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Facts
The assessee, Shree Madhapar Jain Samaj, filed an appeal against the order of the CIT(E) rejecting its application for registration under Section 12A(1)(ac)(iii). The CIT(E) rejected the application, stating that the trust's objects primarily benefited a particular religious community (Jain Samaj) and not the public at large, and also noted deficiencies in submitted documents.
Held
The Tribunal noted that the assessee failed to provide appropriate clarification regarding the objects of the trust and submitted illegible documents. However, considering principles of natural justice and fair play, the Tribunal decided to give the assessee another opportunity to present their case.
Key Issues
Whether the assessee's charitable activities are restricted to a particular community, thus disqualifying it from registration under Section 12A, and whether the assessee was provided sufficient opportunity to present its case.
Sections Cited
12A(1)(ac)(iii), 13(1)(b), 11
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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
�नधा�रती क� ओर से/Assessee by : Shri Darshak Thakkar, AR राज�व क� ओर से/Revenue by : Smt. Pallavi, CIT-DR सुनवाई क� तार�ख /Date of Hearing : 05/08/2025 घोषणा क� तार�ख /Date of Pronouncement : 03/11/2025 ORDER Per Dinesh Mohan Sinha, Judicial Member: Captioned appeal filed by assessee pertaining to Assessment Year 2024- 25, is directed against the order passed by Commissioner of Income-tax (Exemption), Ahmedabad (in short ‘CIT(E)’), dated 17.02.2024, wherein ld. CIT(E) rejected assessee’s application filed in Form No.10AB under Section 12A(1)(ac)(iii) (hereinafter referred to as “the Act”) and provisional registration was also cancelled.
The grounds of appeal raised by the assessee are as under:
“1. The Learned CIT (Exemption) has erred in law as well as on fact in framing opinion about the genuineness of the activities of the trust or institutions. Therefore, the impugned order is liable to be quashed.
Shree Madhapar Jain Samaj vs. CIT(E) 2 2. The Learned CIT (Exemption) has erred in law as well as on fact in concluding that are in the nature of charitable is restricted to benefit of a particular religious' community or caste and its members "Jain Community". 3. Appellant request to allow to add, alter, modify any grounds of appeal during the course of appellate proceedings.”
3. Brief facts of the case are that the assessee is a Public Charitable Trust. It is engaged in the activities of Providing free food, cloths, and all other support to the needy people. Further, it is also working for Conducting activities related to education and medical services and also Engaged in activities related to the welfare of lives, protection of cows, and providing services for cows, including asylums (panjarapole) and other related facilities. It works for the betterment of people as well as animals. It also works for the development, awareness and Unity of Jain Community.
The Ld. CIT(E) has rejected the registration of the trust by observing as under:
“7. The submission of the applicant dated 06.02.2024 is considered but the same is not acceptable for the below mentioned reasons. 7.1 The applicant vide its reply dated 06.02.2024 has stated "Dear Sir, we have submitted documents on 21-12-2023 with respect to earlier hearing letter received from your office." The reply of the applicant is relied upon the submission made by it vide submission dated 21.12.2023. It is apparent that the applicant has not even read the issue for which the show cause was issued on 10.01.2024 and has merely relied upon its earlier submission. It is clear that applicant has failed to furnish any details/explanation/evidences in response to show-cause notice dated 10.01.2024, the present case is required to be decided based on material available on record. On perusal of objects/objectives of the applicant/assessee, as stipulated in the "Constitution" it is observed that the objective/object number 7 and 18 are found for the benefit for a particular religious community or private religious community or caste and its members l.e. Jain Samaj - Madhapar and not for the benefit of public at large. The said objects are reproduced as under.
This institution shall be connected/associated with the interest/benefit of Jain Samaj.
