SPARSHPRATISHTHAN,THANE vs. COMMISSIONER OF INCOME-TAX (EXEMPTION), PUNE

This appeal by the assessee against the order dated 01-10-2020 passed by the Commissioner of Income Tax (Exemption), Pune [„CIT(Exemption)‟].

We note that this appeal was filed with a delay of 14 days. After hearing ld. DR, we find that the reasons stated by the assessee are bonafide which really prevented the assessee to file the present appeal in time. Therefore, the delay of 14 days are condoned.

We find no representation on behalf of the assessee nor any application filed seeking adjournment. Thus, the assessee called absent and set ex-parte. Therefore, we proceed to dispose of the appeal by hearing the ld. DR and perusing the material available on record.

The assessee raised four grounds amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in rejecting the application filed under Form No. 10A seeking registration u/s. 12AA of the Act in the facts and circumstances of the case.

Heard ld. DR and perused the material available on record. We note that the applicant was registered under Bombay Public Trust Act, 1950 and filed an online application in Form No. 10A seeing registration u/s. 12AA of the Act under the category of Charitable trust/institution. Considering the same, the CIT(Exemption) issued letter through ITBA portal requesting to upload certain other information/clarification in order to process the said application. We note that that the CIT(Exemption) acknowledged compliances by the assessee to the said notice vide Para No. 2 of the impugned order. According to the CIT(Exemption) that the assessee has shown huge amount of surplus for F.Ys. 2016-17 and 2017- 18 and held it is an obligatory on the part of the assessee to file Income-tax Returns, as the income exceeds the maximum amount which is not chargeable to Income-tax Act. Further, he held the assessee did not file taxes on the above surplus. According to him, the assessee did not satisfy about the objects of the trust/institution and its genuineness of the activities. The CIT(Exemption) rejected the application seeking registration u/s. 12AA of the Act by holding non-payment of tax do not qualify as genuine as it is not honest. The assessee filed written submissions before this Tribunal vide letter dated 21-07-2021 wherein we note that the assessee contends that the CIT(Exemption) has not called for copy of return of income and without seeking the same wrongly believed that the assessee trust has not filed income tax return and not paid tax due. We note that vie Para No. 4 of written submissions that the assessee stated to have filed Income Tax Return for F.Y. 2016-17 on 31-03-2018 vide Acknowledgement No. 583827180310318 and paid taxes of Rs.6,48,222/-. Further, in F.Y. 2017-18 Income Tax Return was filed on 30-03-2019 vide Acknowledgement No. 449005001300319 and paid taxes of Rs.13,69,687/- . We note that as it appears the CIT(Exemption) did not call for this information as the Income Tax Return for both F.Ys. filed prior to the date of impugned order.

Further, the contention of the assessee is that the procedure of registration envisaged in Section 12AA of the Act prescribes that while granting or rejecting the application, the CIT(Exemption) is required to see about the objects of the trust or institution and genuineness of the activities. Further, for non-filing of Return of Income and non-payment of undisputed tax cannot be said to be the activities of the trust are not genuine. The assessee placed reliance on many case laws which were listed vide Para no. 7 of the written submissions, to contend that the CIT(Exemption) is only entitled to see whether the objects of the trust are charitable in nature and whether its activities are genuine or not.

Further, we note from the impugned order as rightly pointed by the ld. AR that the CIT(Exemption) did not point out the activities of the assessee are non-genuine and he rejected only on the ground that the assessee did not file return of income and not paid tax. This Tribunal in the case of Sant Zolebaba Sansthan Chikhali held the issue of grant of registration and the assessment of income of trust are distinct and separate, by placing reliance in the case of Ananda Social and Educational Trust Vs. CIT reported in 272 Taxman 7 of Hon‟ble Supreme Court which held the mandate of the provisions u/s. 12AA of the Act is to examine whether objects of the trust are charitable in nature or not and the activities of the trust are genuine, but however, in the present case as discussed above the CIT(Exemption) did not point out anything against the objects and genuineness of the activities of the trust but however rejected the registration on the basis of incorrect finding that no returns of income filed and no taxes were paid. We find that it is a settled principle that the grant of registration and the assessment proceedings or exemption u/s. 11 of the Act is separate and distinct. The process of registration is not on occasion to give a finding whether the assessee filed returns of income and paid taxes or not. These issues cannot be examined during the process of registration u/s. 12AA of the Act. Therefore, in our opinion, the order of CIT(Exemption) in denying the registration u/s. 12AA of the Act cannot be sustained and the impugned order is set aside.

In view of the above, the assessee is entitled to have registration u/s. 12AA of the Act in terms of decision of Hon‟ble Supreme Court in the case of Ananda Social and Educational Trust (supra) as relied on by this Tribunal in the case of Sant Zolebaba Sansthan Chikhali. Accordingly, we direct the CIT(Exemption) to grant registration u/s. 12AA of the Act to the assessee from the date of application.

In the result, the appeal of assessee is allowed.