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These appeals by assessee are directed against the order of Ld. CIT(Exem.) dated 31.01.2023 u/s. 12AB and 80G(5) of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2022-23. The assessee has raised the following grounds of appeal in :-
1. Order passed by the Learned Commissioner of Income-Tax, Exemption, Pune U/s 12AB(1)(b)(ii)(B) dated 31/1 / 2023 [DIN: ITBA/EXM/F/EXM45/2022- 23/1049265558(1)] is Bad in law as (a) it seems that the Judicial Mind has not been applied, (b) the Proper Reasonable Opportunity of being Heard has not been given & (c) Erroneously raising doubt about genuineness of activities carried out by the Trust to be charitable and therefore the provisional registration granted U / s. 12A(1)(ac)(vi) vide URN: AAETB0316LE20221 may please be restored.
2. Further the assessee has raised the following grounds in ITA No. 504/Mum/2023:-
Order passed by the Learned Commissioner of Income-Tax, Exemption, Pune U/s 12AB r.w.s 80G(5)(iii) dated 31/1 / 2023 [DIN:ITBA/EXM/F/EXM45/2022- 23/1049268450(1)] is Bad in law as (a) it seems that the Judicial Mind has not been applied, (b) the Proper Reasonable Opportunity of being Heard has not been given & (c) Erroneously raising doubt about genuineness of activities carried out by the Trust to be charitable and therefore the provisional registration granted U / S. 80G(5)(iv) vide URN: AAETB0316LF20221 may please be restored.
The brief facts of the case are that assessee trust filed an application for registration u/s. 12A (1) and 80G (5). The same were provisionally approved by the office of Ld.CIT (E), Pune w.e.f 22-06-2022 to A.Y. 25-26. Thereafter as per clause-j para-10 of form no. 10AC (order for provisional registration)
“The trust or institution shall apply for registration within 6 months of commencement of the activities or at least 6 months prior to the expiry of period of provisional registration, whichever is earlier.”
In compliance to this clause a notice dated 06-12-2022 was issued through ITBA portal seeking certain information/ clarification to be complied by 21-12- 2022. Assessee trust responded to this notice vide dated 21-12-2022. Ld.CIT (E) was not satisfied with the submissions of the assessee trust and cancelled the provisional registration granted earlier u/s. 12A (1) and 80G (5) vide order dated 31-01-2023. Assessee being aggrieved with this order of Ld.CIT (E) approached this tribunal through appeal to restore its registration u/s. 12A (1) and 80G (5) respectively.
We have gone through the provisional registration certificate, form 10AD (order for cancellation of registration) and submissions of the assessee along with audited financials filed before us. For sake of clarity and ready reference we are re-producing herein below the copies of form no. 10AC issued by the Ld.CIT (E) both for provisional registration u/s. 12A (1) and 80G (5):
With reference to the above a reasonable conclusion can be drawn that the provisional certificate issued by the Ld.CIT (E) is of course after through verification of the objects of the trust and they were never under challenge. We have gone through the other clauses of para-10 of the provisional certificate issued vis-à-vis the reasons given by Ld.CIT (E) in his cancellation order in form no. 10AD. We do not find any contravention/ deviation of the conditions prescribed in the provisional registration certificate. The conditions prescribed in form no. 10AC are in consonance with sec 12A (1) (iii). It is pertinent to mention here that assessee trust was formed during the covid period and not very old to have a big corpus, voluntary contribution and assets to serve and operate at very large scale. Moreover, trust is duly registered under the Mumbai Public Trust Act 1950 vides dated 12-02-2020. This ensures that assessee trust is a genuine entity to carry out the objects of the trust duly recognized by the statute of the state government and even Ld.CIT (E) himself vide provisional registration certificate.
The objections raised by Ld.CIT (E) are reproduced herein below for a fair adjudication of the matter in hand.
The assessee has filed application No.CIT EXEMPTION, PUNE/2022- 23/12AA/11699 in Form No.10AB under clause (iii) of section 12A (1)(ac) of the Income Tax Act, 1961 on 05/07/2022.
