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Facts
The assessee filed two appeals against the Ld. CIT(E)'s orders dated 28-12-2024, which cancelled its applications for permanent registration under Section 12AB and exemption under Section 80G of the Income Tax Act, 1961. The Ld. CIT(E) rejected the applications due to concerns regarding the genuineness of the assessee's activities, non-compliance, lack of proper documentation, and alleged siphoning of income.
Held
The Tribunal noted that the assessee was ex-parte before the Ld. CIT(E), but had submitted comprehensive documents to the ITAT. To ensure a decision on merits and provide a fair opportunity, the Tribunal restored both appeals to the file of the Ld. CIT(E) for fresh adjudication. The Ld. CIT(E) was directed to consider the documents submitted to the ITAT and provide the assessee with another opportunity to be heard, with the expectation that the assessee would cooperate.
Key Issues
Whether the Ld. CIT(E) was justified in cancelling the assessee's applications for permanent registration under Section 12AB and exemption under Section 80G on grounds of non-genuineness of activities and non-compliance, without fully considering the documentation.
Sections Cited
12AB, 80G, 12A(1)(ac)(vi), 80G(5), 12AB(4), 12A(1)(ac)(iii), 12AA, 11AA, 10(23C), 11, 12, 2(15)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 229 & 220/JP/2025 u/s 12AB and 80G of the Act fu/kZkj.ko"kZ@AssessmentYear : 2025-26 Samaj Seva Sanstha cuke The CIT-Exemption, Vs. B-1, Officer Campus, Gate No. 4 Jaipur. Rajbhawan Civil Lines, P.W.D. Office Jaipur – 302 006 (Raj) LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABDTS 3382D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Shailesh Mantri, CA jktLo dh vksjls@Revenue by: Mrs. Alka Gautam, CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 04/06/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 23 /06/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M.
These are two appeals filed by the assessee against two different orders of the Ld.CIT (Exemption), Jaipur both dated 28-12-2024 passed under section 12AB and 80G of the Income Tax Act, 1961 respectively. The grounds of appeal raised by the assessee in both the appeals are as under:-
U/s 12AB of I.T. Act, 1961 ‘’That the ld. CIT(E), Jaipur has erred in facts and in law by cancelling the application u/s 12AB(1)(b)(ii)(B) for permanent registration and also canceling the provisional approval u/s 12A(1)(ac)(vi) of Income Tax Act, 1961. U/s 80G of I.T. Act, 1961 ‘’That the ld. CIT(E), Jaipur has erred in facts and in law by cancelling the application u/s 80G(5) for permanent registration and also canceling the provisional approval under clause (iv) of the second proviso to sub section (5) of Section 80G of the Income Tax Act, 1961 2.1 Apropos to the ground so raised by the assessee in the ld. CIT(E) rejected the assessee’s claim of registration u/s 12AB of the Act by observing as under:- ‘’5. Please submit details of all activities undertaken by you to prove the genuineness of the activities of the trust in absence of which your activities could not ascertained genuine and your application may be rejected on non-genuineness and non-compliance.
Many other objects are having potential to be used for commercial. No clause in deed which say activities would be free or at cost, in above of same such objects can be exploited for business purpose. Why application should not be rejected.
In view of above facts, you are requested to please explain as to why your application for registration u/s 4A may not be rejected? Thereafter, a reminder/opportunity letter was also given to the applicant vide dated 11.12.2024 wherein hearing of case was fixed on 16.12.2024. In response to above, the applicant has furnished its reply and furnished only trust deed, trustee details, RPT registration, final accounts for F.Y. 2023-24, bank statements for the period of 09.11.2023 to 30.03.2024, NOC for 13(3) persons, copy of provisional registration, two bills of chana dal purchase, ITR acknowledgment. The reply of the assessee is examined thoroughly and not found tenable. It is also worthwhile to mention here that the applicant has provided three opportunities, but the applicant has not able to prove the genuineness of activities of the trust, whereas this office original questionnaire given vide dated 19.07.2024 to till dated more than 3 months has over but the applicant has not furnished complete details to proving genuineness of the trust. Hence, it is clear that the activities of the applicant trust are not genuine and conclusion drawn from above is under:-
1.
1. The applicant trust has claimed huge salary of Rs. 4,56 000/- in F.Y. 2023-24 to Sh. Subhash Chand, Sh. Dinesh Chand & Pooja Dayama. It is pertinent to mention here that in the F.Y. 2023- 24, the applicant not organized any in the I/E account for only work shown i.e. distribution of food during mela, women day celebration (no proof) but shown 50% expenses on which this huge salary has been paid and also the applicant trust not furnished details of work done by these persons. Thus, its claim of huge salary payment to related persons without explain the services provided these persons and siphoning off the income of the trust to the related persons.
