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Facts
The assessee trust applied for regular registration under sections 12AB and 80G of the Income Tax Act. The CIT(E) denied the application, citing insufficient charitable activities, despite the trust existing since 1944 and having made a single donation to the CM's relief fund. The trust argued it commenced charitable activities after receiving provisional registration and presented an income/expenditure statement.
Held
The tribunal held that the appellant trust failed to place relevant documents before the CIT(E) to prove the bonafides of its charitable activities. Therefore, the impugned order was set aside.
Key Issues
Whether the CIT(E) was justified in rejecting the application for regular registration under sections 12AB and 80G based on the perceived insufficiency of charitable activities? Whether the single donation to the CM's relief fund constituted a genuine charitable activity for the purpose of registration?
Sections Cited
12AB, 80G, 12A(1)(ac)(iii), 80G(5)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA” BENCH PATNA
Date of concluding the hearing : 19.03.2025 Date of pronouncing the order : 04.04.2025 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. These appeals arise from order u/s 12AB and 80G of the Income Tax Act, 1961 (hereafter “the Act”), dated 20.09.2024 and 23.09.2024 respectively, passed by the Ld. Commissioner of Income Tax (Exemptions), Patna (hereafter “the Ld. CIT(E). In the assessee filed an application under Form 10AB for grant of regular registration u/s 12A(1)(ac)(iii) of the Act. The Ld. CIT(E) found that even though the appellant trust was in existence since 1944, it had, allegedly, only one charitable activity, of a donation of Rs. 1,01,000/- to the CM’s relief fund (dated 17.04.2020). This fact, allegedly, militated against the claim that the trust was regularly carrying out charitable activities. Needless to say, the & 618/Pat/2024 Hardeo Dass Natmull Bairoliya Charity Trust registration was denied. In ITA No. 618/Kol/2024, registration u/s 80G of the Act was denied since registration u/s 12A(1)(ac)(iii) was already rejected. Since these matters are interconnected, they are being dealt with together.
1.1 The appellant has filed the present appeals ventilating its grievances through the following grounds of appeals:
1.For that, the Ld CIT exemption erred in rejecting the application for regular registration made u/s 12A(1)(ac)(iii) arbitrarily by not accepting the donation to chief minister relief fund as genuine charitable activity.
For that Ld CIT Exemption erred in holding that maiden transaction of donation to Chief minister relief fund can not be considered as carrying of charitable activities in accordance with the object of trust.
For that Ld CIT exemption failed to appreciate the provision of section 12A(1)(ac) (iii) and time line mentioned there that a provisionally registered trust must apply for regular registration within six months of commencement of charitable activity where as in this case trust had already commenced the charitable activity on 17.4.20 by making donation to chief minister relief fund and as such this trust was required to make application for regular registration soon after getting provisional registration 4. For that Ld CIT Exemption failed to appreciate that insufficiency of charitable activity can not be ground for rejecting the application 5. For that Ld CIT Exemption failed to appreciate that he had himself granted provisional registration for three years AY's 24-25,25-26,26-27 where appellant trust has further carried out charitable activity in AY 24-25 after receipt of provisional registration.
For that Ld CIT Exemption erred further in cancelling the provisional registration and specially AY 24-25 retrospectively.
For that Ld CIT Exemption failed to appreciate that he could have got ample opportunity to examine the genuineness of activity during scrutiny and other proceedings rather than rejecting the application and can celling provisional registration at the threshold.
Appellant crave leave to add, delete, modify any other grounds at or before the hearing.” ITA No. 618/Kol/2024
“1. For that, the Ld CIT exemption erred in rejecting the application for regular registration made u/s 80G(5)(iii) on the ground of rejection of its provisional registration granted u/s 12AB & 618/Pat/2024 Hardeo Dass Natmull Bairoliya Charity Trust 2. For that Ld CIT Exemption erred in holding that maiden transaction of donation to Chief minister relief fund can not be considered as carrying of charitable activities in accordance with the object of trust.
For that Ld CIT Exemption failed to appreciate that insufficiency of charitable activity can not be ground for rejecting the application 4. For that Ld CIT Exemption failed to appreciate that he had himself granted provisional registration for three years AY's 24-25,25-26,26-27 where appellant trust has further carried out charitable activity in AY 24-25 after receipt of provisional registration.
For that Ld CIT Exemption erred further in cancelling the provisional registration and specially AY 24-25 retrospectively.
For that Ld CIT Exemption failed to appreciate that he could have got ample opportunity to examine the genuineness of activity during scrutiny and other proceedings rather than rejecting the application and can celling provisional registration at the threshold.”
Before us the Ld. AR argued that the trust had decided to undertake charitable activity and thus had sought registration u/s 12A and 80G of the Act. The Ld. AR stated that such registration was sought only when the trustees decided to undertake charitable activities. The Ld. AR assailed the action of Ld. CIT(E) and stated that denial of such registration at the initial stage itself would preclude the trust from performing charitable activities altogether. The Ld. AR pointed out that as soon as provisional registration was received, the trust started to carry out charitable activities. The Ld. AR took us through page 30 of the paper book which depicts an income/expenditure statement as on 31.03.2024. Admittedly, there are a few charitable activities mentioned therein. However, the Ld. AR pointed out that those and other supporting documents, were not before the Ld. CIT(E). In conclusion it was mentioned that ever since the grant of provisional registration, the trust was carrying out charitable activities, hence it deserved registration u/s 12A and 80G of the Act.
2.1 The Ld. DR relied on the impugned order.
We have carefully considered the rival submissions and also gone through the documents before us. It is seen that the appellant trust could not place relevant documents before the Ld. CIT(E) to prove the bonafides of its charitable activities. Accordingly, we set aside the impugned order & 618/Pat/2024 Hardeo Dass Natmull Bairoliya Charity Trust and remand both these matters to the file of Ld. CIT(E) for considering the merit in appellant’s claim about charitable activities undertaken since grant of provisional registration. The matter pertaining to section 80G of the Act, also needs to be considered in light of the decision for application under section 12A of the Act.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on 04.04.2025
Sd/- Sd/- (Duvvuru RL Reddy) (Sanjay Awasthi) Vice President Accountant Member Dated: 04.04.2025 AK, P.S. Copy of the order forwarded to: 1. Hardeo Dass Natmull Bairoliya Charity Trust 2. The Principal CIT (Exemption), Patna 3. CIT(A)- 4. CIT- 5. CIT(DR)