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Facts
The assessee, a trust incorporated in 2018, sought regular registration under section 12A(1)(ac)(ii) and approval under section 80G(5)(ii) of the Income Tax Act, 1961. The CIT(E) rejected the applications, citing failure to provide complete details and satisfy the genuineness of charitable activities. The provisional registration and approval were also cancelled.
Held
The Tribunal held that the assessee was not provided with a reasonable opportunity to present their case before the CIT(E) and also failed to submit complete documentation, including the trust deed and donor/beneficiary details. However, in the interest of justice, the case was remanded to the CIT(E) for reconsideration upon production of all documents.
Key Issues
Whether the CIT(E) denied reasonable opportunity to the assessee for presenting their case and whether the assessee has provided complete and genuine details for registration and approval.
Sections Cited
12A(1)(ac)(ii), 80G(5)(ii), 147, 148, 143(3)
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Income Tax Appellate Tribunal, DELHI BENCH “E”DELHI
ORDER PERSUDHIR KUMAR, JUDICIAL MEMBER: The assessee preferred the captioned appeals, challenging the order dated 29.01.2025 passed by the Commissioner of Income Tax (Exemption), Delhi(In short “CIT(E)”) pertaining to assessment order for 2025-26.
The assessee has raised following grounds of appeal :-
1. Failure to provide reasonable opportunity to present the case The appellant submits that they were not provided with a reasonable opportunity to present their case before the Commissioner of Income Tax (Exemption). Despite requests for a personal hearing and time to submit additional documents and clarifications, the appellant was not granted sufficient time or a fair opportunity to address the concerns raised by the department.
The appellant respectfully submits that this denial of a reasonable opportunity to present the case is in violation of the principles of natural justice, and as such, the order passed by the CIT(Exemption) should be set aside.
2. Failure to submit the original trust deed In Para 4.1 of the rejection order, the appellant has submitted a copy of the supplementary deed. Additionally, the appellant has submitted the third supplementary trust deed, on which all the information is correct. During the hearing period, the Commissioner did not request the submission of the original deed. The appellant respectfully requests that the Hon'ble Tribunal kindly consider the supplementary deed and allow the opportunity for submission of the original trust deed at the earliest convenience, as it is a crucial document for the appeal process. However, we possess all the relevant deeds, including the original deed, which are available for submission to the authority at any stage during the proceedings.
3. Non-Submission of Complete Donor Details In Para 4.2 of the rejection order, the appellant respectfully submits that all relevant donor details, including Name, PAN, and Address, have been provided in the prescribed format as requested by the department. However, for donations received through crowdfunding platforms, the appellant faced significant practical difficulties in obtaining the complete details of donors. This is due to the nature of crowdfunding, where donations are often made in small or nominal amounts by multiple individuals, and it is not feasible or practicable to request detailed information from each donor.
The appellant further submits that the donations received via crowdfunding were genuine and transparent, and the omission of detailed donor information in such cases was due to the limitations of the crowdfunding platform. The appellant respectfully requests that the Hon'ble Tribunal consider this explanation, and the donor details already provided and allow an opportunity to provide any additional information if deemed necessary.
4. Non-Submission of Beneficiary Details for Charitable Activities In Para No 4.3 of the rejection order, the appellant respectfully submits that the lack of detailed beneficiary information was due to practical challenges associated with the nature of the charitable activities.
Further, the appellant submits that it was not provided with a reasonable opportunity to present and explain the facts related to the charitabic activities before the learned Commissioner. Despite requests for a personal hearing, the appellant was not given adequate time or an opportunity to present the relevant facts and justifications regarding the nature of the activities and the expenses incurred. However, we have also submitted the activity report, which contains all relevant details, supported by photographic evidence as proof.
The appellant respectfully requests that the Hon'ble Tribunal consider the explanation regarding the challenges in obtaining beneficiary details and the legitimate nature of the charitable activities undertaken. The appellant also requests that an opportunity to fully explain and present the facts be granted, in the interest of justice.
Questionable Nature of Small Donations and UPI Transactions In Para No 4.4 of the rejection order, the appellant respectfully submits that these donations were received through a legitimate crowdfunding platform. Donations through crowdfunding often involve numerous small or nominal contributions from individuals, and it is not uncommon for multiple donations to be made by the same donor on different occasions or in different small amounts.
