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Facts
Two assessee trusts filed applications in Form 10AB for registration under Section 12AB of the Income Tax Act, 1961. The CIT (Exemptions) rejected these applications, citing that the trusts' activities were not commensurate with their registered objectives and that no substantial activities were carried out.
Held
The Income Tax Appellate Tribunal (ITAT) found that the CIT (Exemptions) had rejected the applications without a proper speaking order and failed to consider the detailed submissions and audited accounts provided by the assessees. The ITAT concluded that the trusts are religious trusts undertaking charitable activities aligned with their objectives and directed the CIT (Exemptions) to grant registration under Section 12A of the Act.
Key Issues
Whether the CIT(E) was justified in rejecting the applications for registration under Section 12AB/12A without proper consideration of the assessees' submissions and without issuing a speaking order, and whether the trusts' activities were commensurate with their objectives.
Sections Cited
12AB, 12A, 12A(1)(ac)(iii), 2(15)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
The captioned appeals filed by the assessee are directed against the rejection order passed by the learned CIT (E)- Hyderabad (hereinafter in short “Ld CIT(E)” vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-25/1072492553(1) & ITBA/EXM/ F/EXM45/2024-25/1072443582(1), dated 24/01/2025 and 23/01/2025 respectively. Since the core issue involved in these appeals is identical therefore, both these appeals are clubbed, heard together and disposed of in this consolidated order. We shall first take up as a lead appeal.
Briefly stated facts of the case are that the assessee has filed an e- application in Form No.10AB seeking registration U/s. 12AB of the I.T. Act, 1961 (in short “Act”). The Learned CIT (E) issued notice to the assessee on 10/10/2024 in respect of proceedings U/s. 12A(1)(ac)(iii) of the Act to produce the copy of Memorandum of Association/Trust Deed for verification and to furnish a detailed reply on the specific information called for in the said notice. In response, assessee has submitted some of the details as called for. Subsequently, another notice dated 20/12/2024 was issued to the assessee to submit the full information
Page No. 2 & 169/Viz/2025 Sri Shirdi Sai Nigamagamam Maintenance Trust & Sri Shirdi Sainadh Spiritual Centre as per the notices issued. In response, assessee furnished its reply in compliance to the notice issued by the learned CIT (E). On a perusal of the submission of the assessee, learned CIT (E) rejected the application filed in Form-10AB for registration U/s. 12A of the Act.
3. Aggrieved by the rejection order, the assessee filed the present appeal before us by raising following grounds of appeal:
“1. The CIT (Exemptions) erred in rejecting the application for registration U/s. 12A solely on the ground that the activities of the Trust are not commensurate with the objectives of the Trust Deed. The Trust has provided sufficient documentary evidence, including financial statements, daily activities, and detailed explanations to substantiate the genuineness of its charitable activities.
2. The CIT(Exemptions) wrongly concluded that the activities of the Trust fall under the category of “advancement of any other object of general public utility” and that they involve trade or commerce. The Trust has demonstrated that it provides services at a minimal cost or free of charge, thereby fulfilling the charitable purpose as per section 2(15) of the Act.
The Trust has undertaken multiple charitable activities, including providing a function hall at a minimal cost for the poor, distributing free books to students, conducting yoga classes, providing free purified water, and offering free shelter to pilgrims. These activities are fully aligned with the Trust’s objectives as per the registered Trust Deed.
The CIT(Exemptions) did not provide adequate opportunity to explain or rectify alleged deficiencies in the documentation, violating the principles of natural justice. All requested documents were submitted during the proceedings, but the rejection order was passed without proper consideration of the submissions.
The delay in filing Form 10AB was marginal (seven days beyond the deadline of 30/06/2024, provided under Circular No. 7/2004 issued), and the Trust had a reasonable cause for the delay, as the procedural complexities led to confusion. Several case laws establish that procedural lapses should not result in denial of substantive benefits.
Assessee has relied on case laws (i) CIT vs. Andhra Pradesh State Road Transport Corporation (ii) Surat Art Silk Cloth Manufacturers Association vs. CIT (iii) CIT vs. Gujarat
Page No. 3 & 169/Viz/2025 Sri Shirdi Sai Nigamagamam Maintenance Trust & Sri Shirdi Sainadh Spiritual Centre Maritime Boad (iv) M/s. We are with you Charitable Trust vs. CIT (Exemptions). 7. That the appellant craves leave to add, alter, amend, or withdraw any of the above grounds at the time of hearing.”
4. Before us, at the time of hearing of the appeal, none appeared on behalf of the assessee. The Ld. Departmental Representative (hereinafter in short “Ld. DR”) relied on the order of the learned CIT (E).
5. The only issue contested by the assessee is rejection of the Registration U/s. 12A of the Act, by the learned CIT (E). On this issue, from the record and the material available before us, we find that the assessee has filed Form No.10AB seeking registration u/s 12A of the Act and the same was rejected by the learned CIT (E) without passing any speaking order held as under: “3. On perusal of the submissions made by the assessee, it is observed that activities are not commensurate with the activities as per the objectives of the registered Deed / MOA / AOA, which is in violation of the provisions of section 12A of the Act. In view of the above, the present application in Form 10AB for registration U/s. 12A is hereby with rejected.”
6. On a perusal of the learned CIT(E) order, we find that he has not discussed anything except stating that the activities are not commensurate with the activities as per objectives of the registered Trust Deed / MoA/AoA. We have also perused the documents submitted by the assessee (page No. 79 of the paper book) and we find that the assessee is a Religious Trust which is carrying on its activities according to the objects viz., providing function hall at free of cost to poor people
Page No. 4 & 169/Viz/2025 Sri Shirdi Sai Nigamagamam Maintenance Trust & Sri Shirdi Sainadh Spiritual Centre for marriages and other functions, conducting spiritual programmes, providing handicraft work-shops for unemployed people, conducting tailoring classes for unemployed men and women, distribution of books for poor students for free of cost, conducting yoga classes etc. The learned CIT (E) has casually observed that no substantial activities have been carried out without discussing anything about the details and record filed by the assessee. On further perusal of the details submitted by the assessee, we are unable to understand which activities of the assessee Trust are contrary to the objects of the Trust. We find that the accounts of the Trust are audited and relevant documents are filed in the paper book filed before us. In spite of the above, the Ld. CIT (E) has simply rejected the assessee’s application which, in our considered opinion is not correct. Therefore, we are of the opinion that it is a fit case to grant Registration U/s. 12A of the Act. Accordingly, in the facts and circumstances of the case as discussed above, the impugned order of the learned CIT (E) is set aside and we direct the Ld. CIT (E) to grant registration to the assessee U/s. 12A of the Act.
In the result, appeal filed by the assessee is allowed.
Page No. 5 & 169/Viz/2025 Sri Shirdi Sai Nigamagamam Maintenance Trust & Sri Shirdi Sainadh Spiritual Centre adjudicated in the above paras of this order. Considering identical facts and circumstances of these cases and the similar issue involved in both the appeals, our decision given while adjudicating the assessee’s appeal in (supra) will mutatis mutandis apply to the present appeal also. Accordingly, the grounds raised by the assessee are allowed.