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Facts
The assessee, a registered society, applied for final registration under Section 12AB and approval under Section 80G(5) after receiving provisional registrations. The CIT(Exemptions) cancelled the registration and rejected approval, citing the assessee's failure to provide details regarding a building fund of Rs. 52.93 lakhs and proof of charitable activities. The assessee contended a violation of natural justice as the required details were never requested during the proceedings.
Held
The Tribunal found that the CIT(Exemptions) had not properly verified the genuineness of the assessee's activities and rejected the application without seeking additional data or issuing a show cause notice, violating principles of natural justice. Both issues of Section 12AB registration and Section 80G approval were remitted back to the CIT(Exemptions) to decide afresh after giving the assessee a reasonable opportunity to be heard and to submit necessary documents.
Key Issues
Whether the CIT(Exemptions) was justified in cancelling Section 12AB registration and rejecting Section 80G approval due to alleged lack of documentation and 'meagre' charitable activities, and if the process violated principles of natural justice.
Sections Cited
12AB, 80G, 12A, 80G(5)
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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
These appeals at the instance of the assessee are directed against the order of the ld. CIT(Exemptions), Bangalore, both dated 26.12.2024 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024- 25/1071591914(1) cancelling the registration u/s 12AB of the Income Tax Act, 1961 (in short “The Act”) and vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-25/1071591993(1) rejecting the approval u/s 80G of the Act. in which the assessee has raised the following grounds of appeal:
& 207/Bang/2025 M/s. Buntara Sangha Kavoor ®, Mangalore Page 2 of 8 & 207/Bang/2025 M/s. Buntara Sangha Kavoor ®, Mangalore Page 3 of 8
Brief facts of the case are that the assessee is a registered society having registration No.126/2001-02 dated 24.11.2001 with the Registrar of Societies, Dakshina Kannada, District Mangalore. The assessee society was granted provisional registration on 3.1.2024 vide Unique Registration (URN) No. AAEAB9047PE20231 w.e.f. AY 2024-25 to AY 2026-27 u/s 12A of the Act. Further, the assessee society had also been granted provisional approval on 5.1.2024 vide URN No.AAEAB9047PF20241 from AY 2024-25 to AY 2026-27 u/s 80G(5) of the Act. The assessee trust subsequently applied for final registration in Form 10AB on 30.6.2024. As per the memorandum of association, the main object of the Sangha is to solve the problems of the Members of the Association and to provide adequate protection and facilities to the members of the association against hardship, loss, pain, illness, disability, accident, and death, apart from providing all kinds of services and encouragement to the members of the association. On receipt of the application in Form No.10AB for registration u/s 12AB of the Act, the case was assigned to the JAO for verification. On careful examination of the submission and financial statements, the ld. CIT (Exemptions) found that the assessee had received contribution for building fund amounting to Rs.52,93,605/- for the year ending 31.3.2024, however, the assessee failed to submit the details such as land purchase, nature of building, plan approval copy obtained from the concerned authorities, progress of the construction of the building and the purpose for which the building will be utilized. Further, the ld. CIT(Exemptions) was of the view that the assessee had made meagre donations towards charitable activities, for which the assessee had also not provided any proof and accordingly, the ld. CIT (Exemptions) was of the opinion that, as the assessee was required to submit necessary documents to prove the genuineness of the activity of the trust, which the assessee failed to do, the application in Form 10AB & 207/Bang/2025 M/s. Buntara Sangha Kavoor ®, Mangalore Page 4 of 8 dated 30.6.2024 filed for registration u/s 12AB of the Act was rejected and the registration was cancelled.
Aggrieved by the order of the ld. CIT(Exemptions) dated 26.12.2024, the assessee has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising 68 pages containing various documents/records/ certificates/accounts, along with the case law compilations relied upon by the assessee
Before us, the ld. A.R. of the assessee vehemently submitted that the ld. CIT (Exemptions) never requested any details, as alleged in the order cancelling the registration. Further, ld. A.R. of the assessee submitted that ld. CIT (Exemptions) without seeking any additional data and without issuing the show cause notice to the assessee had rejected the application for registration, which is a gross violation of principles of natural justice, and accordingly prayed that one more opportunity may be granted before the ld. CIT (Exemptions) to represent its case and submit all these documents, as alleged not to have been submitted before the ld. CIT (Exemptions).
