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Facts
The assessee filed applications for registration under Section 12AB and 80G of the Income Tax Act. The CIT(E) rejected both applications for non-submission of complete details and documents.
Held
The Tribunal held that principles of natural justice require the assessee to be given another opportunity to submit the required documents. The matter was remanded back to the CIT(E) for fresh consideration.
Key Issues
Whether the CIT(E) was justified in rejecting the registration applications without providing an adequate opportunity to the assessee to furnish the required documents.
Sections Cited
12AB, 80G, 13(3), 2(15), 11(4A), 10(23C), 12A, 10AC, 13(3)
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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA
These two appeals are filed by the assessee against two different orders of the Ld.CIT (Exemption), Chennai [hereinafter referred to as “CIT(E)”] both dated 29.11.2024 passed under section 12AB and 80G of the Income Tax Act,1961 respectively
The only ground raised by the assessee in these two appeals are the ld.CIT(E) has rejected the application filed by the assessee and denied the & 248/Chny/2025 registration u/s.12AB and u/s.80G of the Act due to non-submission of the complete details and documents by the assessee before the ld.CIT(E).
“4.5 Further, as required in the Show Cause Notice issued to the applicant, it has failed to file the list of documents which are mandatorily required to be submitted by the applicant. As per this Rule 17A, the application shall be accompanied by various documents from clause (a) to (k). In this case, the applicant has been asked to furnish various details as stated supra. The applicant has furnished only part of the details called for. It is pertinent to mention that in the SCN dated 22.10.2024, various details were called for such as Provisional Financials for FY 2023-24, Bank a/c statement for FY 2023-24, details of application of income towards the objects, agreements entered with various parties, TDS deducted on receipts, details of SHGs trained, details of Tsunami reconstruction projects, details of non-formal education carried out, details of vocational training, details of skilled programs conducted, details of SSF loan, details of donors, details notes on JP Community Technical College etc but the applicant has furnished only the agreements entered with, photographs of its activities and bank statements and failed to furnish the full & complete details to prove the genuineness of the activities of the trust. 4.6 Besides, the applicant has submitted that it has been running a school under the name and style “JP Global Academy” and it is seen from the bank account statement bearing SB a/c no 176210100050516 – JP Global Academy for the period 01.04.2022 to 31.03.2023 that the trust ahs received “CASH FEES” to the turn of around Rs.6.60 Lakhs on various dates and the applicant failed to furnish the requisite details called for. It has also not furnished the registration details with the competent authorities 4.7 In addition to the above, from the financials (FY 2023-24) of M/s Vikalp Multimedia, it was noticed that the applicant trust has lend a loan to M/s Vikalp Multimedia to the extent of Rs.63.36 Lakhs under the head “Short Term Borrowings”- “Loan from AID”. Since Vikalp Multimedia is a “Related Party” having common directorship with the applicant trust, the transactions amounts to violation u/s 13(3) of the Income Tax Act, 1961. 4.8 The applicant has stated that the object of the trust is “Relief of the Poor”. However, this limb of the definition of charity has been interpreted by various courts and finally, the CBDT had also defined the same vide CBDT’s circular No 11/2008 (F. No 134/34/2008-TPL) and the same is reproduced below: “Relief of Poor encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefor, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small and marginal farmers, indigent artisans or senior citizen in need of aid. Entities who have these objects will continue to be eligible exemption even if they incidentally carry on & 248/Chny/2025 a commercial activity, subject however, to the conditions stipulated under section 11(4A) or the seventh provision to section 10(23C)” It is observed that the applicant trust has failed to furnish any details with documentary evidences to justify that the trust has applied income towards “Relief of Poor” 4.9 For the reasons stated above, the applicant trust is doing the activities in the nature of trade, commerce, business. Thus, it runs on commercial grounds rather that for “Charitable Purpose” as envisaged u/s 2(15) of the Act.
Hence, the application filed under the section code 12A(1)(ac)(iii) in Form 10AB is not maintainable and as such deserves for rejection. Under the facts and circumstances of the case, the application filed by the applicant on 31.05.2024 in Form 10AB u/s 12A(1)(ac)(iii) seeking registration u/s.12AB of the Act is rejected.”
