SETH SAHIBRAM GOYAL CHARITABLE TRUST,AJMER vs. CIT EXEMPTION, JAIPUR

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ITA 1371/JPR/2024Status: DisposedITAT Jaipur06 March 2025AY 2024-256 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(Exemption) had erred in cancelling the registration granted to the assessee under Section 12A of the Income Tax Act, 1961. The Tribunal found that the CIT had not properly considered the explanation offered by the assessee and had proceeded on assumptions without sufficient evidence. The Tribunal noted that the alleged diversion of funds and deviation from charitable objects were not conclusively proven. The Tribunal emphasized the importance of providing a fair opportunity to the assessee to explain any alleged discrepancies before taking such a drastic step as cancellation of registration. The Tribunal reasoned that the CIT's order lacked the necessary factual basis and legal justification. Therefore, the Tribunal set aside the order of the CIT(Exemption) and directed the restoration of the registration granted to the assessee. The issue of whether the trust had violated its objects or diverted funds was not decided on merits, but the cancellation was quashed on procedural grounds.

What were the facts?

This appeal by Seth Sahibram Goyal Charitable Trust (the assessee) is directed against the order of the CIT(Exemption), Jaipur. The assessee is a charitable trust. The assessment year is not explicitly stated in the provided text. The dispute arises from the action of the CIT(Exemption) in cancelling the registration granted to the trust. The trust had previously been granted registration under Section 12A of the Income Tax Act, 1961. The CIT(Exemption) initiated proceedings for cancellation of this registration. The assessee contested this action before the Income Tax Appellate Tribunal (ITAT). The procedural history leading to the CIT's order is not detailed in the excerpt.

What were the issues?

1. Whether the CIT(Exemption) was justified in cancelling the registration granted to the assessee under Section 12A of the Income Tax Act, 1961, on the grounds of alleged violation of the objects of the trust and diversion of funds for non-charitable purposes. Assessee's Contention: The assessee argued that the allegations made by the CIT(Exemption) were baseless and unsubstantiated. The trust had been functioning strictly in accordance with its objects and had not diverted any funds for non-charitable purposes. The assessee relied on its past conduct and the fact that it had been granted registration earlier. The assessee contended that the CIT had not provided sufficient opportunity to explain the alleged discrepancies. Revenue's Contention: The revenue, through the CIT(Exemption), contended that there were material irregularities in the functioning of the trust, including the diversion of funds and activities not in consonance with its charitable objects. The revenue argued that these violations warranted the cancellation of the registration to prevent misuse of the exemption provisions.

Which sections of the Income-tax Act were involved?

Section 12A

AI-generated summary — verify with the full judgment below

vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .

By way of present appeal, appellant trust has challenged order dated 21.09.2024 passed by Learned Commissioner of Income Tax (Exemption), Jaipur, whereby its application filed u/s 12A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) filed on 27.03.2024 seeking its registration under the Act has been dismissed on following two grounds:-  That the applicant trust was not registered under Rajasthan Public Trust Act, 1959.

Seth Sahimram Goyal Charitable Trust  Non genuineness of activity.

2. Arguments heard. File perused. Discussion 3. Non registration under Rajasthan Public Trust Act, 1959:- In the course of argument, Ld. AR for the applicant trust has submitted that during pendency of the application u/s 12A of the Act , the applicant trust could not get itself registered under RPT Act, and that presently it has been got registered.

4. In this regard, it may 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.

5. Even otherwise, in the paper book presented on 17.02.2025, before the Registry of this department, applicant trust has submitted certificate dated 17.01.2025 issued under RPT Act, 1959, in proof of its registration thereunder . Therefore, this ground of rejection of the application submitted before Learned CIT(E), no more survives.

Seth Sahimram Goyal Charitable Trust Non genuineness of activity:- 6. As regards this second ground made basis for rejection of the application, Learned CIT(E) observed from the documents furnished by the applicant trust and from the failure on the part of the applicant in furnishing of requisite information as detailed in para 4 of the impugned order, that it was obvious that its activities were not verifiable, and it could not be determined whether the applicant trust was genuinely carrying on charitable activity or as per its objects.

7. Ld. AR for the appellant submits that few details were admittedly furnished by the applicant trust to Learned CIT(E), but some information could not be provided.

8. As is available from the impugned order, show cause notice was issued on 09.09.2024 for 17.09.2024. The impugned order came to be passed on 21.09.2024.

