Loading judgment…
Facts
The assessee-trust was formed in July 2019 to manage a temple. It applied for registration under Section 12AB of the Income Tax Act. The CIT(E) rejected the application, stating that the trust failed to provide documentary evidence regarding the genuineness of its activities and compliance with other laws.
Held
The tribunal held that the process of registration under Section 12AB is not an assessment of income but a preliminary stage to examine the genuineness of the trust's objects and activities. The CIT(E) should have objectively evaluated the explanation and sought further clarifications rather than summarily rejecting the application.
Key Issues
Whether the CIT(E) was justified in rejecting the application for registration under Section 12AB for lack of documentary evidence, without a thorough examination of the trust's explanation and providing an opportunity for further submissions.
Sections Cited
12AB, 12A(1)(ac), 10(23C), 115TD, 12AA, 10(230), 253
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH: RAJKOT
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
आयकर अपीलीय अिधकरण, राजकोट �ायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH: RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER & SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No.836/Rjt/2024 (िनधा�रण वष� / Assessment Year : -NA-) Shree Loladi Mataji Madh बनाम/ The Pr.CIT (Exemptions) Trust Ahmedabad – 380 015 Vs. Shinay, Vagamshi Faliya Shinay Gandhidham – 370 205 (Gujarat) �ायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAYTS 3998 R (अपीलाथ� /Appellant) (��थ� / Respondent) .. Assessee by : Shri Mehul Ranpura, Ld.AR Revenue by : Shri Sanjay Punglia, Ld. CIT(DR) सुनवाई की तारीख / Date of Hearing 12 /02/2025 घोषणा की तारीख /Date of Pronouncement 05/05/2025 आदेश / O R D E R PER DINESH MOHAN SINHA, JUDICIAL MEMBER: This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”], dated 02/09/2024, rejecting the application for registration under section 12AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
The brief facts of the case are that the assessee-trust is formed in July 2019, mainly to handle, manage and administered the temple of Shree Loladi Mataji (Devi) which is situated at Shinay (Ta. Gandhidham, Dist. Kuchha, Gujarat). During the last three years, the main activities
ITA No.836 /RJT/2024 Shree Loladi Mataji Madh Trust vs. Pr.CIT(Exemption) Asst.Year : - NA
- 2 - carried out were in respect of repair and maintenance of the Temple of Mataji (Devi) viz. Colouring and some Repairing to the temple structure and the administration expenses in respect of the temple. There is no any activity, other than those stated above, carried out during last three years. The same can be verified from the audited accounts uploaded along with the Return of Income for those relevant years.
The CIT(E) in his order held as under:-
“The present application for registration of the trust has been filed in Form 10A8 under sub-clause (i) of clause (ac) of sub-section (1) of section 12A of Income Tax Act, 1961 as per above details.
2 The procedure for fresh registration of an application made under sub-clause (ii) or sub-clause (ii) or sub-clause (iv) or sub-clause (v) or item (B) of sub-clause (vi) of clause (ac) of sub-section (1) of section 12A is governed by section 12AB(1)(b) of the act. Further, Rule 17A(1) of the Income Tax Rules prescribes the different forms to be filed for making application under various sub-clauses of clause (ac) of sub-section (1) of section 12A of the Income Tax Act for registration of a charitable or religious trust or institution and Rule 17A(2) of the Income Tax Rules lists the documents which shall be attached or submitted with the application made in Form No. 10AB.
3 Notices were issued from time to time as per details given in row no. 10 of table given above requesting to furnish details/documents. The applicant has neither filed any submission nor sought any adjournment in this case.
4 Hence, in the absence of requisite details, the requirements of Rule 17A(2) of I.T. Rules 1962 remains uncompiled with. Other details/documents called for by this office were also not submitted.
ITA No.836 /RJT/2024 Shree Loladi Mataji Madh Trust vs. Pr.CIT(Exemption) Asst.Year : - NA
- 3 - 5 Reliance in this regard is also placed on the judgment delivered by the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Ujjain Vs Dawoodi Bohara Jamat Civil Appeal No. 2492 of 2014, wherein the Hon'ble Act has held as under Apex Court while adjudicating similar provisions u/s. 12AA of the Act has held as under.
"Section 12AA lays down the procedure followed by the Commissioner for grant or refusal of application for registration made under Section 12A. According to procedure so laid down, the Commissioner shall call for documents and information and conduct an enquiry to satisfy himself of the genuineness of the institution and upon reaching satisfaction of the charitable or religious nature of the objects and the authenticity of the activities of the institution, he would grant the registration. If he is not satisfied of the aforesaid, the request made in the application may be declined."