Shree Madhapar Jain Samaj vs. CIT(E) 3 2.. To assist in setting up credit societies, banks, providing legal assistance for the benefit of the members of the organization. Hence, from the above it is evident that above objects are Charitable in nature and the same are found to be for the benefit of Jain Samaj and not for the benefit of public at large. Further, on verification of the application for registration or approval in Form 10AB, the applicant has reported at point number 3 ie. Nature of activities as "Charitable". As per the Registration Certificate issued by the Deputy Charity Commissioner, Kutch trust is registered on 31.05.2019. ……………. …………….
From the above referred discussion and objects of the applicant/assessee it is evident that it is not a religious trust, but it is a charitable trust and above referred objects, which are in the nature of charitable is restricted to benefit of a particular religious community or caste and its members "Jain Community and therefore as per law laid down by the Hon'bile Apex court in the above referred cases, the provision of sec. 13(1)(b) would be applicable and therefore the applicant/assessee would not be eligible for exemption u/s 11 of the Act. Further, on perusal of the documentary evidences submitted along with the present application filed in FORM No. 10AB u/s 124(1)(ac)(ii) of the Act, it is observed that the applicant has failed to furnish following details which are essential to decide the application as per Income Tax Rule: where the applicant is created, or established, under an instrument, self- certified copy of such instrument creating or establishing the applicant: 17A(2)(a) (The applicant in its present application under FORM 10AB has failed to submit original Trust deed/Constitution/ Memorandum & Articles of Association (MoA/ADA) which was approved by the Asst/Deputy/Joint Charity Commissioner or Charity Commissioner, as the case may be) 17A(2)(g) where the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the applicant relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up; (The applicant in its present application under FORM 10AB has submitted audited accounts for FY 2021-22 and 2022-23 which are not legible even though it was specifically asked in show cause notice dated 10.01.2024.) Therefore in the facts and circumstances of the case, the applicant/assessee cannot be granted registration u/s 12A of the Act.
Shree Madhapar Jain Samaj vs. CIT(E) 4 5. That the assessee filed an appeal against the impugned order dated 17.02.2024 before us.
5.1 Ld. AR on behalf of the assessee submitted that the assessee has submitted all relevant documents as required by the Ld. CIT(E) and the same is also submitted herewith in form of Paper Book. That during Covid period the trust conducted expenses on the Covid victim and Gauseva Gaschara.
5.2 On the other hand, Ld. CIT-DR for the Revenue supported the order of the Ld.CIT(E) with a view that the activities of the trust is charitable in nature but it is not a religious trust, but it is a charitable trust and its objects objects, which are in the nature of charitable is restricted to benefit of a particular religious community or caste and its members, that is why, the registration was refused by the Ld.CIT(E).
We have head both the parties. Considering the above facts, the assessee claimed that the assessee has submitted all the documents as asked for by Ld. CIT(E) by notice dated 02.11.2023 AND 06.12.2023, upon show cause notice issued by Ld. CIT(E) on 10.01.2024 asking for furnishing the clarification in respect of object of the trust - “3. From the above, it is can be observed that the above referred objects seems to be charitable in nature and appears to be restricted to the benefit of a particular religious community/caste and its members i.e. Jain Samaj - Madhapar. Therefore, please clarify that as to how there is no specified violation as defined in the Explanation to section 12AB(4) of the act.” and to furnish the Audit Report. We note that no appropriate reply was given by the assessee on the object of trust. However, we note that the Audit Report and the constitution of the Trust is placed before us. The constitution of Trust is in Gujarati Language. We note that assessee could not plead his case successfully before the Ld. CIT(E) and also it prayed for one more opportunity before the Ld.CIT(E). Hence, we are of the view that one Shree Madhapar Jain Samaj vs. CIT(E) 5 more opportunity should be given to the assessee to file relevant documents and evidences before Ld. CIT(E) and to plead his case before the Ld. CIT(E). We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Ld. CIT(E) for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. Therefore, we deem it fit and proper to set aside the order of the Ld. CIT(E) and remit the matter back to the file of the Ld. CIT(E) to adjudicate the issue afresh on merits.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 03/11/2025