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Facts
The assessee applied for permanent registration under Section 12AB of the Income Tax Act, 1961. The CIT(E) rejected the application on grounds of non-registration under the Rajasthan Public Trust Act, 1959, non-genuineness of activities, and issues with the time limit for filing the application for 80G approval.
Held
The Tribunal held that registration under the Rajasthan Public Trust Act, 1959, is not mandatory for obtaining registration under Section 12AB of the Income Tax Act. It also found that the activities of the assessee were genuine and that the CIT(E) had ignored the documents submitted by the assessee.
Key Issues
Whether registration under the Rajasthan Public Trust Act, 1959 is a prerequisite for registration under Section 12AB of the Income Tax Act, and whether the assessee's activities were genuine and properly documented.
Sections Cited
12AB, 12A(1)(ac)(ii), 12A(1)(ac)(vi), 11(4A), 80G(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “A”, JAIPUR
Before: SHRI GAGAN GOYAL & SHRI NARINDER KUMAR
This appeal by the assessee is directed against the order of CIT (E), Jaipur dated 25.04.2024 passed u/s. 12AB (1) (b) (ii) (B) of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has raised the following grounds of appeal: -
The Ld. CIT(E) has erred on facts and in law in rejecting the application filed by the assessee u/s. 12A(1)(ac)(iii) in Form No.10AB seeking registration u/s. 12AB of IT Act, 1961 on the ground that (i) assessee is not registered under Rajasthan Public Trust Act, 1959 (ii) activities of assessee are not genuine and (iii) application filed in Form No.10AB for approval u/s. 80G(5) is not within the time limit. It has further erred in not considering the reply furnished on 17.04.2024 and 18.04.2024 in response to notice dt. 05.04.2024 & 16.04.2024 while rejecting the application of assessee.
2. The Ld. CIT(E) has further erred on facts and in law in cancelling the provisional registration granted by CIT u/s. 12A (1) (ac) (vi) of IT Act, 1961. 3. The appellant craves to alter, amend and modify any ground of appeal.
4. Necessary cost be awarded to the assessee.
The brief facts of the case are that the assessee applied for permanent registration in Form No. 10AB u/s. 12A (1) (ac) (ii) of the Act vide application dated: 28.10.2023, as the assessee is already provisionally registered u/s. 12A (1) (ac) (vi) of the Act vide order dated: 19.12.2022. Application mentioned (supra) filed by the assessee was rejected on the following grounds as under: A). Non-Registration with RPT Act, 1959; B). Non-Genuineness of Activities and Commencement of Activities. C).
3. The assessee being aggrieved with the same preferred the present appeal before us. Now the grounds of rejection will be dealt with as under:
A). Non-Registration with RPT Act, 1959. As far as the issue relating to Non- Registration under the Rajasthan Public Trust Act, 1959 is concerned, there is a consistent view of this bench that the same is not required. Detailed discussion and findings on this issue is already there in the case of APJ Abdul Kalam Education and Welfare Trust vs. CIT(E)[2025] 171 taxmann.com 569 (Jaipur - Trib.), wherein the undersigned with Ld. Judicial Member held as under:
The Commissioner (Exemption) is duty bound to establish that how the compliance with RPT Act, 1959 is material for the purpose of achieving its objects. Both the statutes, i.e. The Income Tax Act, 1961 and RPT Act, 1959 have to be read together. [Para 5] ■ There is no law which is required to be complied with for achieving the objects of the assessee trust. Section 17 of the Rajasthan Public Trust Act, 1959 requires that trustees of the trust have to apply for registration of a public trust, however, there is no section in the RPT Act, 1959 which prohibits a trust to carry out its objects if it is not registered under the RPT Act, 1959. It is opined that both the statutes have their own provisions and implications and none of them have overriding effect. Even if, the assessee trust is not registered with the RPT Act, 1959 and the concerned officials under the RPT Act, 1959 deems it necessary to get the entity registered under section 17 of the RPT Act, 1959, appropriate action can be taken against the trustees of the trust. But this issue can’t be a hurdle in getting registration before the Income Tax Department under section 12AB. [Para 8] ■ In view of discussion, there is no any force in the findings of the Commissioner (Exemption) while holding registration application untenable in the absence of registration under the RPT Act, 1959. [Para 9]
In view of the above, the requirement of getting registration as per Rajasthan Public Trust Act, 1959 is not mandatory and the assessee is not required to furnish any document on the same. This objection of the Ld. CIT (E), Jaipur is set-aside.
As far as the issue pertaining to the genuineness of activities is concerned, to verify the same the Ld. CIT(E), Jaipur issued query notice to the assessee vide dated: 05.04.2024 and 16.04.2024, against these notices the assessee filed its replies vide letter dated: 17.04.2024 and 18.04.2024 (copy enclosed before us vide page no. 58-72 of the paper book). But the Ld. CIT (E), Jaipur while dealing with the issue of the assessee simply ignored the same and there is no reference of the same in his order. It is observed that the paper book submitted before us, the assessee has furnished all the documents including Bills & Vouchers of expenses, details of salary expenses and details of fee charged. These are the information which was required to be furnished by the assessee.
Further, as pointed out by the Ld. CIT (E), Jaipur that no separate books of accounts are being maintained for running of school bus is also not tenable as this activity is inextricably linked to the main activity of the institution, i.e. running an education institution, hence the same is not covered by the provisions of section 11(4A) of the Act. In view of the above discussion, this objection of the Ld. CIT (E), Jaipur is also not tenable and liable to be rejected.
The last objection pertains to commencement of activities. It is quite surprising that how such a contradictory objection can be taken by a senior authority, i.e. on the one hand in his own order he is commenting on the financials of the assessee, on the other hand he is challenging the commencement of activities. The order of the Ld. CIT(E), Jaipur is full of contradictions, e.g. in para 4.2 he is discussing about approval u/s. 80G (5) of the Act, whereas the assessee never ever applied or claimed the same. In view of this, the third and last objection is also not tenable on the facts and law applicable to the assessee.
In view of the above all the objections raised by the Ld. CIT (E), Jaipur is set- aside and grounds raised by the assessee are allowed and the Ld. CIT (E), Jaipur is directed to grant registration to the assessee on the application filed.
In the result, the appeal of the assessee is allowed.
The Order is pronounced in the open court on the 28th day of April 2025.