Given the nature of crowdfunding, where donors typically contribute smaller amounts for specific causes, it is neither feasible nor practical to obtain comprehensive details for every donor. The donations received were genuine, and the appellant has made reasonable efforts to comply with all necessary legal and procedural requirements.
The appellant humbly requests that the Hon'ble Tribunal consider the context of crowdfunding and allow the donations received in this manner, which were made transparently for charitable purposes.
6. Doubt on the Authenticity of Bills for Grocery Purchases In Para No 4.5 and 4.6 of the rejection order, the appellant respectfully submits that the failure to mention the invoice numbers and GSTIN on the submitted bills was not a deliberate omission, but rather a clerical error. Ration (Grocery Items) were procured from a local vendor. The appellant has made efforts to procure the corrected documents, and any discrepancies were unintentional.
However, authority can verify the genuineness of vendor by physical verification.
7. Discrepancy in Ration Distribution Programme Expenditure In Para No 4.5 of the rejection order, the appellant respectfully submits that the apparent discrepancy arises due to a difference in the presentation of the financials and beneficiary details. The expenses have been recorded in a manner that does not fully reflect all transactions in a consolidated format, leading to this perceived difference.
Furthermore, some of the expenses for the ration distribution programme were incurred in cash, and the appellant acknowledges that a complete record of these cash transactions could not be maintained due to the nature of the expenditure and operational challenges at the time. Despite this, the appellant assures that these expenses were genuinely incurred for charitable purposes.
The appellant request the Hon’ble Tribunal to consider the factual circumstances and allow an opportunity to reconcile the financial records, as the expenses claimed were legitimate and were incurred in the furtherance of charitable activities.
The brief facts of the case that the assessee is a trust and incorporated on 16.05.2018 as document no. 486 in additional book no. 4 volume no.4323 on pages 20 to 33 in the office of Sub Registrar, New Delhi. The applicant has obtained provisional registration vide CPC Order No AAC TN9334QFE20215, dated 21.03.2022 under sub- clause(vi) of clause (ac) of the Act. It has now filed an application on 24.06.2024 in Form 10AB for regular registration u/s 12A(1)(ac)(ii) of the Income Tax Act, 1961. The main objects of the applicant trust as per its Form 10AB are relief of the poor, education and medical relief. During the proceedings, the applicant was issued questionnaire dated 19.09.2024 with a request to furnish certain details / documents/ clarifications in support of its claim for registration u/s.12A(1)(ac)(ii) of the Income Tax Act,1961. The case was fixed for compliance on 04.10.2024 and the applicant has filed part details on 04.10.2024. Accordingly, the applicant was issued notice dated 24.12.2024, fixing the case for compliance on 03.01.2025 with a request to file certain details/clarification alongwith pending details. In response assessee filed part details. The Ld. CIT(E) after going through the details filed by the assessee observed that assessee has failed to file the requisite details which are given at page 3 and 4 of the impugned order. Accordingly, the Ld. CIT(E) held that as the applicant has failed to satisfy the genuineness of the charitable activities carried out by the application filed in Form 10AB for grant of registration u/s. 12A (1)(ac) (ii) is rejected.
Further, the Ld. CIT(E) held that since the application filed in Form 10AB for grant of registration is rejected the provisional registration granted earlier is also cancelled.
5. Since, the application filed in form 10B for grant of approval u/s. 80G (5)(ii) is rejected, the provisional approval granted earlier is also cancelled.
Aggrieved by the order of the Ld. CIT(E), assessee is in appeals before us.
At the outset, Ld. Counsel submitted that complete documents could not be filed during the course of proceedings regarding the trust before the Ld. CIT(Exemption), now he wants to file the all documents. In the interest of justice and fair play we deem fit to remand back to the file of the Ld. CIT(Exemption) with direction to consider the documents if any produced by the assessee during the course of proceedings. The appeals of the assessee are liable to be allowed. 8 In the result, the appeals filed by the assessee are allowed for statistical purpose.
Order pronounced in the open court on 25.06.2025