MODEL VILLAGE TRUST ,DELHI vs. SH. PRAKASH DUBEY CIT EXEMPTION, DELHI, DELHI

2. Hon'ble Tribunal may kindly peruse letter dated 05.01.2024 filed by appellant trust on 15.01.2024 (PB 39- 42). This letter and its annexures deal with all points 3

raised by Ld. CIT(E) in his letter dated 21.12.2023. It may be seen that detailed information was called for in respect of 17 points and point number 17 contained further 12 sub-points. This letter contains information inter - alia in respect of following important points: - (i) Note specifying main area of charitable activities along with projection for next two years (PB 43-47); (ii) Charitable purposes provided in section 2(15) and adopted in aims and objects include relief of poor, education, medical relief and advancement of general public utility (PB 64-65); (iii) Confirmation that none of the objects involves any trade, commerce or business (PB 63); (iv) Declaration that income of the appellant trust or any part thereof was never used or applied for the benefit of any person specified in Section 13(l)(c) (PB 66-67-); (v) Certificate that requirement of other laws which are essential for the purpose of achieving the objects of the trust have been complied with; (vi) Note on activities actually carried out (PB 69- 70); (vii) Justification for grant of registration, namely, that appellant trust is registered as a public charitable trust and it has undertaken plans which touch upon education, health, medical relief, women empowerment, livelihood and agriculture promotion activities, and thus, it is entitled to registration as applied for (PB 92); (viii) Details of donations received for three years till 31.03.2023 (PB 142- 242); (ix) Audit report and balance sheet of three years till the year ending 31.03.2023 (PB 243-272);

(x) Income tax returns and forms-26AS for last three years; and (xi) Bills and vouchers for the expenses incurred in the last three years (PB 289-991) 2.1. Vide notice dated 17.01.2024.2024, Ld. CIT(E) called for details on seven points. This notice was complied with by filing letter dated 23.01.2024 and its annexures (PB 994-1093). These points touch upon the activities actually carried out by appellant trust, provisional income and expenditure account for 01.04.2023 to 30.09.2023, bills and vouchers for this period, note on cash deposited in bank arising from donations and bank account for this year. It was again requested that registration may be granted for 5 years. 2.2. As stated earlier, notice dated 06.02.2024 was issued consisting of eight points for compliance on 12.02.2024. This notice was complied with vide letter dated 12.02.2024 (PB 1098-1128). This letter contains details of beneficiaries of low- cost housing, certificate from schools were computer lab and smart library were set up, particulars of contractors who were engaged for low-cost housing and drinking water projects, and particulars of contractor who set up computer lab. 2.3. Ld. C!T(E ) also issued notice dated 03,04,2024, containing two points. This notice was responded to by filing letter dated 04.04.2024 (PB 1133-1162). This letter contains note on activities carried out since inception along with photographs, bills and vouchers and place where the activities were carried out. It was requested that in view of the above, registration may be granted. 2.4. Appellant trust also filed a letter dated 06.05.2024 on 08.05.2024 (PB 1163-1351). This letter contains details of beneficiaries of low-cost housing projects, the contactors concerned and agreements made with them; activities conducted in terms of objects of appellant trust; list of donations exceeding one lakh rupees and note on various activities with photographs.

3. In arriving at the conclusion that activities are not genuine, Ld. CIT(E) drew a table of donations received in three years and mentioned in paragraph no. 4 that donations are received mostly in cash. From the table, it is seen that donations are received in cash as also in cheque or by on line transfer. It is made out that address od donors are not complete as house no. is not stated. It is submitted that house nos. are not allotted. The addresses are complete, i.e., if a letter is posted at the given address, it will reach the donor. 3.1. It is further mentioned that narration of entry of Rs. 10,000/- is not furnished, although the same was called for vide notice dated 17.01.2024. It is submitted that complete bank account was furnished vide item no. 2 of letter filed on 23.01.2024 (PB 998-1041). All entries contain narrations. Therefore, there is no force in this adverse observation. 3.2. It is also mentioned that certain expenses were incurred on account of low- cost housing projects. The details of beneficiaries have been furnished but their confirmations have not been furnished. It is submitted that names of beneficiary, addresses and their aadhar nos. were furnished vide item no.l of letter dated 12.02.2024 (PB 1100-1101). No confirmations were received but even in absence of the confirmations, these details sufficiently establish that this activity was actually carried on by appellant trust. 3.3. It is also mentioned that agreements with contractors, who carried out low-cost housing projects and drinking water projects are written on plain papers, which has no legal sanctity. It is submitted that details of such contractors and agreements with them were furnished vide item no. 7 of letter dated 12.02.2024 and 08.05.2024 (PB 1126-1127, 1164-1294). The crux of the matter is as to whether these activities were carried out or not. The details of beneficiary and contractor sufficiently establish that such activities were actually carried out. In the light of this, the observation that agreements were written on plain papers loses significance. Therefore, this observation does not detract

