MEERA PRAKASH VERMA FOUNDATION TRUST,UDAIPUR vs. CIT(EXEMPTION), JAIPUR

The assessee has raised the following grounds of appeal:

The ld. CIT(E), however, found the explanation furnished by the assessee to be unsatisfactory. According to him, the assessee failed to furnish complete supporting bills, vouchers, ledger accounts, documentary evidence regarding expenditure, details of transactions

The ld. CIT(E) further observed that payments described as honorarium to certain trustees had not been supported by any evidence regarding the nature of services rendered. Likewise, certain payments made to a dining hall and restaurant were not explained with reference to the charitable activities of the trust. On the basis of these observations, the ld. CIT(E) concluded that the genuineness of the activities of the trust could not be established, that there appeared to be violation of section 13(1)(c) read with section 13(3) and the Explanation below section 12AB(4), and consequently rejected the application for registration under

Aggrieved, the assessee is in appeal before us.

The ld. Authorised Representative submitted that the impugned order deserves to be set aside as the ld. CIT(E) travelled beyond the limited jurisdiction vested in him while considering an application for registration under section 12AB of the Act. It was submitted that the scope of enquiry at the stage of grant of registration is confined to examining the charitable objects of the trust and the genuineness of its activities. However, the ld. CIT(E), instead of restricting himself to the statutory requirements, virtually assumed the role of an Assessing Officer by embarking upon an elaborate examination of expenditure, vouchers and alleged violation of section 13(1)(c) of the Act. The ld. AR further submitted that the ld. CIT(E) exceeded his jurisdiction by recording conclusive findings regarding alleged siphoning of funds and by holding that the genuineness of the activities of the trust was doubtful without there being sufficient material to support such conclusion. It was contended that the impugned findings were beyond

Per contra, the ld. Departmental Representative relied upon the impugned order passed by the ld. CIT(E). It was submitted that sufficient opportunities had been afforded to the assessee through several statutory notices, yet the assessee failed to furnish the supporting documentary evidence called for during the proceedings. According to the ld. DR, the assessee was unable to establish the genuineness of its activities by producing complete bills, vouchers, ledger accounts and documentary evidence linking the expenditure with the charitable objects of the trust. It was therefore submitted that the ld. CIT(E) was fully justified in rejecting the application under section 12AB.

We have carefully considered the rival submissions and perused the material available on record.

The controversy before us relates to the rejection of registration under section 12AB on the ground that the assessee failed to establish the genuineness of its activities. From the impugned order, it is evident that the ld. CIT(E) had issued several notices dated 01.12.2023,

The ld. CIT(E) has elaborately recorded various deficiencies noticed during the proceedings. According to him, the assessee furnished only self-made vouchers without supporting documentary evidence; the expenditure remained unverifiable; payments made to trustees and related persons were not supported by evidence showing utilisation for charitable purposes; certain honorarium payments were unsupported by any evidence of services rendered; and certain expenditure incurred at a dining hall and restaurant remained unexplained. On these premises, the ld. CIT(E) concluded that the genuineness of the activities had not been established and proceeded to reject the application.

The principal contention of the assessee before us is that the ld. CIT(E) exceeded the scope of enquiry contemplated under section 12AB

In the present case, we find that multiple opportunities were admittedly granted to the assessee. The impugned order also indicates that the assessee did furnish replies from time to time. However, one of the principal reasons for rejection is the alleged inability of the assessee to establish the nexus between the expenditure incurred and the charitable objects of the trust. We also notice that although the ld. CIT(E) has recorded various deficiencies, the impugned order does not comprehensively analyse the explanation furnished by the assessee in relation to each item of expenditure with reference to the objects of the trust. Equally, no complete material explaining the expenditure and its

In these circumstances, we are of the considered opinion that the ends of justice would be met if the matter is restored to the file of the ld. CIT(E) for a fresh examination. Accordingly, we set aside the impugned order and restore the entire matter to the file of the ld. CIT(E). The assessee shall furnish complete documentary evidence, including supporting bills, vouchers, ledger accounts, bank statements and all other material necessary to establish the nexus between the expenditure incurred and the charitable objects of the trust as well as the genuineness of its activities. The ld. CIT(E) shall thereafter examine the same independently and pass a speaking order in accordance with law after affording the assessee an adequate opportunity of being heard.

We make it clear that this shall be the final opportunity available to the assessee to substantiate its claim before the ld. CIT(E). The assessee shall fully cooperate in the proceedings and shall not seek unnecessary adjournments. Since we are restoring the matter for fresh adjudication, we refrain from expressing any opinion on the merits of

In the result, the appeal of the assessee is allowed for statistical purposes.