Loading judgment…
Facts
The assessee filed applications for registration u/s 12AB and recognition u/s 80G. The CIT(E) rejected these applications citing discrepancies, non-genuineness of activities, and cancellation of temporary registration.
Held
The Tribunal held that the CIT(E) should reconsider the matter afresh. The Tribunal also observed that the registration u/s 80G is consequential to the registration u/s 12AB, and therefore, it also needs to be reconsidered.
Key Issues
Whether the CIT(E) erred in rejecting the assessee's applications for registration u/s 12AB and recognition u/s 80G without proper consideration and adherence to procedural requirements.
Sections Cited
12AB, 80G, 12A, 12A(1)(ac)(iii), 80G(5)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
ORDER PER: DR. S. SEETHALAKSHMI, J.M. The Present Bunch of four appeals filed by the assessee, challenging the order passed by the Ld. CIT(E), Jaipur all dated 26.11.2024 thereby rejecting the registration u/s 12AB and recognition u/s. 80G of the Income Tax Act [ for short Act], consequent to that even the temporary registration and recognition given to the assessee was also rejected, therefore, the present appeal challenges that four findings recorded by the Ld. CIT(E).
1. That the order passed by Ld. Commissioner of Income Tax, Exemption, Jaipur by rejecting application u/s 80G(5)(iii) of the I.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same. 2. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them. the assessee has raised following grounds:- “
1. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case by neither recording the independent satisfaction for rejection of provisional approval and nor issued Show Cause Notice for rejection of provisional approval u/s. 80G of the I.T. Act 1961 which is wrong, unwarranted and bad in Law. Kindly restore the same.
2. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case in rejecting the provisional approval u/s. 80G without issuing separate DIN of the rejection order, which is against the circular & notification issued by the CBDT. So, the same is wrong, unwarranted and bad in Law. Kindly restore the same.
3. That the order passed by Ld. Commissioner of Income Tax (Exemption), Jaipur by rejecting provisional approval u/s. 80G of the 1.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same.
4. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.” the assessee has raised following grounds:-
“1. That the order passed by Ld. Commissioner of Income Tax, Exemption, Jaipur by rejecting application u/s 12AB(1)(b) of the I.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same. 2. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.” 2.4 In the assessee has raised following grounds:- to 1475/JPR/2024 Outspread Wings Foundation vs. CIT(E)
1. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case by neither recording the independent satisfaction for rejection of provisional registration and nor issued Show Cause Notice for rejection of provisional registration u/s. 12A of the L.T. Act 1961 which is wrong, unwarranted and bad in Law. Kindly restore the same.
2. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case in rejecting the provisional registration u/s. 12A without issuing separate DIN of the rejection order, which is against the circular & notification issued by the CBDT. So, the same is wrong, unwarranted and bad in Law. Kindly restore the same.
3. That the order passed by Ld. Commissioner of Income Tax (Exemption), Jaipur by rejecting provisional registration u/s. 12A of the L.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same.
That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.”
The facts as culled out from the records are that the assessee “Outspread Wings Foundation”, filed online application under section 12A(1)(ac)(iii) in Form No. 10AB seeking registration u/s 12AB of the Income Tax Act, 1961 on 29.05.2024. A letter/notice dated 02.07.2024 was issued at the e-mail/address provided in the application requiring the assessee to submit certain documents/expenses by 19.07.2024. The details/documents filed by the assessee were examined and it was found by the ld. CIT(E) that the assessee was not eligible for the registration u/s 12AB, due to discrepancies considered for non registration under Rajasthan Public Trust Act, 1959 and Non- Genuineness of activities and thereby the application for registration was dismissed while doing so he has also cancelled the temporary registration granted to the assessee. Whereas in the case of the application filed by the assessee for registration u/s 80G (5) of the Act the same to 1475/JPR/2024 Outspread Wings Foundation vs. CIT(E) was rejected as the assessee was not granted the registration u/s 12AB of the Act and here also the temporary recognition granted was also cancelled.