In the matter to the grounds raised
in the ld. CIT(E) rejected the assessee’s claim of registration u/s 80G of the Act by observing as under: -
4. In view of the above, the application filed by the applicant in section code 80G(5)(iii) in Form 10AB is not maintainable as such deserves for rejection. Under the facts and circumstances of the case, its application dated 31.05.2024 filed in Form 10AB under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961, seeking approval u/s 80G is not maintainable for the reasons stated in para 3.1 to 3.9 of this order and hence the application is rejected”
5. Aggrieved, the assessee is in appeal before us challenging both the orders rejecting registration u/s.12AB and 80G of the Act dated 29.11.2024 passed by the ld.CIT(E).
The Ld. AR submitted that the trust was founded in 1982 primarily to address issues of illiteracy, unemployment, poor health, unemployment and other socio-economic issues at the grassroot level by providing technical, networking and training support to vulnerable communities. The objective is to alleviate poverty, illiteracy, social inequality by providing to small and marginalized sections and promoting social justice and welfare. This was done by taking several measures to increase access of these sections to education, health and opportunities for livelihood. The trust had more than 3 decades of experience in implementing services to humanity in several states and was & 248/Chny/2025 involved in several projects in this regard. Further, the Ld. AR submitted that the trust was registered under the old regime and was enjoying exemption u/s 11 and also provisional registration was granted on 07.03.2024 for AY 2024- 25 to AY 2026-27 in Form 10AC. On 30.05.2024, the assessee filed an application in Form 10AB seeking registration under item (iii) of clause (ac) of sub-section (1) of section 12A of the Act. The Ld. CIT(E) rejected the approval of registration of trust u/s 12AB of the Act alleging that the assessee’s activities were not carried on for charitable purpose as envisaged u/s 2(15) of the Act. The Ld. AR drew our attention to para 4.5 of Page 13 of the impugned order dated 29.11.2024 rejecting the approval of registration of trust u/s 12AB of the Act wherein as required in the Show Cause Notice dated 22.10.2024, the assessee failed to file the list of documents which were mandatorily required to be submitted and has failed to furnish the full & complete details to prove the genuineness of the activities of the trust. He further drew our attention to para 4.7 on page 14 and submitted that the Ld. CIT(E) has alleged violation of section 13(3) of the Act. The Ld.AR contended that the assessee may be given one more opportunity for filing of details sought for by the ld. CIT(E) in the show cause notice and submitted that this issue may be remanded back to the file of the ld. CIT(E) for fresh consideration.
Per contra, the ld. DR relied on the order of the ld. CIT(E).
After hearing both parties and perusing the materials available on record, we noticed that an application for registration u/s.12AB of the Act was rejected by the ld. CIT(E) for the reason that the assessee has failed to file the list of documents which were mandatorily required to be submitted and has failed to furnish the full & complete details to prove the genuineness of the activities of the trust. In the course of hearing, the Ld.AR prayed that one more chance should be given to the assessee trust to re-submit or argue the case before the ld. CIT(E) so that he will be in a position to appraise the case to the ld.CIT(E). Therefore, we are of the view and feels on the principles of natural justice, the assessee should be given one more opportunity to furnish the & 248/Chny/2025 documents before the ld. CIT(E) as to registration of the trust u/s.12AB of the Act. Hence, in view of the facts and circumstances of the case, the matter is restored to the file of the ld. CIT(E) for de novo consideration on merits by providing adequate opportunity of being heard. The assessee is also directed to comply with any notices issued by the Ld. CIT(E) in this regard and to furnish all necessary supporting documents/evidence with due diligence in support of its application for registration.
Insofar as the application u/s.80G(5) of the Act is concerned, the decision on the application u/s.12A of the Act (supra) shall apply mutatis mutandis to this issue as well. Hence, is also remanded to the file of the Ld. CIT(E) with similar directions as stated above.
In the result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in the court on 10th September, 2025 at Chennai.