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Facts
The assessee, a charitable trust, was granted provisional registration under Section 12A of the Income Tax Act. The CIT(E) rejected the application for regularization, observing no charitable activities were undertaken. The assessee contended an expenditure of Rs. 35,000/- was incurred, with the cheque issued on 29/03/2024 but debited on 02/04/2024.
Held
The Tribunal found that the matter required reconsideration. The CIT(E) was directed to reconsider the application for provisional registration, taking into account the assessee's submissions and evidence. The assessee was directed to cooperate fully.
Key Issues
Whether the rejection of regularization of provisional registration by the CIT(E) was justified, considering the charitable expenditure incurred and the date of debiting from the bank account.
Sections Cited
12A, 12A(1)(ac)(vi)
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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI. OMKARESHWAR CHIDARA
The instant appeal of the assessee was filed against the order of theLd. Commissioner of Income-tax (Exemption), Mumbai [for brevity, ‘Ld.CIT(E)’] passed under section 12A of the Income-tax Act, 1961 (in short, ‘the Act’), date of order 19/10/2024.
The assessee is a public charitable trust established on 08/04/1981 and has been compliant with its statutory obligations. The assessee was granted Jin Mitra Sangh provisional registration under sub-clause (vi) of clause (ac) of sub-section (1) of Section 12A of the Act on 05/10/2022 for the AY 2023-24 to AY 2025-26. Subsequently, the assessee filed Form 10AB seeking regularization of the provisional registration under Section 12A of the Act.
During the proceedings, the Ld. CIT(E) observed that the assessee had not undertaken any activities related to its charitable objectives. A notice was duly issued, and in response, the assessee contended that an expenditure of Rs. 35,000/- had been incurred under the head ‘medical support’ for the financial year 2023-24. However, the Ld. AR clarified that the said payment was made through a cheque dated 29/03/2024 and was debited from the assessee’s bank account on 02/04/2024. The relevant documentary evidence was annexed in the Assessee’s Paper Book (APB) on pages 26 to 64. Since the expenditure was not debited from the bank account during the financial year 2023-24, the Ld. CIT(E) rejected the application for regularization of provisional registration.
The Ld. AR argued that the Ld. CIT(E) erred in denying the grant of provisional registration. The observation that no activity related to the trust was undertaken is contrary to the records. The assessee had, in fact, incurred charitable expenditure amounting to Rs. 35,000/-, and the cheque for the said expense was issued on 29/03/2024, though it was debited from the bank account on 02/04/2024. In these circumstances, the Ld. AR submitted that the matter should be remanded to the Ld. CIT(E) for fresh consideration.
The Ld. DR vehemently supported the order passed by the Ld. CIT(E).
Jin Mitra Sangh 6. After considering the rival submissions and perusing the material on record, we are of the opinion that the matter requires reconsideration by the Ld. CIT(E). Accordingly, the matter is remanded to the file of the Ld. CIT(E) for verification and fresh adjudication. The Ld. CIT(E) is directed to reconsider the application for provisional registration in light of the assessee’s submissions. The assessee is also directed to extend full cooperation and submit all relevant documents and evidence as may be required by the Ld. CIT(E).
In the result, appeal bearing is allowed for statistical purpose.