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Facts
The assessee, a trust, applied for regular registration under Section 12AA of the Income Tax Act. The CIT(Exemption) rejected the application, citing issues with donation receipts not being updated with the new 80G approval number and a lack of specific details and documentary evidence for their activities.
Held
The Tribunal held that while there were procedural lapses in maintaining donation receipts, the charitable activity of the assessee for taking care of cows was not in dispute. The Tribunal found that the assessee had provided sufficient material to prove its charitable activities.
Key Issues
Whether procedural lapses in donation receipts and lack of detailed documentation are sufficient grounds to deny registration for charitable activities, when the core activity itself is not disputed.
Sections Cited
12AA, 12A(1)(ac), 11(1)(d), 2(15), 12AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of appellant is directed against the order framed by ld. Commissioner of Income Tax (Exemption), Pune dated 31.07.2024 denying grant of regular registration u/s.12AA of the Income Tax Act, 1961 (‘the Act’).
The facts apropos this appeal are that the appellant is a trust, filed application on Form No.10AB under clause (iii) of section 12A(1)(ac) of the Act for grant of regular registration u/s.12AA of the Act on 08.02.2024. In order to verify the genuineness of activities of the appellant, the ld. CIT (Exemption) issued a notice through ITBA portal on 27.04.2024 calling upon the appellant to file certain information/clarification. The appellant filed the requisite details. However, the ld.CIT(E) rejected the application filed by the appellant inter alia that the Ujjwal Gorakshan Sanstha appellant trust has issued donations receipt with old 80G approval and has not updated the approval number on its donation receipts by observing as under :
“................ .................
The assessee has re-furnished only a general note without giving therein the requisite details. As per financial statements, a considerable amount is spent towards cattle feed and medicines. However, trust has not furnished details such as number of cows sheltered, how they are procured etc. Also, no supporting documentary evidences have been furnished despite specific query. It has not even furnished photographs of the purported activities. The assessee has furnished only a ledger extract of purchase account without furnishing therewith copies of supporting bills/invoices/ vouchers etc. Thus, the assessee has failed to produce any material/ documents to support its contention.
Regarding expenses on the objects and the copies of directions from donors of corpus donations, the assessee has stated that expenses on cattle feed/ medicines etc are done from 'Gorakshan Kalyan Fund'. The donations received from donors are directly credited to the Gorakshan Kalyan Fund and each donation receipt contains direction that the donations be credited to Gorakshan Kalyan Fund.
6. The assessee's contention is not acceptable. On verification of the submissions made by the assessee trust regarding the classification of donations as specific donations under section 11(1)(d) of the Income-tax Act, 1961, it is observed that the trust has credited all donations received during the year to the Gorakshan Kalyan Fund. The trust contends that each donation receipt contains a direction that the donation be credited to this fund, thereby classifying these donations as specific in nature. However, the purported directions from donors, as claimed by the trust, are based solely on pre-printed statements on the donation receipts that specify the crediting of donations to the Gorakshan Kalyan Fund. These pre-printed statements do not constitute a valid, explicit direction from the donors as required under section 11(1)(d) of the Income-tax Act, 1961. The insertion of such pre-printed remarks by the trust does not demonstrate the donors' intent to specifically allocate their donations to the Gorakshan Kalyan Fund. Further, it appears that the trust has not issued any receipts for general donations and has used the aforementioned pre-printed receipts for all donations. This blanket approach weakens the trust's position that the donations are specific in nature, as it suggests that donors were not provided with an opportunity to express any alternative intent regarding the use of their contributions.
7. Without prejudice to the observations made above, it is further noted that the donation receipts furnished by the assessee trust pertain to the FY 2023-24. It is important to highlight that there have been significant changes in the process for registration and approval under sections 12A and 80G of the Income-tax Act, 1961. In light of these changes, fresh Ujjwal Gorakshan Sanstha approval or provisional approval certificates have been issued to all eligible entities. However, the donation receipts issued by the trust continue to reference the old 80G approval number, which was originally issued in the FY 2011-12. The trust's failure to update the approval number on its donation receipts, despite the issuance of a new or provisional approval, raises concerns about the compliance and accuracy of the information provided to donors and the department which indicates a lack of adherence to the updated procedural requirements and raises concern on the validity of the receipts issued.
In view of the above, the undersigned is not satisfied about the genuineness of 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. Therefore, the application filed by the assessee is hereby rejected and the provisional registration granted on 31/08/2021 under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act, 1961 is hereby cancelled.”
Aggrieved appellant approached the Tribunal challenging the impugned order denying grant of registration u/s.12AA of the Act.
Ld. Counsel for the appellant at the outset submitted that albeit the assessee is engaged in the charitable activities of taking care of cows, their feed, shelter etc. The appellant filed the requisite details as called for by the ld.CIT(Exemption) including photographs separately. It was already submitted before the CIT (Exemption) that the amount given by donors are directly credited to Gorakshana Kalyan Fund and the said purpose is exclusively spent for the charitable objects of the trust as mentioned in the pre-printed receipts. However, ld. CIT(Exemption) chose the reject the application filed by the appellant on the grounds of donations received in the pre-printed receipts, impliedly accepting the charitable object of taking care of the cows. Since the charitable activities carried out by the assessee have not been doubted, the authorities were not right in rejecting the application for grant of registration u/s.12AA of the Act.
5. On the other hand, ld. Departmental Representative vehemently argued supporting the order of the ld.CIT(Exemption).
We have heard the parties and perused the relevant material on record. We find that in compliance to the notices issued by the ld.CIT(Exemption) the assessee has filed the requisite details before him including the photographs as noted in the impugned order itself. We further note that the purported sums donated by the donors have been directly credited to the Gorakshan Kalyan Fund which is the sole charitable activity of the trust. We find that the assessee has placed sufficient material to prove that charitable activity undertaken by it for taking care of old cows, their feed, medicines, shelter etc and the objects of the assessee trust falls in the charitable activity as defined u/s.2(15) of the Act. Even though the assessee has furnished the details, ld.CIT(A) has referred to various minute details which did not affect the nature of basic charitable activity carried out by the assessee. There are certain procedural lapses on the part of assessee of not maintaining donation receipts in the proper manner but that does not come in the way of granting registration u/s.12AA of the Act. Since the charitable activity carried out by the assessee is not in dispute, we are inclined to grant registration u/s.12AA of the Act to the assessee trust.
In the result, the appeal of the assessee is allowed. Order pronounced on this 29th day of January, 2025.