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Facts
The assessee, Faridi Foundation, applied for regular registration under section 12A(1)(ac)(iii) of the Income Tax Act, 1961. The Ld. CIT (Exemption) rejected the application and cancelled its provisional registration due to doubts about the genuineness of the trust's activities and the nature of its receipts, specifically cash donations collected through mass funding and donation boxes, citing a lack of corroborating evidence and unrealistic patterns in donor lists.
Held
The Tribunal found that the CIT (Exemption) was not justified in rejecting the application, noting that a similar trust with similar facts had been granted registration. The order of the Ld. CIT (Exemption) was set aside, and the case was remanded for reconsideration. The assessee is required to submit further details of donations received through each teacher and evidence for the genuineness of its activities, which the Ld. CIT (Exemption) shall consider before deciding on final approval.
Key Issues
The key legal issues were the genuineness of the trust's charitable activities and the nature/source of its donation receipts (particularly cash and anonymous donations) for the purpose of granting regular registration under Section 12A of the Income Tax Act, 1961, and whether the CIT(E) followed proper procedure in cancelling provisional registration.
Sections Cited
12A(1)(ac)(iii), 12AB(1)(b), 12AB, 115BBC, 12A(1)(ac)(vi), 12AB(4), 2(15), 12A, Form No. 10AB, Form No. 10A, Form No. 10AC
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Income Tax Appellate Tribunal, PATNA BENCH AT KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
order
: January 30th, 2025 ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Exemptions)-Patna [hereinafter referred to as the “Ld. CIT (Exemption)”] passed in respect of registration u/s 12A(1)(ac)(iii) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2023-24 dated 26.05.2023.
The assessee is in appeal before the Tribunal raising the following grounds of appeal:
1. That the Ld. CIT(Exemptions) has erred in law and on facts by not following the procedure for registration laid out in section 12AB(1)(b) of the g) To substantiate our claim, we have prepared a detail wherein the following particulars appear in the serial order as under: - 1) The screenshot of bank statement depicting the credit in the bank account of the Trust from the teachers. 2) The detail of donors from whom the amount of general donation is received via door-to-door campaign or other spiritual campaigns. 3) The screenshot of UPI app is attached evidencing that the said amount was transferred via UPI of the teacher collecting the donation. (Refer Attachment No. 2.3 for the copy of substantiation prepared of donations received) h) From the above-mentioned attachment it is clear that the donations were first received by teacher during their spiritual campaign and door-to-door campaign. The teacher on receipt of donation first records the details of the donor in the mobile app of the Trust. Thereafter, on conclusion of the spiritual campaign the teacher either deposit the said amount in bank account of the Trust in cash or transfer the said amount via UPI due non-availability of bank branch or if another connecting tour of the teacher is scheduled. i) As explained above only "when there are no availability of Axis bank Branches in these rural part of the state, the Teacher, through it's UPI or through direct bank transfer, remit the donation which he has received in cash from the donor to the Axis Bank of the Trust. Further it can be seen that in various scenarios the donation collected by the Teachers are deposited in "Cash" directly in bank account of the Trust. 1) The trust is recording the said transaction in "Cash" as the amount has been collected in Cash only by the Trust from the donor through its Teacher,