DAR E ARQAM EDUCATION CHARITABLE TRUST,PUNE vs. ITO EXEMPTION WARD 1(2), PUNE

(vi) As per the balance sheets for the last three years major part of your funds are invested in FDRs / bank accounts without its utilization on objectives and these funds are lying idle year-to-year whereas various objects have duly been provided in the trust deed for application of income. Amount of Rs.143.15 lacs out of total assets of Rs.229.70 lacs as on 31/03/2023 is lying idle in bank accounts / FDRs without its actual utilisation on objects of the trust. Thus, it is noticed that almost 62% of the total assets are invested in FDRs/Bank accounts. Similar is the case for the earlier two years also, In view of the decision of the Hon'ble ITAT Chandigarh in the case of I.K. Gujral University Vs. CIT(Exemptions) in appeal 2017, keeping of funds in bank accounts / FDRs cannot be considered to be any, application towards the charitable JAXD objects. Please explain with evidence as to why the said decision of the Hon'ble ITAT (supra), should not be applied in your case."

4.1 The reply filed by the assessee to the above notice was not found satisfactory by the Ld. CIT(E) and consequently, having been unable to draw any satisfactory conclusion about the genuineness of the activities of the trust, the Ld. CIT(E) proceeded to pass the impugned order rejecting the assessee’s application for regular approval and also cancelled the provisional registration granted earlier by observing as under : “5. The assessee in its submission contended that it has submitted the trust deed with objects. On verification of the same it is noticed that the assessee has once again furnished the copy of trust deed which was submitted in earlier submission wherein objects of the trust was missing and in show cause notice it is specifically mentioned that the trust deed were incomplete and object were missing. In absence of the same the charitable nature of objects of the trust / institution cannot be verified and whether the activities are in line with the objects of the trust / institution can also not be ascertained. The assessee has also furnished the details of donation stated that the amount are matching with financial statements. On verification of the same they are not found in synch with financial statements. Further in list of donations, complete address, PAN of donor & receipts number has not been provided for cash donation despite specific query to that effect. In respect of "Zakat" the assessee itself has admitted that this is received for specific purpose & has been reserved for the same. However, the details of specific purpose alongwith donors direction were not furnished for verification. Therefore, identity of such donors and consequential genuineness of donations remained doubtful. The assessee has furnished some light bills in different names. Except for these light bills, no other supporting document, evidence have been furnished by the assessee. It has also not clarified as to in what connection, said expenditure has been incurred. Therefore, the genuineness of these evidences remained questionable.

7. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 27/05/2021 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.”

“Erroneous Rejection of Application 1. On the facts and in the circumstances of the case, and on facts Hon'ble CIT(Exemption) Pune has erred in rejecting the application of the appellant trust for Final registration u/s 12A of the Act without properly appreciating the facts and circumstances and thus, the impugned rejection order may please be quashed and set aside, and registration under section 12A of the Act may be granted. Failure to Consider Compliance of the Trust 2. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application on the alleged ground of non-submission of certain documents, whereas the appellant trust had duly submitted all relevant documents and clarifications as sought by the department. Non-Consideration of Trust's Activities 3. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in not appreciating that the appellant trust is engaged in genuine charitable activities and has been carrying out its objectives in accordance with the law, and hence is eligible for registration under section 12A of the Act. Unjustified Reliance on Technical Deficiencies 4. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application merely on technical grounds such as missing documents or procedural aspects, whereas the substantive compliance and charitable nature of the trust were clearly established. Contravention of Judicial Precedents 5. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in not following established judicial precedents wherein courts and tribunals have held that minor procedural lapses should not be the basis for rejection of a genuine charitable trust's registration. Improper Interpretation of Section 12AB Requirements 6. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has misinterpreted the provisions of section 12AB of the Income Tax Act, 1961 and has erroneously concluded that the trust does not meet the requirements for registration. Denial of Natural Justice 7. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application without providing a reasonable and adequate opportunity to the appellant trust to rectify any alleged deficiencies, thereby violating the principles of natural justice. Other Ground 8. The Appellant craves leave to add, amend, alter, modify, vary, or withdraw all or any of grounds of appeal, in the interest of justice, if necessary, at the time of hearing of the appeal.

“Improper & invalid rejection order

1. On the facts and in the circumstances of the case, and on facts Hon'ble CIT(Exemption) Pune has erred in rejecting the application of the appellant trust for Final registration u/s 80G of the Act without properly appreciating the facts and circumstances and thus, the impugned rejection order may please be quashed and set aside, and registration under section 80G of the Act may be granted. Erroneous Rejection Based on Alleged Delay 2. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application for final registration under section 80G(5) on the ground of delay, without appreciating that the law permits filing of the application within six months before the expiry of provisional approval, particularly where activities had commenced prior to such approval and thus, the impugned rejection order may please be quashed and set aside, and registration under section 80G of the Act may be granted. Misinterpretation of Section 80G(5) Provisions 3. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in misinterpreting the provisions governing the timeline for filing the application, resulting in an unjust and unreasonable rejection. Failure to Consider the Genuineness of Activities 4. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application without duly considering the documentary evidence submitted in support of the genuineness of the trust's charitable activities. Denial of Natural Justice 5. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application without affording adequate opportunity of being heard and without ensuring proper service of notices in accordance with the law. Unjustified Cancellation of Provisional Approval 6. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in cancelling the validly granted provisional approval under section 80G(5), despite the appellant fulfilling allsubstantive conditions for final registration. Mechanical and Non-Speaking Order 7. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in passing a non-speaking order, without properly addressing the submissions, explanations, and documents furnished by the appellant. Failure to Exercise Discretion Judiciously 8. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has failed to exercise discretion judiciously by rejecting the application on technical grounds, despite the trust meeting all substantive requirements.

Invalid Rejection Due to Non-Grant of Section 12A Registration 9. On the facts and in the circumstances of the case, the Hon'ble CIT(Exemption), Pune has erred in rejecting the application for registration under section 80G(5) solely on the ground that the appellant does not have valid registration under section 12A, despite the fact that the Appellant has challenged the rejection order u/s 12A before Hon'ble Tribunal and further, the substantive conditions of section 80G(5) were otherwise fulfilled and thus, the impugned rejection order u/s 80G may please be quashed and set aside, and registration under section 80G of the Act may be granted. Other Ground 10. The Appellant craves leave to add, amend, alter, modify, vary, or withdraw all or any of grounds of appeal, in the interest of justice, if necessary, at the time of hearing of the appeal.”

Order pronounced in the open court on 31st July, 2025.