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Facts
The assessee, Dr Ishwar Chandra Seva Sansthan, filed an application for registration under Section 12AB of the Income Tax Act, 1961. The CIT(Exemption) rejected the application, stating that the assessee failed to provide supporting documentary evidence for its charitable activities and the genuineness of its objects.
Held
The Tribunal held that the assessee had demonstrated that it filed evidences related to its activities, which appeared to have escaped the CIT(Exemption)'s attention. To serve the principles of natural justice, the Tribunal set aside the CIT(Exemption)'s order.
Key Issues
Whether the CIT(Exemption) erred in rejecting the registration application without considering the documentary evidence filed by the assessee, and whether the genuineness of the trust's activities and objects were properly verified.
Sections Cited
12AB, 17A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee is directed against the order of the Learned Commissioner of Income-tax (Exemptions), Lucknow dated 27.09.2024. The assessee has raised the following grounds of appeal: -
1. Because the CIT(Exemption) has erred on facts and in law in rejecting the registration granted to the trust/sansthan under section 12AB of the Income-tax Act, 1961, the order passed is contrary to the provisions of law, based on incorrect facts, without consideration of the submissions and against the principles of natural justice, be quashed.
2. Because the CIT(Exemption) has failed to appreciate that the objects of the said assessee trust/sansthan, are all charitable in nature and the activities carried on by it are in accordance with its objects, the twin conditions i.e. the “objects being charitable” and “activities being in accordance with the objects”, not being in dispute, the CIT (Exemption) has erred in rejecting the petition for registration already granted u/s.12AB of the Act (provisional), such order being contrary to the provisions of law be set-aside and the registration as sought for be granted.
Because on a proper consideration of facts and circumstances of the case, the evidences as filed by the assessee trust/sansthan, none of them has been found to be false or untrue, the CIT (Exemption) was not justified in rejecting the registration as applied for to the assessee trust/sansthan.
Because in any case and in all circumstances of the case, the conditions as lid down for grant of registration under section 12AB having all been fulfilled and there being no violation of the same, the rejection of the same as provisionally granted under section 12AB to the assessee trust/sansthan and as withdrawn be restored.” 2. The facts giving rise to the present appeal are that the assessee is a trust who had filed an application in the Form No.10AB under Rule 17A of the Income Tax Rules, 1962 (“the Rules”, for short) before the Ld. CIT(E), seeking registration u/s 12AB of the Income Tax Act, 1961 (“the Act”, for short) on 15.03.2024. The said application was dismissed by the Ld. CIT(E) by observing as under: - “5. As per trust deed above are object, but no supporting documentary evidences have been filed related to charitable activities carried out, if any, as per object mentioned in the trust deed. As per income expenditure account filed for 31.03.2023 gross receipt shown at Rs 7,30,000/- from different head, and expenses amounting to Rs 2,02,74,000/- shown to have incurred on different head, but supporting documentary evidences have not been filed in support of its claim. Again a final opportunity was provided vide notice dated 20.09.2024 for compliance on 24.09.2024, to furnish the details of expenses incurred in the FY 2022-23, however assessee failed to file the same. A Perusal of material available on record, it is noticed that assessee failed to file bill and vouchers of expenditure incurred on charitable activities, if any, & details of evidences regarding activities as per object mentioned in the trust deed/memorandum of association. Therefore assessee failed to file any supporting documentary evidences with regard to incurred expenses on charitable activity. Assessee has also failed to file supporting documentary evidences with regard to commencement of charitable activities as per object of the trust. Therefore no verification of the object as per the trust deed with-the activities carried out, if any, could be made. Thus the genuineness of the activities, as per object of the trust deed, does not get established. Section 12AB makes it very clear that before granting registration under this section, the Commissioner has to satisfy himself about the genuineness of the activities of the trust or institution and also he has to verify that these activities are in consonance with the object of the trust or institution.
6. Further, assessee has failed to file audit report for A.Y. 2023-24.
7. As discussed above, the applicant has failed to file documentary evidences to enable me to satisfy about the genuineness& commencement of its charitable activities and to verify these activities are in consonance with its objects.
Page 3 of 4 8. Considering to the above facts, I am unable to arrive at the satisfaction about the charitable nature of activities. Hence, the application filed in Form No. 10AB for the registration u/s. 12AB of the I.T. Act, 1961, is hereby rejected, and proceedings for cancellation of provisional registration granted u/s 12AB dated 27.05.2021 No. AAICD1047K20206 is being initiated separately.” 3. Aggrieved against this, the assessee is in appeal before this Tribunal.
4. At the outset, the Ld. Counsel for the assessee contended that the authority below has not considered the evidences filed by the assessee and has incorrectly returned a finding that no evidence was filed in support of the activities. He drew our attention to the evidences filed before the Ld. CIT(E). He also contended that the Ld. CIT(E) considered these evidences regarding activities carried out by the assessee trust he would have not rejected the application. Therefore, he prayed that the order of the Ld. CIT(E) may be set aside and the Ld. CIT(E) be directed to grant registration u/s 12AB of the Act.
On the other hand, the Ld. CIT-DR opposed the submissions and supported the order of lower authorities and submitted that there is no infirmity in the order of the Ld. CIT(E).
We have heard rival submissions and perused the material available on record. The assessee has demonstrated that he had filed evidences related to the activity, it appears that these evidences escaped attention of the Ld. CIT(E). Therefore, to sub- serve the principles of natural justice we deem it proper and in the interest of justice to set aside the impugned order of the Ld. CIT(E) and restore the application along with evidences filed in the form of paper book herein and stated to be filed before the Ld. CIT(E) as well. The Ld. CIT(E) would re-consider the application Page 4 of 4 and decide the same in accordance with law after giving proper opportunity of being heard to the assessee. Grounds of appeal of the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 21/05/2025.