us from the conclusion that such charitable activities were actually carried out. 3.4. Vide item no. 17(iv) of notice dated 21.12.2023, appellant trust was required to file details of donation received in a prescribed format. These details were filed in the prescribed format vide item no 17{iv) of letter dated 05.01.2024 (PB 142-242). Vide item no 7 of notice dated 17.01.2024, appellant trust was required to file confirmations in respect of donation exceeding Rs. 50,000/-. In this connection, list of such donors was filed containing date, name, address, ID type (whether PAN or aadhar no.), mode of donation (all such donations are by bank transfer), and amount in rupees. Confirmations were not obtained from such donors. However, as all such donations have been received through banking channels, the genuineness cannot be doubted. Further, addresses were furnished but even sample inquiry was not made. PAN / aadhar no. also proves bona-fides of the donors. Appellant trust maintained name and address of donors, which is the requirement of law as per section 115BBC(3), failing which tax would have to be paid as per section 115 BBC(l). 3.5. Vide item no. 12 of notice dated 21.12.2023. appellant trust was required to file note on activities since inception. The note was filed vide item no, 12 of letter dated 05.01.2024 (PB 63,71). It was inter- alia pointed out that activities have been undertaken in respect of menstrual hygiene, maternal health, vaccination in co-ordination with rural authorities, adult literacy programme, running one teacher school, student learning centre etc. Further, following details were furnished in this respect: - (i) List of beneficiaries of malnutrition programme (PB 358-362, 596-609); (ii) List of beneficiaries of adult female learning centre (PB 371, 561-566); (iii) List of beneficiaries of hunger relief (PB 567- 592); (iv) List of beneficiaries of malnutrition free village programme (PB 593) (v) List of beneficiaries of sanitary Napkins sponsorship project (PB 610-722); (vi) List of beneficiaries of toilet project (PB 363- 370, 723); and (vii) one teacher school expenditure. 3.6. All these activities are real and substantive charitable activities. Therefore, it is submitted that adverse observations have been made without appreciating the details and evidence filed in the course of registration proceedings. It is further submitted that some of these points are to be seen at the time of assessment and these points do not have any significance for grant of registration. In this regard, submissions are made in succeeding paragraphs.

4. We may now deal with the order of Ld. CIT(E). He has referred to provision of Section 12AB(1), which is reproduced hereunder: “where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) [or item (B) of sub-clause (vi)] of the said clause,— (i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about— (A) the genuineness of activities of the trust or institution; and (B) the compliance 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 objects; (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),— (A) pass an order in writing registering the trust or institution for a period of five years; or (B) if he is not so satisfied, pass an order in writing,— (I) in a case referred to in sub-clause (ii) or sub- clause (i) or sub¬clause (v) of clause (ac) of sub- section (1) of section 12A rejecting such application and also cancelling its registration; (II) in a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub-section (1) of section 12A, rejecting such application, after affording a reasonable opportunity of being heard;” 4.1. It may be seen that adverse observations made by Ld. CIT(E) have no repercussion in deciding the issue of grant of registration. At the stage of registration, he can only examine objects of the trust, genuineness of the activities and compliance of any other law which is material for the purpose of achieving its objects. Needless to say, that all objects are charitable in nature. Activities are genuine. And there has been no violation of any other law. Thus, registration has been refused on considerations other than those mentioned in Section 12AB(l)(b). Therefore, the order is bad in law and is required to be reversed. On the other hand, it is asserted that all objects are charitable in nature and activities are genuine and any other law applicable to appellant trust has been complied with. Therefore, the order of Ld. CIT(E) is not sustainable in law and therefore it is requested that this order may be reversed and registration may be granted.

