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Facts
The assessee filed an application for registration under Section 12A(1)(ac) of the Income Tax Act, 1961. The CIT(E) rejected the application citing non-compliance with Section 36A(3) of the Maharashtra Public Trusts Act and the Right to Education Act.
Held
The Tribunal held that the assessee failed to obtain prior permission from the Charity Commissioner before taking a loan and did not provide details to verify the loan's utilization for the trust's objects. Furthermore, the assessee did not comply with the Right to Education Act.
Key Issues
Whether the CIT(E) was justified in rejecting the registration application due to non-compliance with the Maharashtra Public Trusts Act and the Right to Education Act.
Sections Cited
12A, 12AB, 36A(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2022-23 Jagdish Krishna Educational V The CIT Exemption, Society, s Pune. H.No.103, building No.2, Omkar, Rahnal – 421302. Maharashtra. PAN: AABAJ8221E Appellant/ Assessee Respondent / Revenue Assessee by Smt.Deepa Khare – AR Revenue by Shri P R Mane - DR Date of hearing 24/04/2025 Date of pronouncement 29/04/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the assessee is against the order of ld.Commissioner of Income Tax-Exemption, Pune passed under section 12A(1)(ac) of the Income Tax Act, 1961; dated 28.03.2024. The assessee has raised the following ground of appeal : “The Appellant above named most respectfully begs to submit grounds of Appeal against the rejection order dated 28-03-2024 vide Application No. CIT EXEMPTION,
PUNE/2023-24/12AA/12608 dated 23/09/2023 as under:- 1) The learned CIT (Exemption) Pune erred in law and on facts in not granting registration u/s 12A of ITA, 1961, and rejecting the Application for the same. 2) The Ld. CIT Exemption Pune is not considering the submission made on 23/09/2023 and further submission on 05/03/2024 reply given to notice dated 27/02/2024 which has been explained about the loan permission of section 36A, The trust takes the nominal amount from the trustee (Anamat) for giving salaries to teachers and other nominal expenses small amount from some years, RTE from financially weaker sections students not considered and the Building is Purchase in F. Y. 2022-23 and submission was made upto F.Y.2021-22. Hence we have not explained this in the final submission.
The application was filed on 23/09/23, The Notice for hearing was given on 27/02/2024 for compliance on or before 05/03/2024. Thus the learned CIT (Exemption) Pune given very short notice to complaice of queries raised in the notice. Hence the learned CIT (Exemption) Pune erred in law and on facts in not granting sufficient opportunity to the appellant to submit the details/information thereby violating the principles of natural justice. 4) The appellant contends that learned CIT(E) ought to have decided the matters on merits i.e., on the tests of bona fide objects, genuine educational activity, etc. instead of the hyper-technical aspect of section / sub-section opted during the filing of application vide form 10AB for registration u/s 12A of ITA, 1961. 5) The appellant craves leave before Hon'ble ITAT to add, alter, clarify, explain, modify, or delete any of the grounds of appeal
, set aside, and to seek any just and fair relief.” Submission of ld.AR :
2. Ld.AR submitted that Assessee had filed application on 23.09.2023. Ld.AR submitted that one more opportunity may kindly be provided, so that assessee files details, before ld.CIT(E) ld.AR pleaded that case may be set-aside to ld.CIT(E).
Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of the ld.CIT(E).
Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, first hearing was on 17.09.2024. Advocate-Smt.Deepa Khare filed Vakaltnama and an adjournment letter stating “I am required to obtain relevant papers. I therefore, request that the case may kindly be adjourned to any convenient date”. Accordingly, the case was adjourned to 4th November 2024. None appeared on 04.12.2024. Case was adjourned to 19.12.2024. On 19.12.2024, ld.AR appeared and requested for adjournment. Accordingly, case was adjourned to 06.01.2025.On 06.01.2025, at the request of ld.AR, case was adjourned to 07.01.2025. On 07.01.2025, case was adjourned to 05.03.2025 at the written request of ld.AR. On 05.03.2025, ld.AR filed following adjournment letter :
4.1 The case was adjourned to 22.04.2025. On 22.04.2025, ld.AR appeared and requested for adjournment. Accordingly, case was adjourned to 24.04.2025.