2. Only one work of Khatu Shyam Mela Sewa Exp. carried out, but claimed salary of Rs. 4,56,000/- in FY 2023-24 is not justifiable and no justification has been given by the applicant.
3. No detail notes on charitable activities carried out by the applicant trust in F.Y 2022-23 to till date.
4. No proof of bills for other year, the assessee has submitted bills & vouchers for 4. F.Y 2021-22 only, 5. No ledger accounts.
6. The applicant has not furnished proper bills & vouchers, proof of women's day celebration exp. etc to prove genuineness of the trust. It is amply clear from the facts of the case and above discussion that, the assessee trust is retrieving salary expenses of the trust for their own personal use and is not using the same for charitable purposes. The applicant has also not submitted any evidence of the retrieved salary expenses being used for charitable purposes. Therefore, it is concluded that the trust is in specified violation by giving benefit to the specified persons and not applying income of trust for the purpose other than objects of the trust, thus it is specified violation under clause (a) of Explanation below of section 12AB(4) of the IT Act, 1961 therefore, the case falls out of the scope of registration u/s 12A. Hence from the above it is clear that the activities are not verifiable and it could be determined whether the applicant is genuinely carrying out charitable activity and it's cannot be ascertained that activities are as per objects. Therefore, the applicant claim of registration u/s 12AB is also liable to be rejected on ground of not proving its genuineness of activity.
3. In view of above discussion applicant's application for registration u/s 12AB is liable to be rejected and thus being rejected on following grounds:-
Non-Genuineness of activities.
04. Further 12A(1)(ac)(iii) of the Income Tax Act, 1961 also state that if CIT is not satisfied has to pass order rejecting such application and also cancelling its earlier registration. Thus, it is clarified that applicant's provisional registration under clause (vi) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961 dated 08.09.2022 is also being cancelled. Further assessee has failed to give proper justification for regularisation of provisional registration, thus with this order provisional registration is also lapsed and cancelled.’’ 2.2 Apropos to the ground so raised by the assessee in the ld. CIT(E) rejected the assessee’s claim of exemption u/s 80G of the Act by observing as under:- ‘’02. Approval u/s 80G cannot be granted without registration u/s 12AB 2.1. As per rule 11AA of the Income Tax Rule, 1962, the registration u/s 12A/12AB or notification u/s 10(23C) is a precondition for granting approval u/s 80G of the IT Act, 1961. Vide this office order No. ITBA/EXM/F/EXM43/2024-25/1071652908(1) dated 28.12.2024. Also, during the present proceedings, the applicant has also failed to furnish any replies, thus, genuineness of activities and all the above issues remains same. Thus, genuineness of activities and all the issues remain same. Thus, the claim of the applicant u/s 80G is liable to rejected on this issue on following grounds:-
Non-Genuineness of activities. In view of above discussion, the application in form No. 10AB seeking exemption u/s 80G is liable to be rejected.
03. In view of above discussion assessee's claim of approval u/s 80G is liable to be rejected and thus being rejected on following grounds - Approval u/s 80G cannot be granted without registration u/s 12AB.