for charitable purposes and secondly, the activities of the trust/institution must be genuine. • In the case of Hari Krishna Trust vs. CIT(E) [2023] 154 taxmann.com 656 (ITAT Lucknow), it has been held in Para B.l that it is well settled that there are two conjunctive tests to be considered at the time of registration u/s 12AA of the Act. Firstly, it is to be examined whether stated objects of the applicant are charitable in nature. Secondly, genuineness of the charitable activities is to be established in reality. The applicant has to pass these two tests cumulatively. Charity is the core issue for registration. Mere declaration of charitable objects is not adequate. Establishing the genuineness of the charitable activities is also an essential requirement. • In the case of CIT-II, Chandigarh vs. Surya Educational and Charitable Trust [2011] 15 taxmann.com 123 (P&H), it has been held in Para 11 that the object of Section 12AA is to examine genuineness of the objects of the Trust but not the income of the trust for charitable or religious purposes. The stage of application of income is yet to arise, that is, when such trust or institution files its return. In view of this judgement, it can be said that Ld. CIT(E) went beyond his scope of enquiry when he called for confirmations in respect of scholarships to meritorious girls. This point has to be seen by the AO while making assessment. • In the case of CIT-I, Ludhiana vs. Baba Kartar Singh Dukki Educational Trust [2014] 42 taxmann.com 17 (P&H), it has been held that object of Section 12AA of the Act is to examine genuineness of the objects of the Trust and though while examining genuineness, income as well as resources may be taken into'’ consideration but any suspicion as to these facts cannot be the sole criterion for rejecting an application. • In the case of M/s Saint Kabir Education Society vs. CIT(E) in dated 13.06.2019 (ITAT Delhi), it has been held that the requirement of Section 12AA is only to the extent that CIT has to satisfy himself about the objects of the Trust/institution and genuineness of its activities. The applicant society was not deviating from its main objects to utilise the resources for propagation of education in Haryana. The commissioner, at no point of time pointed out that applicant society is not doing these activities. Thus, commissioner has not followed the proper guidelines given u/s 12AA. Therefore, the Tribunal was of the opinion that registration should have been granted. • In the case of Association of Physician of India vs. CIT(E) [2021] 33 taxmann.com 5.15 (ITAT Amritsar), it has been mentioned in Para 7 that the coordinate bench in the case of Seth Vinod Kumar Somani Charitable Trust vs. CIT, has held that at the time of registration, the commissioner has to satisfy himself about the objects of the trust and genuineness of its activities. This decision of the coordinate bench was followed. • In the case of Har Nihal Charitable Trust vs. CIT(E), Chandigarh [2021] 131 taxmann.com 155 (ITAT Chandigarh), it has been held that after examining the issue as per order of ITAT, Ld. CIT(E) has not recorded any adverse observations in the impugned order in respect of charitable activities carried out by the appellant trust. Thus, Ld. CIT(E) ought to have granted registration to the appellant trust. • In the case of CIT(E) vs. Nanak Chand Jain Charitable Trust [2024] 162 taxmann.com 353 (P&H), following conclusions have been drawn : (i) Income Tax Appellate Tribunal while hearing an appeal u/s 254(1) in a matter where registration u/s 12AA has been denied by the commissioner can itself pass an order directing commissioner to grant registration in case Tribunal disagrees with satisfaction of the commissioner on the basis of material already on record before the commissioner; (ii) The power of the Tribunal is co-extensive with power of commissioner u/s 12AA of the Act. However, order for registration can be issued only after recording satisfaction with regard to genuineness of the activities of the Trust; and (iii) The Tribunal had recorded its satisfaction that objects of the Trust are charitable and its activities are genuine. Therefore, the Tribunal has rightly directed CIT to grant registration u/s 12AA and also approval u/s 80G(5). 5.1. It is submitted that objects of appellant trust are charitable in nature. No adverse finding has been recorded in this respect. Ld. CIT(E) erred in recording a finding that activities are not genuine. In doing so, he was guided by irrelevant facts and such other facts which could be examined only in the course of assessment. It may be added that one more condition is to be satisfied u/s 12AB of the Act, namely, that other laws relating to achievement of objects of the trust are not violated. It has been submitted by appellant that there has been no such violation. As a matter of fact, Ld. CIT(E) has not made any averment in this regard. Accordingly, on proper appreciation of the facts, it will transpire that conditions mentioned in Section 12AB(l)(b) are fulfilled in this case. It is therefore prayed that order of Ld. CIT(E) may be reversed and registration may be granted to appellant trust for 5 years.

