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Facts
The assessee, a trust, applied for registration under Section 12A and approval under Section 80G of the Income Tax Act. The CIT(E) rejected both applications due to insufficient details regarding the genuineness of its educational activities, lack of approvals for courses, and unsecured loans taken from trustees without Charity Commissioner's permission.
Held
The Tribunal observed that the assessee was not given a proper opportunity to substantiate its activities and clarify the issue of unsecured loans. Therefore, the matter was remanded back to the CIT(E) for fresh adjudication, directing the CIT(E) to provide a final opportunity to the assessee to present all requisite details and evidence.
Key Issues
Whether the CIT(E) was justified in rejecting the applications for registration under Section 12A and approval under Section 80G without providing adequate opportunity to the assessee to prove the genuineness of its activities and compliance with legal requirements regarding loans.
Sections Cited
12A, 12A(1)(ac), 12AB, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
filed by the assessee is directed against the order dated 18.07.2024 of the Ld. CIT(Exemption), Pune refusing grant of registration u/s 12A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). filed by the assessee is directed against the order dated 18.07.2024 of the Ld. CIT(Exemption), Pune refusing grant of approval u/s 80G of the Act. For the sake of convenience, both these appeals were heard together and are being disposed of by this common order.
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 19.01.2024 for registration of the trust under clause (iii) of section 12A(1)(ac) of the Act. With a view to verify the genuineness of the activities of the assessee and compliance to requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects, a notice was issued through ITBA portal on 27.03.2024 requesting the assessee to upload certain information / clarification. The compliance date was 11.04.2024. Since there was no compliance from the side of the assessee, the Ld. CIT(E) sent another notice dated 25.04.2024 requesting the assessee for necessary compliance. The assessee was also requested to show cause as to why the application should not be rejected and why the registration u/s 12AB should not be cancelled.
In response to the same the assessee vide its reply dated 17.05.2024 furnished certain details but has not furnished sufficient details about the activities undertaken. The Ld. CIT(E) observed that the assessee trust has not carried out any educational activities. However, in the financial statements expenses have been shown as educational activities like DMLT courses, Nursing Care Assistant, Dialysis Techniques, Paramedical courses etc. He observed that the assessee trust has not furnished any details with respect to these courses such as permissions/approvals from the competent government authorities / education department to run said courses, affiliation certificates, details of students admitted for each course, teachers and technical staff, fees structure etc. No supporting evidences to prove genuineness of activities has been furnished. Further, the assessee’s submission that no permission of Charity Commissioner was required for unsecured loans and advances taken from the trustee of the trust, was rejected by the Ld. CIT(E). He, therefore, was not satisfied about the genuineness of activities of the assessee and compliance of requirements of any other law for the time being in force by the assessee as are material for the purpose of achieving its objects. In view of the above, he rejected the application for grant of registration u/s 12A and also cancelled the provisional registration granted earlier on 02.10.2021 u/s 12AB of the Act. Since he cancelled the application for grant of registration u/s 12A, he rejected the application for grant of approval u/s 80G of the Act.
Aggrieved with such order of CIT(Exemption), the assessee is in appeal before the Tribunal.
The Ld. Counsel for the assessee at the outset submitted that the assessee has filed voluminous details but the Ld. CIT(E) has not gone through the same properly and has rejected the application for grant of registration u/s 12A and also rejected the application for grant of approval u/s 80G of the Act. He submitted that in the interest of justice, the assessee should be given one more opportunity to substantiate its case before the Ld. CIT(E) by filing the requisite details according to his satisfaction.
The Ld. DR on the other hand heavily supported the order of the Ld. CIT(E).
We have heard the rival arguments made by both the sides, perused the order of the CIT(E) and the paper book filed on behalf of the assessee. We find due to non-submission of sufficient details along with supporting evidence to prove the genuineness of activities and acceptance of certain unsecured loans and advances from the trustee without obtaining permission of the Charity Commission, the Ld. CIT(E) rejected the application for grant of registration u/s 12A of the Act. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case with evidence to the satisfaction of the Ld. CIT(E) regarding the genuineness of activities. It is also his submission that the assessee can prove with rules and regulations that no permission is required from the Charity Commissioner for temporary unsecured loans and advances taken from the trustee of the trust for running day to day activities when necessary and that the assessee has not taken any other funds or raised any loan from any financial institution or bank. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(Exemption) with a direction to grant one final opportunity to the assessee to substantiate the genuineness of its activities and other issues as raised by Ld. CIT(E) and decide the issue as per fact and law. The assessee is also hereby directed to file necessary details to the satisfaction of Ld. CIT(E) regarding the nature and the amount of unsecured loans and advances taken from the trustees of the trust and the permission, if any, obtained from the Charity Commissioner subsequent to that or not. The Ld. CIT(E) is directed to decide the issue as per fact and law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
Since we are restoring the issue of grant of registration u/s 12A of the Act to the file of the Ld. CIT(E) for fresh adjudication, therefore, the issue regarding the grant of approval u/s 80G of the Act is also being restored to the file of the Ld. CIT(E) for deciding the issue afresh in accordance with law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 28th October, 2025.