04. Further 2nd proviso to 80G(5) also state that if CIT is not satisfied has to pass order rejecting such application and also cancelling its earlier approval. Thus, it is clarified that applicant provisional approval under clause (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act. 1961 dated 14.09.2022 is also being cancelled. Further assessee has failed to give proper justification for regularisation of provisional approval, thus with this order provisional approval is also lapsed and cancelled.’’ 2.3 During the course of hearing, the ld. AR of the assessee mainly submitted that the assessee the ld. CIT(E) has not considered the complete documents and details of activity carried out by the assessee and cancelled the registration and the ld. CIT(E) did not raise any objection in respect of the objects of the assessee sanstha. The detailed written submission as made by the ld.AR of the assessee sanstha before the Bench is reproduced as under:- 1. The assessee is registered society incorporated on 22/03/2013, registered with sub registrar society. The assessee is engaged in the activities for benefit of general public at large. The objects of the trust are as under (PB page no 3-5):-
3.01. To provide education for all, make arrangements for the promotion of non-formal and formal primary, secondary, and higher education, and to conduct basic education for the underprivileged sections. 3.02. Ensuring health, education, and medical services for all, especially for the deprived sections in urban and rural areas, and conducting awareness programs and other initiatives related to family welfare, AIDS prevention, immunization, and maternal and child health. 3.03. To coordinate programs and projects related to agriculture, horticulture, forestry, conservation and management of natural resources, environment, science and technology, heritage, tourism, religious sites, national monuments, handicrafts, exhibitions, arts, culture, information, technology, and urban and rural development. 3.04. To provide protection to abandoned children, women, the elderly, and differently- abled groups, and to manage child care homes, old age homes, women's shelters, and rehabilitation centers. 3.05. To work on all activities related to children, including child labour, child marriage, child trafficking, rehabilitation, the POCSO Act, child abuse, education, health, and missing children, and to manage programs and projects related to the protection of child rights. 3.06. Development, protection, and rehabilitation of street children and working children 3.07. To organize mass marriage ceremoniex 3.08. Organize programs and activities related to women's empowerment, gender equality, national unity, cultural values, prevention of domestic violence, dowry female foeticide, superstition, drug addiction, etc., and awareness campaigns. 3.09. To create self-reliance and employment opportunities for women affected by violence, help them establish their own small-scale enterprises, provide necessary support, and ensure market ability for their products. Provide them platforms in national and international exhibitions fairs. Provide information regarding participation in such exhibitions/ fairs 3.10. Promote the use of non-conventional energy sources, green energy, herbal products, eco-friendly materials, and programs/policies related to environmental protection and climate change, especially in rural and backward areas 3.11 Organize training and production camps for widowed and destitute women to make them self-reliant by helping them in production, marketing, and management of goods and services. Provide necessary financial aid and support from banks or other financial institutions for setting up such small-scale businesses. 3.12 Coordinate with government/state institutions and social service organizations to run special programs for the rehabilitation and protection of women and child victims in conflict-affected areas. 3.13. Organize awareness campaigns on the harmful consequences of child marriage, child labour, and dowry. 3.14. Organize awareness programs to prevent exploitation of women and girls from scheduled castes and tribes and other marginalized groups, especially on issues like trafficking and migration. 3.15. Conducting public awareness programs on alcohol prohibition and drug de- addiction. 3.16. Listening to the problems of victimized women, providing cowrwelling, and if the issue is not resolved through counselling arranging for necessary police or legal action as required. 3.17 Organize programs addressing problems faced by women prisoners, such as domestic violence, lack of legal and, and make necessary recommendations to the police/judiciary. 3.18. Utilizing the Member of Parliament and Member of Legislative Assembly fund for the development of the respective villages and towns. 3.19. Participate in national and international exhibitions and fairs to showcase regional cultural traditions Organize seminars, rallies, and competitions on important social and political issues on occasions like Women's Day 3.20. Raise awareness and campaign against air pollution and noise pollution 3.21. With the help of the Public Relations Department media press, disseminate success stories of exemplary women to the public along with awareness messages. 3.22. Conducting public awareness campaigns and organizing workshops to prevent rising digital cyber-crime 3.23. To encourage talented students, important persons institutions of the society by honouring them and to make efforts to increase the educational level of the society. To encourage employment in the form of training, guidance and financial assistance with the help of the society for skill development of the youth 3.24. To conduct programmes and projects for the overall upliftment of tribal’s living in tribal areas. 3.25. To encourage dense plantation for clean environment, to implement various schemes, to acquire the vacant lands, pastures of the gram panchayats and to plant trees on them and to work for the development of the society: 3.26. Starting new Gaushalas, upgrading various working Gaushalas, providing welfare assistance and fodder and water to animals and birds. 3.27. Participating in international seminars, fairs, competitions, cultural, social and religious programmes and inviting the citizens of Bada and taking the people of this place along to connect them with the culture. 3.28. To work for the welfare and employment of the members of the military, paramilitary, home guards and other military services. 3.29. In collaboration with Panchayati Raj, Devasthan Education, Transport, Police, Indira Gandhi Panchayati Raj, Rural Development Institute, Medical Women and Child Development Department and all other government departments, to create awareness among the general public, give training. conduct all schemes and other programs and plans providing employment. 3.30. Making people aware about road safety, providing information about road safety signs, providing various types of security on national highways, state highways and expressways, conducting seminars and campaigns for following rules of road travel, decorating both sides of roads, crossings, national highways. expressways etc. and putting up hoardings of public welfare notices. 3.31. To receive and conduct arry plans, schemes, seminars, fairs, exhibitions etc. issued by the Government of India, NITI Aayog, State Governments, Academies, Commissions, departments of public establishments etc 3.32. Organizing programmes and events for any specific groups like youth women, children, senior citizens, elderly etc. based on various issues. 3.33. To develop networking with other organizations, governmental and non- governmental agencies working with similar objectives and for the same target groups 3.34. To manage/acquire other institutions with similar objectives and to look after their assets.
