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Facts
The assessee trust filed an appeal against the order rejecting its application for registration under Section 12AB of the Income Tax Act, 1961. The rejection was based on grounds including non-compliance with the Rajasthan Public Trust Act, genuineness of activities, and restricted investments. The appeal was filed with a significant delay, for which the assessee sought condonation.
Held
The Tribunal condoned the delay in filing the appeal, subject to costs, considering that the trust was incorporated for charitable purposes. However, it was noted that the grounds for rejection, particularly regarding non-registration under the RPT Act, no longer survived as the trust was subsequently registered. The Tribunal also noted that regarding genuineness of activities and investments, the assessee needed to be given a reasonable opportunity to present its case.
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the grounds for rejection of registration under Section 12AB, including non-compliance with RPT Act and genuineness of activities, were valid.
Sections Cited
12AB, 11(1)(a), 11(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B-Bench” JAIPUR
Before: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM
vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .
The above captioned appeal came to be presented on 20.02.2025, while challenging order dated 23.03.2024, passed by Learned CIT(E), Jaipur. Vide impugned order, application presented by the applicant trust seeking its registration u/s 12AB of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), came to be rejected, on the following three grounds:- Rajasthan Public Trust Act, 1959.
Tulsibai Motiram Girdhar Educational Trust vs. CIT(E) Genuineness of activities and non compliance. Restricted Investments.
2. The Registry noticed that the appeal was filed 265 days, after prescribed period of limitation. In this regard, the applicant presented an application seeking condonation of delay.
3. Firstly, Ld. AR for the appellant-applicant put forth his submissions on the point of condonation of delay.
The ground put forth seeking condonation of delay is that the appeal challenging the impugned order could not be filed upto 22.05.2024 as the representative of the trust was under bona fide belief that fresh application seeking registration was to be filed after getting itself registered under RPT Act, 1959, but, subsequently, it was advised that there was no provision for filing of fresh application seeking registration, and that is how, the appeal came to be presented after a delay of 265 days. Ld. AR has submitted that taking into consideration the affidavit of Smt. Kiran Katoch, Chairperson of the trust, delay in filing of the appeal may be condoned.
Having gone through the application and the affidavit of the Chairperson of the appellant trust, we do not find any averment therein to suggest as to when the representative or the Chairperson of the applicant Tulsibai Motiram Girdhar Educational Trust vs. CIT(E) contacted any consultant or Practitioner or Advocate to seek proper legal advice, and as to when she was advised about filing of present appeal.
From the written submissions put forth in the course of arguments, it transpires application seeking registration of the trust under RPT Act, 1959 came to be filed on 09.03.2024 i.e. even before passing of the impugned order. This goes to suggest that the representative of the applicant had been apprised of the said requirement of registration of the trust under RPT Act, 1959, even during pendency of the application before Learned CIT(E). As regards proper legal advice, the Chairperson of the applicant trust has nowhere submitted as to when the concerned representative/practitioner was contacted, and as to when the proper legal advice was provided for filing of this appeal, instead of going for fresh application seeking registration under section 12 AB of the Act, but, taking into consideration that the applicant Trust has been incorporated for charitable purpose as claimed, we deem it a fit case to condone delay in filing of the appeal, but subject to costs. Having regard to all the facts and circumstances, applicant is burdened with cost of Rs. 1,500/-. Costs to be deposited by the applicant in “Prime Minister’s National Relief Fund”.
Tulsibai Motiram Girdhar Educational Trust vs. CIT(E) The application seeking condonation of delay is disposed of accordingly. Arguments have been advanced on the appeal today itself. Non-Registration of the appellant under RPT Act, 1959.
This is one of the grounds made basis for rejection of prayer for registration of the Trust under section 12 AB of the Act. It may be mentioned here that Co-ordinate Bench ITAT, Jaipur has held in APJ Abdul Kalam Education and Welfare Trust vs. CIT(E) decided on 15.01.2025 that for the purposes of registration of such institutions, u/s 12AB of the Act, registration under RPT Act, 1959 is not one of the essential requirements.
Even otherwise, in the course of arguments, Ld. AR for the appellant has pointed out that in the meanwhile the appellant trust has got itself registered under RPT Act, 1959. In this regard, an application under Rule 29 of Income Tax (Appellate Tribunal ) Rules has been made part of the paper book presented on 08.05.2025.
The fact remains that the appellant is stated to have got itself registered under RPT Act, 1959 w.e.f. 28.03.2025. Accordingly, said ground of rejection raised by Learned CIT(E) does not survive.
Tulsibai Motiram Girdhar Educational Trust vs. CIT(E) Genuineness of activities and restricted investments 10. In para 3 of the impugned order, Learned CIT(E) specified therein non compliance on the part of the applicant as it failed to furnish following details:- “1. The applicant has not furnished the details of activity like to whom scholarship given thus, the same remains unproved.
In order to verify the genuineness of activity, the applicant was asked to furnish bank statement. However, the applicant has not furnished the same. Thus, the expenses are unverified and activities do not seem genuine.
The applicant has made donation to DAV & SOS Children's Villages of India but not furnished any proof that donation is made as per the objects of the trust it is to verify whether donation given is utilized as per the objects of the applicant trust or for other purpose, beyond the objects of the applicant trust. In order to verify whether application of income is as per the objects of the assessee trust, it was asked specifically vide SCN dated 27.02.2024, to furnish deed, 12A/ 80G status of DAV & SOS Childeren's Village of India. However, in response no submission/reply furnished by the applicant In absence of any reply/document it is not clear that the applicant has applied its income for the purpose of objects of the trust. It is not ensured that donation is given for the objects for which donor trust is created. Section 11(1)(a) of the I.T. Act, 1961 makes it clear that the income derived from property held under trust wholly for charitable and religious purposes, to the extent to which such income is applied to such purposes in India, is excluded. Here, in the present case it is not clear that that donation given is for same purpose for which donor trust is created. From the material available on record, it is established that the above application of income is beyond its objects. Therefore, the activities carried out by the applicant are not as per the objects of the deed. This application of income of Tulsibai Motiram Girdhar Educational Trust vs. CIT(E) trust comes under the specified violation as per the Explanation (a) of the Section 12AB(4) of the IT. Act. 1961. Hence, the applicant has failed to justify the genuineness of activities and thus falls out of the scope of registration u/s 12AB of the Act.”
Learned CIT(E) has observed in the impugned order that vide notice dated 27.02.2024, the applicant was asked to prove that investments made in various ICICI Funds were as per section 11(5) of the Act, but the applicant did not furnish any reply to the said notice. Ld. AR for the appellant has pointed out that in reply to the notice dated 27.02.2024, the applicant submitted its reply dated 09.03.2024, copy whereof is available at pages 63 to 67 of the paper book submitted here.