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Facts
The assessee, a trust engaged in educational and welfare activities, applied for registration under section 12AB and approval under section 80G(5). The CIT(E) rejected these applications, citing deficiencies in documentation and doubts about the genuineness and scope of activities, and that the trust might be benefiting a particular community. The assessee contended that sufficient evidence was provided and that the CIT(E) applied incorrect provisions for rejection.
Held
The Tribunal held that at the stage of granting registration/approval, only a prima facie satisfaction of the objects and genuineness of activities is required. The CIT(E) had not conducted a thorough inquiry and had failed to bring on record conclusive evidence to disprove the charitable nature of the trust's activities or its alleged benefit to a specific community. Deficiencies noted by the CIT(E) should be addressed during assessment proceedings, not lead to outright rejection at this stage.
Key Issues
Whether the rejection of applications for registration under section 12AB and approval under section 80G(5) by the CIT(E) was justified based on the evidence and statutory requirements.
Sections Cited
12AB, 12A(1)(ac)(vi), 80G(5)
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Income Tax Appellate Tribunal, NAGPUR BENCH :: NAGPUR
Before: SHRI PAWAN SINGH & SHRI KHETTRA MOHAN ROY
and Welfare Association) 2. The assessee is a trust, filed applications seeking registration under section 12AB and approval under section 80G(5) of the Income-tax Act, 1961. A notice was issued by the Ld. CIT(E) on 04.06.2024 calling for various details in respect of charitable activities claimed to be carried out by the trust. In response, assessee furnished details including photographs, bills, notes on activities, and particulars of expenses incurred towards charitable objects. The assessee submitted that it is engaged in educational and welfare activities, including support to students and conducting educational sessions. The assessee also furnished financial statements and other supporting documents in respect of its activities. However, the Ld. CIT(E) observed certain deficiencies, absence/incomplete documentation for certain expenses, and expressed doubt regarding the genuineness and scope of activities in a very general manner. It was further noted that the application for registration under section 12AB had been rejected earlier and, consequently, the conditions prescribed under section 80G(5) were considered not to be fulfilled. Accordingly, the applications were rejected and the 2 & 72/NAG/2025 (Social Educational and Welfare Association) provisional registration/approval earlier granted was cancelled.
Learned counsel for the assessee has submitted that assessee is a duly constituted trust, engaged in carrying out charitable activities. In response to the notice issued, assessee furnished all the details including nature of expenses incurred. Absence of certain documents such as beneficiary lists and their identity, or letters of appreciation cannot be a ground to doubt or unravel the genuineness of activities, particularly when other concrete evidences substantiating the conduct of activities have been placed on record. On the issue of alleged benefit to a particular community, the assessee submitted that its activities are not restricted exclusively to any religious community or caste, and benefits are extended to all eligible persons irrespective of creed or caste. It was further submitted that absolutely no material has been brought on record by the Ld. CIT(E) to establish that the trust is created or operated solely for the benefit of a specific & 72/NAG/2025 (Social Educational and Welfare Association) community in violation of statutory provisions and such allegation is based on his whims and fancies. Learned counsel for the assessee also submitted that at the stage of granting registration under section 12AB and approval under section 80G(5), only a prima facie satisfaction regarding the objects and genuineness of activities is required, and not a detailed scrutiny or conclusive verification of each transaction. He submitted a paper book running into 77 pages, which includes Memorandum of Association, Audit Reports in Form 10BB for A.Ys. 2020-21 to 2022-23. He prayed that the rejection of applications and cancellation of provisional registration/ approval be set aside, and registration under section 12AB as well as approval under section 80G(5) be granted by this august forum itself.
On the other hand, Ld. Departmental Representative (DR) vehemently supported the order of Ld. CIT(E). He further submitted that the activities appeared to benefit a particular religious community and that the assessee failed to demonstrate compliance with the conditions prescribed under & 72/NAG/2025 (Social Educational and Welfare Association) sections 12AB and 80G(5). Accordingly, the Ld. DR prayed that the rejection of the assessee’s applications be upheld. However, he could not satisfactorily explain the logic of his averments.