3.35. Organizing and participating in programs in collaboration with organizations like Bharat Scout Guide, Redcross, National Service Scheme, National Cadet Corps, Civil Defence etc.
The assessee has filed an application for permanent registration u/s 12A & 80 G of the income tax act. The assessee has submitted the complete details of the activity along with papers in the reply dated 16/12/2024 in which assessee has submitted documents related to salary and supporting photos and evidence of activities carried out by the assessee along with ledgers, bills and vouchers through which the activities can be verifiable. The CIT(E), Jaipur has cancelled the registration on the ground of Non- Genuineness of Activities. In respect of Genuineness of activities, it is to submit that the CIT(E) has denied the registration considering the points that the voucher ledgers are not provided without considering the facts that the evidence of activity was submitted like details of major charitable activities with photos, Bills, Vouchers, Ledgers, Bank statement etc.
The CIT(E) has not considered the complete documents and details of activity carried out by the assessee and cancelled the registration. Section 12AA of the act deals with the registration process of Trust or Institutions to claim the advantage under sections 11 and 12 of the Act. It mandates the commissioner to satisfy himself for the objects of the trust or institution and the genuineness of its activities and grant a registration on the condition if he is pleased, whereas in the case the CIT(E) has neither considered the activities being conducted by the assessee not raised any objection in respect of objects of the assessee. The CIT(E) has examined the application as like assessment. It is further submitted that the Hon'ble Supreme Court has decided that, while granting the registration u/s 12A, the object of the trust should be examined that, the activity proposed by the trust is genuine or charitable or not reliance can be placed on following decisions:- (i) Ananda Social and Educational Trust vs. Commissioner of Income Tax and Anr. reported in [(2020) 17 SCC 254] The purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust, that is equally genuine, Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term 'activities' in the provision includes "proposed activities. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust." (ii) CIT(E) Vs INTERNATIONAL HEALTH CARE EDUCATION AND RESEARCH INSTITUTE (SC-SPECIAL LEAVE PETITION (CIVIL) Diary No. 19528/2018) order dt. 11/02/2025. Hon'ble Supreme Court held that “- "To the aforesaid extent there is no problem. We may only say that mere registration under Section 12-AA automatically does not entitle any charitable trust to claim exemption under Sections 10 and 11 respectively of the Act, 1961. When it return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed genuinely or not. If the assessing officer is not convinced it is always open for him to decline grant of exemption.’’ Considering the above it is requested, that the all activities executed by the Trust as well as objects of the trust are charitable as per section 2(15) of income Tax act and therefore the registration u/s 12 AA and 80 G of Income Tax Act should be granted and oblige.’’ Further, the ld. AR of the assessee sanstha has filed the following documents to support his case. S.N. Particulars Page No.
Form No. 10AC 1-2 2. Society Deed 3-11 3. Reply submitted before CIT(E),Jaipur 12-16 4. Details of major charitable activities 17-70 5. Project Report ‘’Mission Tehsil-392’’ A Project 71-90 under State Govt. Scheme for Disabled persons 6. Bills,Vouchers and Ledgers 91-275 7. Ledger of expenses 276-318 8. Bank Statements 319-339 9. Details of donation received 340-343 10. Details of expenses above Rs.10,000 344-345 11. Registration under RPT Act 346 12. Rent Deed 347-353 13. Provisional Financial Statements & Audit Report 354-363 2.4 On the other hand, the ld.DR supported the orders of the ld. CIT(E). 2.5 We have heard both the parties and perused the materials available on record. It is an admitted fact that the assessee is ex-parte before the ld. CIT(E). Therefore, the assessee could not put forth its defence in accordance with the requirement of the ld.CIT(E). It was the bounded duty of the assessee sanstha to appear before the statutory authorities as and when called for. It is noticed that various opportunities were provided to the assessee for settling the issue but the assessee remained lethargic and unserious in pursuing its. However, the Bench is of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Hence, the matter relating to both the appeals are restored to the file of the ld. CIT(E) to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. It is also pertinent to mention that the ld. AR of the assessee has filed the submissions as well as the paper book as mentioned above which should be also be taken into consideration by the ld. CIT(E) while disposing off the appeals of the assessee in relation to Section 12AB and 80G of the Act. The assessee is also directed to advance the documents as required by the ld. CIT(E) to resolve the issues (supra). Thus both the appeals of the assessee are allowed for statistical purposes. 2.6 Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by ld. CIT(E) independently in accordance with law. 3.0 In the result, both the appeals of the assesee are allowed for statistical purposes Order pronounced in the open court on 23 /06/2025.
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