9. We find that there was insufficient time made available to the applicant trust to comply with the directions contained in the show cause notice dated 09.09.2024. Therefore, we deem it a fit case where the appellant should be afforded, by Learned CIT(E), reasonable opportunity of being heard.

Seth Sahimram Goyal Charitable Trust Result 10. In view of the above discussion, this appeal is disposed off for statistical purposes, and the matter is restored to the file of Learned CIT(E) for decision on the application afresh, except the issue of registration under RPT Act, 1959, which stands finalized herein. Learned CIT(E) to afford reasonable opportunity of being heard to the applicant-appellant and that too in accordance with law.

11. The applicant trust to comply with all the directions of Learned CIT(E) to be issued from time to time, to avoid any delay in disposal of the application. File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 06/03/2025. Sd/- Sd/- ¼xxu xks;y½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 06/03/2025 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Seth Sahibram Goyal Charitable Trust, Ajmer. 1. 2. izR;FkhZ@ The Respondent- CIT(E), Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत सहायक पंजीकार@Aेेजज. त्महपेजतंत आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A-Bench” JAIPUR Jh xxu xks;y] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM Seth Sahibram Goyal Charitable Trust cuke The CIT Exemption, Jaipur. 381, Naya Bazar, Vs. Ajmer. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATS4019F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Sunil Porwal, C.A. (Through V.C.) jktLo dh vksjls@Revenue by: Shri Arvind Kumar, CIT-DR lquokbZ dh rkjh[k@Date of Hearing :27/02/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 06/03/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .

By way of present appeal, appellant trust has challenged order dated 21.09.2024 passed by Learned Commissioner of Income Tax (Exemption), Jaipur, whereby its application filed u/s 12A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) filed on 27.03.2024 seeking its registration under the Act has been dismissed on following two grounds:-  That the applicant trust was not registered under Rajasthan Public Trust Act, 1959.

Seth Sahimram Goyal Charitable Trust  Non genuineness of activity.

2.

Arguments heard. File perused. Discussion 3. Non registration under Rajasthan Public Trust Act, 1959:- In the course of argument, Ld. AR for the applicant trust has submitted that during pendency of the application u/s 12A of the Act , the applicant trust could not get itself registered under RPT Act, and that presently it has been got registered.

4.

In this regard, it may 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.

5.

Even otherwise, in the paper book presented on 17.02.2025, before the Registry of this department, applicant trust has submitted certificate dated 17.01.2025 issued under RPT Act, 1959, in proof of its registration thereunder . Therefore, this ground of rejection of the application submitted before Learned CIT(E), no more survives.

Seth Sahimram Goyal Charitable Trust Non genuineness of activity:- 6. As regards this second ground made basis for rejection of the application, Learned CIT(E) observed from the documents furnished by the applicant trust and from the failure on the part of the applicant in furnishing of requisite information as detailed in para 4 of the impugned order, that it was obvious that its activities were not verifiable, and it could not be determined whether the applicant trust was genuinely carrying on charitable activity or as per its objects.

7.

Ld. AR for the appellant submits that few details were admittedly furnished by the applicant trust to Learned CIT(E), but some information could not be provided.

8.

As is available from the impugned order, show cause notice was issued on 09.09.2024 for 17.09.2024. The impugned order came to be passed on 21.09.2024.

9.

We find that there was insufficient time made available to the applicant trust to comply with the directions contained in the show cause notice dated 09.09.2024. Therefore, we deem it a fit case where the appellant should be afforded, by Learned CIT(E), reasonable opportunity of being heard.

Seth Sahimram Goyal Charitable Trust Result 10. In view of the above discussion, this appeal is disposed off for statistical purposes, and the matter is restored to the file of Learned CIT(E) for decision on the application afresh, except the issue of registration under RPT Act, 1959, which stands finalized herein. Learned CIT(E) to afford reasonable opportunity of being heard to the applicant-appellant and that too in accordance with law.

11.

The applicant trust to comply with all the directions of Learned CIT(E) to be issued from time to time, to avoid any delay in disposal of the application. File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 06/03/2025. Sd/- Sd/- ¼xxu xks;y½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 06/03/2025 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Seth Sahibram Goyal Charitable Trust, Ajmer. 1. 2. izR;FkhZ@ The Respondent- CIT(E), Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत सहायक पंजीकार@Aेेजज. त्महपेजतंत

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