6. Ld. CIT(A) has also cancelled provisional registration granted on 01.10.2021. It is submitted that the cancellation of registration including provisional registration is governed by the provisions contained in Section 12AB(4). This provision provides that provisional registration can be cancelled on occurring of any specified violations mentioned in Explanation to this subsection. Ld. CIT(E) has neither called for any information or document from appellant trust nor mentioned which of the specified violation has been committed by appellant trust after conducting such enquiry and after calling document or information as mentioned in the sub-section. He summarily cancelled the provisional registration on the ground that application for registration filed now u/s 12A(l)(ac)(iii) is rejected. He could not have done so without giving proper opportunity to the appellant trust and showing which specified violation has been committed by the appellant trust out of violations mentioned in clauses (a) to (g) of the Explanation. This amounts to violation of principle of natural justice. Therefore, it is requested that this part of the order contained in Para 6 may also be'reversed and the provisional registration granted for AYs 2022-23 to 2024-25 may be restored.”

4. On the other hand, the Ld. DR strongly supported the orders of the CIT(E) in rejecting the registration u/s 12A as well as 80G to

5. Heard rival submissions, perused the orders of the Ld. CIT(E) and the materials placed before us. The Ld.CIT(E) rejected the registration u/s 12A and also 80G observing as under: -

“4. From the perusal of the submissions /details, the following points /issues have been noted: - 1. From the examination of Income & Expenditure account of the assessee for A.Y.2021-22, 2022-23 & 2023- 24 , it is noted that the assessee has received following amount of donation during the last three years:-

It is clear from the above that, the assessee has received mostly donation in cash from donors claimed to be of kerala. The address of donors are incomplete, i.e., does not have House Number.

5. In the light of above facts, the assessee has failed to file the necessary details/evidence in support of genuineness of activities claimed to be carried out. Therefore, the present application filed in Form 10AB for grant of registration u/s 12A(1 )(ac)(iii) is hereby rejected.”

Confirmation of donation exceeding Rs.50,000/- were filed, details of contractors engaged with the trust, agreements entered into various contractors for construction of low cost house under Model Village were filed activities and the objects of the trust and confirmation letter of donation of Rs.1 lakh or more etc. and also the brief summary of activities carried out by the trust were filed.

Therefore the assessee had filed all the necessary details to prove the genuineness of the activities and charitable objects of the assessee. The Ld. CIT(E) did not make any comments on the genuineness of the objects of the trust. The registration u/s 12A as well as 80G was denied only for the reason that certain details were not furnished by the assessee. As held by various High Courts while granting registration u/s 12A one has to see whether the objects of the trust are charitable and the activities of the trust are genuine.

The voluminous evidences furnished by the assessee proves that the assessee is a charitable trust and the activities carried on by the assessee are genuine. The queries raised and details required by the Ld. CIT(E) were all subject matter of verification by the Assessing Officer while completing the assessment. Therefore, since the genuineness of the objects of the trust and the activities of the trust were not in doubted by the Ld. CIT(E) he should not have rejected the registration u/s 12A as well as 80G of the Act on the ground that certain details were not furnished by the assessee which otherwise all the details were in fact furnished by the assessee. Thus, we direct the Ld. CIT(E) to restore the provisional registration granted to the assessee u/s 12A and also direct to grant registration u/s 12A as well as 80G to the assessee trust.

Order pronounced in the open court on 09.04.2025