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Facts
The assessee trust applied for registration under section 12AB of the Income Tax Act, 1961, declaring that its activities had not commenced and it had never filed income tax returns or claimed exemptions since its establishment in 1952 due to no activities or income. The CIT(E) rejected the application for non-maintainability, citing the absence of ITRs or corroborative material.
Held
The Tribunal held that the CIT(E)'s rejection was excessively technical, as section 12AB registration is a preliminary stage to assess genuineness, not an income assessment, and the trust had explained its non-filing of ITRs. The Tribunal set aside the CIT(E)'s order and restored the matter for fresh adjudication after allowing the assessee an opportunity to be heard.
Key Issues
Whether the CIT(E) was justified in rejecting an application for Section 12AB registration solely for lack of ITRs, when the trust claimed no commencement of activities and no taxable income, and whether such rejection is excessively technical.
Sections Cited
12AB, 12A, 11, 12, 10(23C)
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR
O R D E R
PER MAKARAND V. MAHADEOKAR, AM:
This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”], dated 23.10.2024, rejecting the application for registration under section 12AB of the Income Tax Act, 1961. Facts of the Case: 2. The assessee trust filed an application in Form No. 10AB on 01.05.2024 seeking registration under section 12AB of the Income Tax Act, 1961. The Shree Kalka Matajina Vahivat Badal Sarvjanik Trust vs. CIT(E) 2 application was filed under section 12A(1)(ac)(vi) – Item (B), which is applicable in cases where the activities of the trust or institution have not commenced as on the date of the application.
In response to the said application, the Ld. CIT(E) issued a notice dated 14.06.2024 requiring the assessee to furnish following details:
1. Details of exemptions claimed under section 11, 12, or section 10(23C), if any, and 2. Copies of ITRs filed for the period post commencement of activities.
3.1. In reply dated 21.08.2024, the assessee submitted "NA", stating that the trust was established in 1952 and has never filed income tax returns nor claimed any exemptions under section 11, 12 or section 10(23C) of the Act. The Ld. CIT(E), however, rejected the application on the ground that the assessee had not furnished any ITRs or other corroborative material and held the application as non-maintainable, observing that the trust opted to remain silent and did not show eagerness to establish the genuineness of its claim.
Aggrieved by the order of CIT(E), the assessee is in appeal before us with following grounds of appeal:
1. The Ld. CIT-Exemption, Ahmedabad has erred in law in rejecting the application for registration of the trust u/s 12AB of the IT Act on the ground that the appellant failed to furnish ITR / Computation sheet/ Snapshot of e-filing Portal. However, the fact is that the appellant never filed any Income Tax Return since inception of the trust.
2. The appellant craves leave to add, alter or delete any ground either before or in the course of hearing of the appeal.
On perusal of the record, it is noted that the assessee trust had duly disclosed that it had not filed any return of income since its inception in 1952 Shree Kalka Matajina Vahivat Badal Sarvjanik Trust vs. CIT(E) 3 and had also never claimed exemption under section 11, 12 or section 10(23C) of the Act. In light of such disclosure, the application was rightly filed under section 12A(1)(ac)(vi)-Item (B), which governs applications before commencement of activities.
5.1. The Ld. CIT(E), instead of verifying the genuineness of the trust or examining its charitable objects and proposed activities, rejected the application treating it as non-maintainable merely due to absence of ITRs or evidentiary proof. The approach of the Ld. CIT(E) appears to be excessively technical and contrary to the scheme of registration, particularly in a case where the assessee asserts that activities have not commenced.
5.2. It is a settled principle of law that the process of registration under section 12AB of the Act is not an assessment of income, but rather a preliminary stage to examine the genuineness of the trust’s objects and proposed activities. When the trust has explicitly stated that it has not filed returns as it had no activities and thus no income chargeable to tax, it was incumbent upon the Ld. The CIT(E) to evaluate such explanation objectively and to call for any further clarifications or proposed activity plan rather than summarily rejecting the application.
5.3. In our considered view, the interest of justice would be served if the matter is restored to the file of the Ld. CIT(E) for de novo adjudication. The assessee is directed to cooperate in the proceedings and furnish any further details that may be required to ascertain the genuineness of its claim. At the same time, the Ld. CIT(E) shall decide the matter on merits and in accordance with law, after granting due opportunity of being heard. Shree Kalka Matajina Vahivat Badal Sarvjanik Trust vs. CIT(E) 4 5.4. In view of the foregoing discussion, we set aside the impugned order of the Ld. CIT(Exemption), Ahmedabad dated 23.10.2024 and restore the matter to his file for deciding the application for registration afresh and in accordance with law, after providing adequate opportunity of hearing to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.