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Facts
The assessee, a charitable trust, was denied registration under sections 12AB and 80G by the CIT(E). The CIT(E) rejected the application citing a lack of proof of activities and genuine expenditure, despite the assessee having incurred expenses. The assessee appealed the decision.
Held
The Tribunal admitted additional evidence submitted by the assessee, finding it essential for a fair decision. The Tribunal then set aside the issue to the CIT(E) for reconsideration with the new evidence, allowing the appeals for statistical purposes.
Key Issues
Whether the denial of registration under sections 12AB and 80G was justified based on the evidence presented, and if additional evidence should be admitted to decide the case.
Sections Cited
12AB, 80G, 12A, 80G(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI PRAKASH CHAND YADAV
PER WASEEM AHMED, ACCOUNTANT MEMBER:
These are appeals filed by the assessee against the orders passed by the ld. CIT(E), Bangalore, dated 11/11/2024 and 23-12-2024, rejecting the applications for registration under sections 12AB and 80G of the Act. as the lead case for the rejection of the registration application under section 12AB of the Act.
The only issue raised by the assessee is that the ld. CIT(E) erred in cancelling the application for registration filed under section 12AB(1) of the Act.
Brief facts are that the assessee is a public charitable trust established vide trust deed dated 18-03-2023, with the object of providing aid to economically weak children/students and offering social services like mobile clinics, hospitals, etc. The trust initially obtained provisional registration under section 12A vide Form 10AC dated 30.11.2023. Subsequently, it filed Form 10AB on 30.05.2024 seeking regular registration under section 12AB of the Act. The application was assigned to the Jurisdictional AO (JAO) and the Range Head for verification. The JAO and Range Head, after examining the documents submitted, observed certain mismatches in the details furnished by the assessee, as reproduced below:
“The assessee was requested vide email to furnish supporting evidences with regards to major expense towards education support. The assessee, in the submission made on 18.10.2024, enclosed a letter dated 14.10.2024 issued by St. Joseph Educational Society for having received Rs.50,000/- on 07.06 2024 and Rs. 1,50,000/- on 19.08.2024 from the assessee trust i.e. a total of Rs.2 Lakhs received towards construction of water tank. However, the provisional financial statements as at 30.09.2024 reflect only a receipt of Rs. 1.20 lakhs of which Rs.0.77 Lakhs been spent towards the objects of the trust. No details have been submitted towards the expenditure f Rs. 1.60 Lakhs made during AY 2024-25”
The learned CIT(E), based on the report submitted by the JAO/Range Head, observed that the assessee had incurred substantial expenditure towards its objectives but had not submitted any proof or evidence of activities. The relevant observations of the learned CIT(E) are as under:
“3. Assessee has made substantial amount of expenditure towards the objects and assessee has not submitted any proof or evidence of activities. Thus, it is clear that the assessee has not commenced its activities.”
In view of the above, the learned CIT(E) concluded that the assessee was required to submit necessary documents to prove the genuineness of its activities and also to comply with the requirements of any other law material for the purpose of achieving its objects. Since the assessee failed to do so, the application for registration under section 12AB of the Act was rejected.
Being aggrieved by the order of the ld. CIT(E), the assessee is in appeal before us.
The learned AR before us filed the appeal set running from pages 1 to 14, a paper book running from pages 15 to 147, case law compilations running from pages 150 to 177, and a petition for the admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963, spanning 17 pages. The learned AR submitted that the assessee carried out activities to achieve its objects, which was also evident from the provisional financial statements placed at pages 138 to 140 of the paper book. According to the learned AR, this fact was also admitted by the learned CIT(E) in his order. The learned AR further prayed before us that the additional evidence is crucial to decide the issue on hand and therefore, the same should be admitted.
On the other hand, the learned DR submitted that the assessee is producing additional documents and, therefore, the matter should be set aside to the file of the learned CIT(E) for deciding the issue afresh after considering the new evidence as per the provisions of law. According to . the learned DR, the charitable activities of the assessee had not yet commenced. The learned DR vehemently supported the order of the authority below.
We have heard the rival contentions of both parties and perused the materials available on record. We have also carefully considered the petition filed by the assessee under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, seeking the admission of additional evidence consisting of 17 pages, submitted during the course of hearing.
9.1 The learned AR submitted that these documents are vital to establish that the assessee has carried out activities towards achieving its charitable objectives. The additional documents, including the provisional financial statements and supporting records, directly address the core issue on which the learned CIT(E) rejected the registration application — namely, the genuineness of the activities.
9.2 We note that under Rule 29, the Tribunal has the discretion to admit additional evidence if it is necessary to enable it to pass orders or for any other substantial cause. In the present case, we find that the additional evidence is essential for deciding the matter effectively and fairly. Moreover, we are satisfied that the non-filing of such evidence before the lower authority was neither deliberate nor due to negligence but arose from the nature of the proceedings and the early stage of the assessee’s activities. Likewise, there was also no objection of the ld. DR for the admission of such additional documents. Accordingly, we admit the additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. Since, the additional documents have not been considered by the learned CIT exemption and therefore in the interest of . justice and fair play we are setting aside the issue on hand to the file of the learned CIT exemption for deciding the matter after necessary verification of the additional documents and as per the provisions of law. Hence, the ground of appeal of the assessee is hereby allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. an appeal by the assessee
The assessee has raised as many as 3 grounds in the memo of appeal which are interconnected and pertains to the rejection of application filed for regularization of registration under section 80G of the Act.
At the outset, we note that assessee along with application for regularization of registration under section 80G of the Act also applied for regularization of registration under 12AB of the Act which was also rejected by the learned CIT(E) on the same basis as adopted for rejection of application for regularization of registration under section 80G of the Act. The dispute regarding the rejection of registration under section 12AB of the Act has already been adjudicated vide paragraph number 9 of this order in the case of appeal bearing ITA No. 100/Bang/2025. We note that the provisions of section 12AB of the Act and section 80G(5) of the Act in relation to granting registration are pari materia. Therefore, the finding given regarding the registration under . section 12AB of the Act shall also be applicable on the issue on hand i.e. registration under section 80G(5) of the Act. We have the decided the issue of registration under section 12AB of the Act in favour of the assessee for statistical purposes vide above mentioned paragraph. Hence, following the same, the issue on hand is also allowed in favour of the assessee for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
In the combined results, both the appeals of the assessee are allowed for statistical purposes.