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Facts
The assessee filed an application for registration under Section 12AB of the Income Tax Act, which was rejected by the NFAC. The grounds for rejection included concerns about the genuineness of activities, particularly regarding patient selection criteria, and whether payments were made in cash. The assessee appealed this rejection.
Held
The Tribunal held that there is no prohibition on trustees being directors of the hospital and that treatment being provided solely at the assessee's hospital is not a ground for rejection. However, to ensure fair play and in the interest of justice, the matter was set aside to the CIT for fresh verification of the patient selection criteria.
Key Issues
Whether the rejection of registration under Section 12AB was justified based on the assessee's activities and patient selection criteria, and whether the matter should be remanded for fresh verification.
Sections Cited
12AB, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
These appeals are filed by the assessee against the order passed by NFAC, Delhi, dated 27.12.2024, DIN No. ITBA/EXM/F/EXM45/2024- 25/ 1071624913(1) and ITBA/EXM/F/EXM45/2024-25/1071625044(1) rejecting the registration application under section 12AB/ 80G of the Act.
ITA 463/Bang/2025 2. There was a delay of 3 days in filing the appeal. Considering the short delay and no objection from the Department, we condone the delay and proceed to decide the case on merits.
The assessee filed Form 10AB on 26.06.2024 seeking registration under section 12AB of the Act. The CIT (Exemptions) called for a report from the JAO/Range Head, who reported: o Trustees are also directors of Trustwell Hospitals Pvt. Ltd. o Trustees claimed to help poor and needy patients. o Treatment was given only at Trustwell Hospitals Pvt. Ltd. o Payments for treatment were made to this hospital in cash. o No selection criteria for identifying deserving patients were provided. o Donation receipts were not substantiated. 3.1 Based on this, the JAO/Range Head recommended that the genuineness of activities was not established, and registration under section 12AB should not be granted; provisional registration may also be canceled.
3.2 The CIT (Exemptions), after considering the report, held that the assessee failed to submit necessary details to justify the genuineness of activities and rejected the registration application.
Being aggrieved by the order of learned CIT-Exemption, the assessee is in appeal before us.
The learned AR before us submitted detailed arguments, including: o There is no prohibition on trustees being directors in the hospital. o Providing treatment only at Trustwell Hospital is not a ground for rejection.
. o No financial help was extended to other hospitals, but that does not affect the genuineness of activities. o No cash payments were made; all were through banking channels. o No specific query on patient selection criteria was raised, so no separate details were submitted. o Donor details were submitted and are part of the paper book (Annexure 3).
On the other hand, the learned DR submitted that Query No. 11 (notice dated 07.10.2024) raised the issue of patient selection criteria, which was not answered by the assessee, but he had no objection if the matter was remanded for fresh examination.
The learned AR opposed remand, arguing all details were already submitted, and the authorities only assumed non-genuineness about the activities without evidence.
We have considered rival submissions and perused the material on record. There is no dispute about the facts of the case which have been duly elaborated in the preceding paragraph and therefore for the sake of convenience and brevity, we are not inclined to reproduce the same. Based on the above discussion our observation stands as under:
A. There is no bar under the Act preventing trustees from being directors of the hospital through which financial aid is provided.
B. There is also no restriction requiring treatment to be provided only at different hospitals; treatment at Trustwell Hospitals Pvt. Ltd. is sufficient to conclude that medical help was extended. 8.1 The core concern is whether financial aid was given to genuinely needy persons or to undeserving persons under the guise of charity. The onus lies on the assessee to prove this, but such details are to be submitted only when queried. Upon examining Query No. 11, it is clear no question was specifically raised regarding selection criteria for patients. Therefore, there was no occasion for the assessee to submit the details. The relevant Query No. 11 reads:
“The learned CIT (Exemptions) has erred in categorizing the reimbursement of medical expenses for financially weaker patients as cash payments, despite the Appellant having remonstrated and substantiated through documentary evidence that all such payments were made exclusively through banking channels. The failure to consider bank records, payment receipts, and supporting documentation has resulted in an incorrect conclusion, warranting reversal of the order. (Ground III).” 8.2 In response to this, the assessee provided detailed replies, which are available on record. However, it is evident from the above query, that there was no question concerning the selection criteria by the revenue was raised. Nevertheless, the observation made by the Ld. CIT exemption about the selection criteria of the patient is a very pertinent aspect of the case. Therefore, in the interest of justice and fair play, this aspect needs to be verified after granting sufficient opportunity to the assessee.
8.3 Regarding donations, we note that the ld. DR did not point to any specific defect or bogus donations; all are supported by documentary . evidence, as seen in Annexure 3. Considering all, we deem it appropriate to set aside the matter to the ld. CIT (Exemptions) for fresh verification specifically regarding the selection criteria for patients. The assessee is directed to submit all necessary details and cooperate during the proceedings. Accordingly, the grounds of appeal are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Now Coming to ITA No. 464/Bang/2025
The facts of the case on hand are identical to the facts of the case discussed above, therefore, respectfully following the same, the assessee is directed to furnish the necessary details in support of its contention. With this observation, the ground of appeal of the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.