The ld. D.R., on the other hand, supported the order of the ld. CIT (Exemptions) and vehemently submitted that as the assessee failed to submit the details, such as land purchase, nature of building, plan approval copy, as well as progress of the construction of the building, the ld. CIT (Exemptions) has rightly cancelled the registration u/s 12AB of the Act.
We have heard the rival submissions and perused the materials available on record. On going through the order of ld. CIT(Exemptions), we find that the assessee claimed to have received a contribution for building fund amounting to Rs.52,93,605/- for the year ending 31.3.2024. The ld. CIT(Exemptions) in her order had & 207/Bang/2025 M/s. Buntara Sangha Kavoor ®, Mangalore Page 5 of 8 categorically observed that the assessee had failed to submit the details such as land purchase, nature of building, plan approval copy obtained by the concerned authorities, progress of the construction of the building and purpose for which the building will be utilised by the assessee. However, we also take note of the fact that the ld. CIT(Exemptions) concluded by observing that the assessee had made meagre donations towards charitable activity for which the assessee had also not provided the proof. We are of the considered opinion that it is not a case that assessee had not commenced its activities towards the object of the trust. Before us, the ld. A.R. of the assessee vehemently submitted that the ld. CIT(Exemptions) without seeking any additional data and without issuing the final show cause notice had rejected the application of the assessee and accordingly prayed that one more opportunity may be granted before the ld. CIT(Exemptions) to represent its case. This being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we deem it fit and proper to remit the entire issue in dispute to the file of ld. CIT (Exemptions) to decide afresh in accordance with law after giving reasonable opportunity of being beard to the assessee. We are of the view that for the purpose of granting registration, the ld. CIT (Exemptions) should call for such documents or information or make such enquiry as he/she thinks necessary in order to satisfy herself/himself about the twin objects – (a) the genuineness of the activity of the trust and (b) the application of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its object. 7.1 Undisputedly in the present case, there is not even a whisper about any non-genuineness of activities carried on by the assessee trust. The only contention of the ld. CIT(Exemptions) is that the assessee had made only meagre donation towards charitable activities. We are of the firm opinion that it is not the quantum of & 207/Bang/2025 M/s. Buntara Sangha Kavoor ®, Mangalore Page 6 of 8 expenditure which are relevant for the purpose of granting registration, but in fact the genuineness of the activity of the trust in accordance with the object of the trust is relevant for granting registration. We are also of the considered opinion that ld. CIT (Exemptions) has not properly verified the genuineness of the activity under the present facts and circumstances of the case, which is crucial in granting the registration of the trust. Therefore, we deem it fit and proper to remit the entire issue to the file of the ld. CIT(Exemptions) for verifying the details as below and decide in accordance with the law: a) With regard to the donation/contribution received for building amounting to Rs.52,93,605/-, the CIT(Exemptions) shall verify whether any specific directions have been received from the donor or not? b) The assessee is also directed to produce details of land purchase, nature of building, plan approval copy, progress of the construction of the building and the purpose for which the building will be utilised. c) The ld. CIT(Exemptions) shall also verify the present status of the building and also take note of the activities carried on by the trust on the said building since its construction. d) The ld. CIT(Exemptions) shall also verify the object of the trust, i.e. whether they are limited to the members of the association or they are for the purpose of the public at large. e) The ld. CIT (Exemptions) shall also carry any other enquiry as deemed fit for the purpose of establishing the genuineness of the activity carried on by the trust. It is ordered accordingly.
In the result, the appeal filed by the assessee in is partly allowed for statistical purposes. & 207/Bang/2025 M/s. Buntara Sangha Kavoor ®, Mangalore Page 7 of 8 9. Now we take up wherein the assessee has raised the following grounds of appeal:
& 207/Bang/2025 M/s. Buntara Sangha Kavoor ®, Mangalore Page 8 of 8
Since we have remitted the entire issue of registration u/s 12AB of the Act to the file of the ld. CIT(Exemptions) with a specific direction, we also deem it fit and proper to remit this issue of approval u/s 80G(5) of the Act to the file of the ld. CIT(Exemptions) to decide afresh in accordance with law as the assessee had also not submitted the necessary documents to prove the genuineness of the activity of the trust and fulfilment of all the conditions laid down in clause (i) to (v) of section 80G of the Act.
In the result, this appeal filed by the assessee in is also partly allowed for statistical purposes.
In the combined result, both the appeals filed by the assessee are partly allowed for statistical purposes. Order pronounced in the open court on 6th Oct, 2025