The application was carefully perused and considered along with its annexure. With a view to verify the genuineness of activities of the assessee, a notice was issued through ITBA portal on 06/12/2022 requesting him to upload certain other information / clarification viz. date of commencement of activity, date of expiry of provisional registration, details of any other Law applicable for achievement of objectives and the proof of compliance of said Law, proof of identity of main trustees / directors, year-wise list of donations received, note on activities carried out along with supporting credible evidence etc.. The assessee was requested to submit his compliance by 21/12/2022. The assessee was specifically informed that in the event of failure to comply by the due date, the matter will be decided based on material available on record. The notice was duly served on the assessee through e-portal / email.
3. However, it is seen that the note on activities furnished by the assessee is not proper and the assessee has also not furnished any satisfactory evidence in support of the activities claimed to have been carried out. The assessee came into existence on 12/02/2020 and claimed to have arranged medical camp for general public during Covid- 19 pandemic, distributed free medicines, hand sanitizers, food grains and masks jointly with local authority to needy and persons below poverty line. However, the assessee has not furnished any details of the beneficiaries and also not furnished any supporting evidence except few photographs which do not show any relation to the assessee trust The assessee has furnished copies of two purchase bills of total Rs. 9,360/- in respect of purchase of soap and 'anchal' which are n related to the activity of distribution of free medicines, hand sanitizer masks or food grains. A total expenditure of Rs. 19,689/- on account other charitable objects and round figure of Rs. 1,00,000/- on account medical relief is shown in the financial statements of F.Y. 2020-21. Out this the amount of Rs. 1, 00,000/- is shown payable as on 31/3 / 2021 and appearing as payable till 31/3 / 2022 also. The assessee has not furnished any credible evidence in support of this medical relief activity except a bill which itself remained payable for two years create doubt about the activity. Further, the assessee has not shown any expenditure on objects during F.Y. 2021-22 although it was having funds to the tune of Rs. 1, 28,461/-in its bank account. 3.1 The assessee has also furnished a copy of donation receipt made to Rs. 10, 329/- one Shree Swami Samarth Vedalaya Va Annaprasad for Mahaprasad on account of Covid-19. The assessee has not submitted any details about of the objects of the said entity. It is not clear as to whether the objects of the said entity to which donation is given were similar to that of the assessee trust. However, the name the said entity - Shree Swami Samarth Vedalaya Va Annaprasad itself suggests to be in the nature of religious objectives. 3.2 In view of the above, undersigned is unable to draw any satisfactory conclusion about genuineness of activities of the assessee and has left no alternative but to rejection.
4. Accordingly, the application filed by the assessee is hereby rejected.
In view of the above we found that objections of the Ld.CIT (E) Vis a Vis provisions of sec. 12A (1) are not in harmony. Ld.CIT (E) has failed to make out the case for rejection/ cancellation of the provisional registration certificate issued in form no. 10AC. It is further observed that the basic objections of the Ld.CIT (E) are not with reference to any violation of the objects of the trust and conditions prescribed in form no. 10AC but with reference to certain transactions of the assessee trust. For which as a matter of natural justice he is duty bound to give a fair opportunity to assessee trust to clarify. It is also observed that the Ld.CIT (E) taken a final decision based on submissions of assessee filed on 12-12-2022. Thereafter there was no communication from the side of Ld.CIT (E) if he has any doubt or clarification required. Rather, he passed an order on the last day, which is 31-01-2023 without any opportunity to the assessee. This approach of Ld.CIT (E) is against the spirit of principle of natural justice and fatal to the scheme of sec 12A. This approach of Ld.CIT (E) towards a newly formed trust that is to very small in size and trying to take off is not appreciable at all. In view of this we set aside the orders of Ld.CIT(E) with reference to sec 12A (1) and 80G (5) set aside and direct the Ld. CIT(E) to issue the fresh order granting exemption u/s. 12A and 80G(5) consequentially. Grounds of appeal in both the & 504/Mum/2023 are allowed.
In the result both the appeals filed by the assessee are allowed.