4.2 On 24.04.2025, we heard ld.AR and ld.DR. Ld.AR only pleaded that case may set-aside to ld.CIT(E), so that assessee files all relevant details. We specifically asks ld.AR, why the details have not been filed before ld.CIT(E), the ld.AR could not give any reason. We specifically asked ld.AR why not a single document has been filed before us, to demonstrate the object of the Trust, genuineness of the activities. Ld.CIT(E) has mentioned in the order that assessee has violated provisions of section 36A of Maharashtra Public Trust Act, by not obtaining prior permission of Charity Commissioner for the Loan. It is also noted that not a single document has been filed before us to explain the identity of the Lender, the reason for impugned loan, the reason for not obtaining prior permission of Charity Commissioner.
4.3 Ld.CIT(E) has noted that assessee is running a school, called “Global International High School and Junior College”. Ld.CIT(E) noted that Assessee-School has not given any admission to students of weaker sections under the Right to Education Act. Ld.CIT(E) noted that it is mandatory to admit students of weaker sections as per Right to Education Act. Even before us, ld.AR could not explain the reasons for violation of Right to Education Act.
4.4 Ld.CIT(E) has pointed out certain other discrepancies in para 5 of the order. Ld.AR has not filed any document or rebutted the findings of ld.CIT(E).
4.5 Section 12AB is reproduced here as under : 12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,— (a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) 2[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 4.6 Section 12AB of the Act mandates ld.CIT(E) to verify genuineness of the activity of the trust. Section 12AB also mandates ld.CIT(E) to verify compliance of any law applicable.
4.7 It is not in dispute that Maharashtra Public Trust Act is applicable to the assessee.
5 The Section 36A(3) of the Maharashtra Public Trusts Act is reproduced here as under : “(3) No trustee shall borrow moneys (whether by way of mortgage or otherwise) for the purpose of or on behalf of the trust of which he is a trustee, except with the previous sanction of the Charity Commissioner, and subject to such conditions and limitations as may be imposed by him in the interest or protection of the trust.”
5.1 Thus, as per section 36A(3) of the Maharashtra Public Trusts Act, it is mandatory for the Trustees to obtain prior permission from Charity Commissioner before taking any Loan. In this case, admittedly, assessee has not taken any prior permission of Charity Commissioner. Assessee has not even made an application for obtaining permission from Charity Commissioner. Thus, it is clear that assessee has violated Section 36A(3) of the Maharashtra Public Trusts Act. There is a penalty u/s.37 of Maharashtra Public Trusts Act. To protect the Trust Properties, Section 36A(3) has made it mandatory to obtain prior permission before availing loan. The prior permission also gives an opportunity to the Charity Commissioner to verify that the money taken on loan has been properly utilized for the objects of the Trust. In this case, since no details have been filed by the assessee, it is impossible to verify whether the loan was utilized for the objects of the trust or not! Also, assessee has not proved that the loan was utilized for the objects of the trust, therefore, the genuineness of the activities is in doubt.
The Assessee has also not complied provisions of Right to Education Act. It is categorically mentioned by ld.CIT(E) that assessee has been receiving grants from Government. Therefore, it was mandatory for the assessee to comply Right to Education Act.
Thus, it is clear that assessee has not complied the Acts which were applicable to it.
7.1 Therefore, for all the reasons discussed above, ld.CIT(E) was right in rejecting assessee’s application for registration u/s.12A r.w.s 12AB of the Act. In these facts and circumstances of the case, grounds of appeal raised by the assessee are dismissed.
8. We have discussed all the grounds raised by the assessee in earlier paragraphs. Therefore, all the grounds raised by the assessee are dismissed.
In the result, appeal of the assessee is dismissed. Order pronounced in the open Court on 29th April, 2025.