4. The assessee challenges that orders before this Tribunal on the ground as stated hereinabove. As regards the nonregistration under RPT Act, 1959, the ld. AR for the assessee submitted that the assessee is registered u/s 8 of the Companies Act, 2013 vide registration No. U85500RJ2023NPL086593 dated 28.03.2023. The ld. AR of the assessee stated at bar that recently the ld. CIT(E) taken a view that in case of Company registered u/s 8 of the Act as the charitable entity, he has waived that aspect of the registration under RPT Act. Therefore, the assessee needs a chance to represent this fact before the Ld. CIT(E). So far as the observation for non genuineness of the activity, it was argued that the assessee has provided all the details which was called for , but the Ld. CIT(E) was of the view that certain curial information were not given and adjournment was sought on that aspect of the matterconsidering the misconception that without RPT Act, assessee may not get the registration and therefore that crucial details were not submitted but adjournment was sought . The ld. AR of the assessee submitted that there should be given a fair chance with the merits of the disputes and thereby prayed to remand the matter back to the file of the ld. CIT(E). to 1475/JPR/2024 Outspread Wings Foundation vs. CIT(E) 5. Per contra, the ld. DR relied upon the orders of the Ld. CIT(E) and submitted that the assessee remain non-compliant before the ld. CIT(E) and therefore, the order of the ld. CIT(E) be sustained.
Heard rival submissions and perused the material available on record. The Bench noted that there is a force in the arguments of the ld. AR of the assessee that the Ld. CIT(E) has taken a view that where the assessee is a charitable entity registered under Companies Act, ld. CIT(E) has already taken a view that RPT Act registration cannot be enforced onceassessee registered with the registrar of companies as charitable and non-profit undertaking. Considering that aspect of the matter and as argued by the Ld. AR of the assessee that the assessee is ready to furnish all the details before the Ld. CIT(E). Considering that fact of the case that ld. CIT(E) has to see the object of the trust and future activities to be done. Even the Hon'ble Supreme Court upheld the Delhi High Court's decision, affirming that a in a case of newly registered trust, registration can be granted under Section 12AA based on its stated objectives and proposed activities, even in the absence of any prior activities. While dealing with the appeal of the revenue in Civil Appeal no(s), 5437-5438/2012 in the case of Ananda Social and Education Trust Vs The Commissioner of Income Tax & ANR the apex court has observed that: to 1475/JPR/2024 Outspread Wings Foundation vs. CIT(E) “For the reasons stated earlier, we are of the view that the object of the provision in question is to ensure that the activities undertaken by the Trust are not contrary to its objects and that a commissioner is entitled to refuse registration if the activities are found contrary to the objects of the Trust. In the present case, what has been found is that the Trust had not spent any amount of its income for charitable purposes. This is a case of not carrying out the objects of the Trust and not carrying on activities contrary to its object. These circumstances may arise for many reasons including not finding suitable circumstances for carrying on activities. Undoubtedly the inaction in carrying out charitable purposes might also become actionable depending on other circumstances; but we are not concerned with such a case here.”
In the light of the above discussion we direct the ld. CIT(E to decide the issue a fresh considering over all aspect as argued before the Bench and decide the issue to registration of the Trust u/s 12AB of the Act.
As regard the second appeal for rejection of the recognition under the 80G of the Act on the reason advanced was that the applicant was denied the registration for 12AB of the Act and therefore, recognition u/s. 80G of the Act was also denied. Since we have restored the matter of registration u/s 12AB of the Act to the file of the Ld. CIT(E) and considering that aspect of the matter since the registration u/s. 12AB is set aside the issue of recognition u/s. 80G being consequential to that is also set aside to the file of the ld. CIT(E). In the light of this aspect of the case, the Bench feels that the assessee should be given one more chance to contest the case before the Id. CIT(E) and the assessee is directed to to 1475/JPR/2024 Outspread Wings Foundation vs. CIT(E) produce all the relevant papers concerning both the application filed before the ld. CIT(E) to settle the dispute raised hereinabove.
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 the ld. CIT(E) independently in accordance with law. In the result, appeals of the assessee are allowed for statistical purpose. Order pronounced in the open court on 28/02/2025.