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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, 1961. The CIT(Exemption) rejected both applications, and cancelled provisional registration under Section 12AB, due to concerns about the genuineness of charitable activities, lack of supporting expenses, and non-compliance with statutory conditions.
Held
The Tribunal acknowledged the CIT(Exemption)'s dissatisfaction with the submissions. In the interest of justice, and considering the assessee's request for further opportunity, the Tribunal restored both matters (Section 12A registration and Section 80G approval) to the file of the CIT(Exemption) for fresh adjudication. The CIT(Exemption) was directed to grant one final opportunity to the assessee to substantiate its case.
Key Issues
Whether the CIT(Exemption) was justified in rejecting the applications for registration under Section 12A and approval under Section 80G without allowing the assessee sufficient opportunity to furnish requisite details and substantiate its claims.
Sections Cited
12A, 12A(1)(ac), 12AB, 80G, 80G(5), 10(23AA), 10(23C), 11, 12
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
The above two appeals filed by the assessee are directed against the separate orders dated 30.09.2024 of the Ld. CIT(Exemption), Pune rejecting the application for grant of registration u/s 12A and approval u/s 80G of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). For the sake of convenience, both these appeals were heard together and are being disposed of by this common order.
There is a delay of 79 days in filing of both the appeals before the Tribunal for which the assessee has filed separate condonation applications along with affidavits explaining the reasons for such delay. After considering the contents of the condonation applications filed along with the affidavits and after hearing the Ld. DR, the delay in filing of the appeals is condoned and the appeals are admitted for adjudication.
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 26.06.2024 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 09.05.2024 requesting the assessee to upload certain information / clarification. In response to the same, the assessee filed certain details. The CIT(Exemption) while going through those details found certain discrepancies in the submissions filed by the assessee for which he issued another notice to clarify on those issues, in response to which the assessee filed certain details. However, Ld. the CIT(Exemption) was not satisfied with the arguments advanced by the assessee and rejected the application filed by the assessee for grant of registration u/s 12A of the Act and also cancelled the provisional registration granted earlier u/s 12AB of the Act by observing as under: “6. The assessee furnished its reply in response to the notice on 10/08/2024. However, the same is not accepted for the reasons as stated under: (i) The trust has not shown any expenses in the last 2 years on the charitable activities of the trust. Also, expenses shown in the year 2022-23 is mostly on establishment and administration head. There is no expenses shown on the charitable activities by the trust. The supporting bills are that of building construction and not temple construction. Also, It is seen that no credible evidence is furnished in support of the activities claimed to have been carried out except some photographs and considering the fact that a very meagre expenditure is shown on objects as compared to expenditure on establishment, the satisfaction about the genuineness of activities could not be arrived at. Also, there are no signage or banners displayed in the photographs submitted so as to show association of the assessee with said activities.
7. Considering the above facts discussed in the show notice and discrepancies noticed, the undersigned is 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.
8. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 25/05/2022 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.”
Aggrieved with such order of CIT(Exemption), the assessee is in appeal before the Tribunal by raising the following grounds:
1. The Ld CIT Exemption erred in law and on facts in rejection of application for Registration u/s 12A(1)(ac) (iii) and cancelling provisional registration u/s 12A(1)(ac)(vi) granted on 16.09.2022 without considering the facts and circumstances of the case. 2 The appellant prays for opportunity so as to explain its case.
3. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.
The Ld. Counsel for the assessee at the outset submitted that very little time was granted to the assessee and given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Ld. CIT(E). He accordingly submitted that the matter may be restored to the file of the Ld. CIT(E) with a direction to grant one more opportunity to the assessee to substantiate its case by filing the requisite details.
The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(E). He submitted that despite number of opportunities granted to the assessee, he did not file the requisite details to the satisfaction of the Ld. CIT(E) for which he has rejected the application for registration u/s 12A of the Act. He accordingly submitted that the appeal filed by the assessee be dismissed.
We have heard the rival arguments made by both the sides and perused the order of the Ld. CIT(E). It is an admitted fact that on the basis of submissions made by the assessee the Ld. CIT(E) was not satisfied with the submissions for which he rejected the application for grant of registration u/s 12A and also cancelled the provisional registration granted earlier, the reasons of which have already been reproduced in the preceding paragraphs. 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 by filing the requisite details before the Ld. CIT(E) to his satisfaction. 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 its case by filing the requisite details to his satisfaction and decide the issue as per fact and law. The assessee is also hereby directed to submit the details as called for by the Ld. CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(Exemption) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
8. After hearing both sides, we find the Ld. CIT(E) rejected the application for grant of approval u/s 80G of the Act by observing as under:
“6. The assessee furnished its reply in response to the notice on 10/08/2024. However, the same is not accepted for the reasons as stated under: (i) The trust has not shown any expenses in the last 2 years on the charitable activities of the trust. Also, expenses shown in the year 2022-23 is mostly on establishment and administration head. There is no expenses shown on the charitable activities by the trust. The supporting bills are that of building construction and not temple construction. Also, It is seen that no credible evidence is furnished in support of the activities claimed to have been carried out except some photographs and considering the fact that a very meagre expenditure is shown on objects as compared to expenditure on establishment, the satisfaction about the genuineness of activities could not be arrived at. Also, there are no signage or banners displayed in the photographs submitted so as to show association of the assessee with said activities.
7. Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of sub- clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 as well as the provisions of Rule 11AA(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is not satisfied about the genuineness of activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act.
As per the condition vide clause (i) of section 80G(5) of the Income Tax Act, 1961, the approval is available only if the income of the institution or fund is not be liable to inclusion in its total income under the provisions of section 11 and 12 or clause (23AA) / clause (23C) of section 10 of the Income Tax Act, 1961. Exclusions for the said condition are detailed in clause (a), (b) and (c) of proviso to clause (i) of section 80G(5) of the Act. Therefore, the institution / fund is required to be regularly registered / approved either under section 12AB or 10(23AA) or 10(23C) of the Income Tax Act, 1961 or the institution / fund shall be a Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependents. 8.1 In the instant case it is noticed that the assessee is neither regularly registered u/s 12AB read with section 12A(1)(ac)(i) /12A(1)(ac)(iii) nor having regular approval under section 10(23C) read with clause (i) / (iii) of first proviso to the said section and the case is not covered under the exclusions provided vide proviso to clause (i) of section 80G(5) of the Act. The assessee is not approved under section 10(23AA) of the Act. The assessee is also not a Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependents. In fact, the application of the assessee in form No. 10AB for registration u/s 12AB filed under the provisions of section 12A(1)(ac)(iii) of the Act has been rejected vide order dated 30/09/2024. Therefore, the condition (i) of section 80G(5) of the Income Tax Act, 1961 is also not fulfilled in this case.
9. In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 27/05/2021 under clause (iv) for first proviso to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.”
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 by filing the requisite details before the Ld. CIT(E). Since we have restored the issue of registration u/s 12A of the Act to the file of the Ld. CIT(E) for fresh adjudication, therefore, this matter is also being restored to his file for adjudication of the issue afresh after giving 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.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 24th April, 2025.