We have heard both the sides and perused the material placed before us and the reasons assigned by the Ld. CIT(E) for rejecting the applications. We find that at the stage of granting registration under section 12AB and approval under section 80G(5), the scope of enquiry is limited to examine (i) the objects of the trust, and (ii) the genuineness of its activities on a prima facie basis. The law does not mandate a conclusive or exhaustive verification of each activity or beneficiary at this stage. In the present case, assessee has placed on record various documents such as photographs, bills, details of activities, and expenditure incurred towards its stated objects. Merely because certain documents such as testimonials, complete beneficiary details, or exhaustive supporting evidence were not furnished, the same cannot be a sole and compelling ground to conclude that the activities are & 72/NAG/2025 (Social Educational and Welfare Association) not genuine and nothing is on record to disprove the evidences particularly when the primary objects of the trust are charitable in nature. Further, the observation of the Ld. CIT(E) that the trust is benefiting a particular religious community cannot be a infallibly ground for rejection unless it is demonstrated that the trust is established for the benefit of a specific religious community or caste in violation of the statutory provisions. No such conclusive finding has been brought on record as Ld. CIT(E) has miserably failed as to how he has arrived at his conclusion. As regards deficiencies in bills, invoices, or absence of some material may require further verification during assessment proceedings, but do not justify outright rejection of registration at the threshold stage. With respect to the rejection of registration under section 12AB and consequent denial under section 80G(5), we observe that once the objects are charitable and activities are prima facie demonstrated, the assessee cannot be denied registration merely on technical or incomplete compliance, without providing adequate opportunity to cure such defects. We are of the considered opinion that assessee has successfully 6 & 72/NAG/2025 (Social Educational and Welfare Association) demonstrated the charitable nature of its objects and genuineness of its activities and Ld. CIT(E) has not undertaken a minimalistic enquiry to disprove. Learned counsel for the assessee has placed reliance on the decision of the Coordinate Bench of ITAT, Lucknow in the case of Malik Hasumullah Islamic Educational & Welfare Society vs. CIT in dated 03.07.2012, wherein it has been held as under:-
“6. …. A bare perusal of the provisions of section 12AA of the Act clearly reveals that the CIT is required to satisfy himself about the genuineness of the activities of the trust or institution and may also make such enquiry as deemed fit in this behalf. Further, after satisfying himself about the objects of the trust or institution and the genuineness of its activities, the case of the assessee, for registration u/s 12AA of the Act is to be considered accordingly. In the present case, the learned CIT invoked only the provisions of section 11, 12 and 13 of the Act, for the purpose of denial of grant of registration u/s 12AA of the Act. Thus, it is clear that the impugned order passed by the learned CIT, is founded, on the consideration of irrelevant provisions of section 11, 12 and 13 of the Act, which are operative and relevant, in the course of assessment proceedings. The provisions of section 12A and 12AA are material and relevant, for the purpose of granting registration u/s 12AA of the Act. Needless to say that it is well settled legal proposition that the registration proceedings u/s 12A read with section 12AA of the Act are not to be confused with the assessment proceedings wherein the provisions of section 11, 12 and 13 of the Act are applicable. The provisions of section 12A and 12AA of the Act confer jurisdiction, on the CIT, for grant of registration or otherwise. The CIT is not competent, to invoke the provisions of section 11, 12 and 13 of the Act Educational and Welfare Association) intended for the exercise of jurisdiction by the Assessing Officer, for the purpose of declining registration u/s 12AA of the Act. The registration proceedings and assessment proceedings are independent and different proceedings, covered by different and independent provisions of the Act, with different legislative intent.
The learned CIT has not brought on record any material, to prove that the activities of the appellant society are not carried out in pursuance of the stated objects. Further, it has not been demonstrated by the learned CIT that the activities of the appellant society are non- genuine. Similarly, it has not been shown by the CIT that the objects of the assessee are not charitable, within the meaning of section 2(15) of the Act.
In view of the above legal and factual discussions, we are of the considered opinion that denial of registration to the appellant society u/s 12AA of the Act is contrary to the provisions of section 12AA read with section 12A of the Act. The denial of grant of registration is founded on invocation of provisions of section 11, 12 and 13 by the CIT. In view of this, the action of CIT is contrary to the Legislative intention contained u/s 12A read with section 12AA of the Act. Therefore, order of CIT is set aside and he is directed to grant registration to the assessee society.”
Respectfully relying upon the judicial precedence which is fragile and unsustainable, we set aside the impugned orders passed by the Ld. CIT(E). The applications filed by the assessee for registration under section 12AB and approval under section 80G(5) of the Act are allowed. Accordingly, Ld. CIT(E) is directed to grant registration u/s. 12AB and approval u/s. 80G(5) of the Act in accordance with law.
& 72/NAG/2025 (Social Educational and Welfare Association) 7. In the result, both the appeals filed by the assessee are allowed.