. Therefore, the authorities were justified in rejecting the application by the appellant trust seeking registration u/s.12AB of the Act.
6. We heard the rival submissions and perused the relevant material on record. We find, in the present case, the assessee trust filed application in Form No.10AB dated 29.09.2023 seeking registration u/s.12A(1)(ac)(iii) of the Act. The CIT(Exemptions) rejected the application filed by the assessee trust owing to non-compliance to the notice issued through ITBA portal. On mere perusal of the contents of para no.2.2 and 2.3 of the impugned order, it would reveal that notice was issued to the assessee trust through ITBA portal on 29.02.2024 requesting the assessee trust to file explanation to the discrepancies pointed out in the above notice, on or before 07.03.2024. Undisputedly, the time given to the assessee trust for compliance is less than a week, which is against the Standard Operative Procedure (‘SOP’) issued by the CBDT dated 19.11.2020, wherein, minimum period of 15 days is required to be given to the assessee to comply with notices u/s 142(1) from the date of issue of the notice. Recently, the Hon’ble Delhi High Court in the case of Dauphin Travel Marketing Private Limited vs. ITO in W.P.(C) 8870/2023 & CM Nos.33516-17/2023 dated 05.07.2023 taking note of this SOP held that the grant of insufficient time to respond the notice violates the principles of natural justice and, therefore, set-aside the assessment. Thus, it is clear that the assessee trust was given unreasonably very short period of time to respond to the notice, which is against the principles of natural justice. In the light of the aforesaid facts mentioned above, we find that the approach adopted by the ld. CIT, Exemption is unreasonable and violates of the principles of natural justice. In the circumstances, we are of the considered opinion that it is a fit case to remand the matter to the file of ld. CIT, Exemption for de novo consideration of application in accordance with law.
7. In the result, the appeal of the appellant is partly allowed for statistical purposes.
Order pronounced on this 01st day of August, 2024.
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