6 Further, while adjudicating similar provisions u/s 10(230) of the Act, the Hon'ble Supreme Court in the case of M/s New Noble Educational Society in Civil Appeal No. 3795 of 2014 has held as under
"While considering applications for approval under Section 10(230), the Commissioner or the concerned authority as the case may be under the second proviso is not bound to examine only the objects of the institution. To ascertain the genuineness of the institution and the manner of its functioning, the Commissioner or other authority is free to call for the audited accounts or other such documents for recording satisfaction where the society, institution or institution genuinely seeks to achieve the objects which it professes. The observations made in American Hotel (supra) suggest that the Commissioner could not call for the records and that the examination of such accounts would be at the stage of assessment. Whilst that reasoning undoubtedly applies to newly set up charities, institutions etc. the proviso under Section 10(230) is not confined to newly set up institutions it also applies to existing ones. The Commissioner or other authority is not in any manner constrained from examining accounts and other related documents to see the pattern of income and expenditure."
ITA No.836 /RJT/2024 Shree Loladi Mataji Madh Trust vs. Pr.CIT(Exemption) Asst.Year : - NA
- 4 - 7 As discussed above, the applicant/assessee has failed to file documentary evidences to enable me to satisfy about. i. Genuineness of the activities of the trust or institution. ii. That the activities of trust or institution are in consonance with the objects of the trust or institution. iii. That other laws material for the purpose of achieving objects are complied with.
In view of the above, the present application filed in Form No. 10AB sub- clause (ii) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961 is rejected and also your provisional registration stands cancelled.
9 Further, the applicant should computer its tax liability under section 115TD of Income Tax Act, 1961 read with Rule 17CB of IT Rules and report the same in return of Income. It should also pay the tax so computed within timeline provided under section 115TD(5) of Income Tax Act, 1961. In case applicant is filing appeal against this order u/s. 253. of IT Act 1961 proof of filing of appeal should be provided to AO to get benefit of extended time limit provided u/s. 115TD(5) of IT Act 1961.”
Aggrieved by the order of CIT(E), the assessee is in appeal before us with following grounds of appeal:
“1, The grounds of appeal mentioned hereunder are without prejudice to one another. 2. The order passed by the learned Commissioner Income-tax Ahmedabad of (Exemption), [hereinafter referred to as the "CIT(E)"] u/s. 12AA of the Income Tax Act, 1961 is bad in law and on facts. 3. The learned CIT(E) erred on facts as also in law rejecting the application for registration u/s. 12AA of the Act alleging that (i) the appellant failed to prove the genuineness of its activities with documentary evidence (ii) the activities of trust are in consonance with the objects of the trust and (iii) other laws material
ITA No.836 /RJT/2024 Shree Loladi Mataji Madh Trust vs. Pr.CIT(Exemption) Asst.Year : - NA
- 5 - for the purpose of achieving objects are complied with. The learned CIT(E) may kindly be directed to grant registration u/s. 12AA of the Act. 4. Your Honour's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on before the hearing of appeal.”
On perusal of the record, it is noted that the assessee trust had duly furnished documents apart from documents uploaded along with the application filed and had also never claimed exemption under section 11, 12 or section 10(23C) of the Act. In light of such disclosure, the application was rightly filed under section 12A(1)(ac) of the Act.
5.1. The Ld.Authorized Representative (AR) for the assessee submitted that, instead of verifying the genuineness of the trust or examining its charitable objects and proposed activities, rejected the application. The approach of the Ld. CIT(E) appears to be excessively technical and contrary to the scheme of registration, particularly in a case where the assessee asserts that activities have not commenced.
5.2. The Ld.Departmental Representative (DR) for the Revenue did not object to the restoration of the matter to the file of the CIT(E) for a fresh adjudication on merits.
5.3. We have heard the rival submissions and perused the material available on record. It is a settled principle of law that the process of registration under section 12AB of the Act is not an assessment of income, but rather a preliminary stage to examine the genuineness of the
ITA No.836 /RJT/2024 Shree Loladi Mataji Madh Trust vs. Pr.CIT(Exemption) Asst.Year : - NA
- 6 - trust’s objects and proposed activities. When the trust has explicitly stated that it has not filed returns as it had no activities and thus no income chargeable to tax, it was incumbent upon the Ld. The CIT(E) to evaluate such explanation objectively and to call for any further clarifications or proposed activity plan rather than summarily rejecting the application.
5.4. In our considered view, the interest of justice would be served, if the matter is restored to the file of the Ld. CIT(E) for de novo adjudication. The assessee is directed to co-operate in the proceedings and furnish any further details that may be required to ascertain the genuineness of its claim. At the same time, the Ld. CIT(E) shall decide the matter on merits and in accordance with law, after granting due opportunity of being heard. The assessee may also be permitted to make necessary correction in the application in Form No.10AB under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act.
5.5. In view of the foregoing discussion, we set aside the impugned order of the Ld. CIT(Exemption), Ahmedabad dated 02/09/2024 and restore the matter to his file for deciding the application for registration afresh and in accordance with law, after providing adequate opportunity of hearing to the assessee.
ITA No.836 /RJT/2024 Shree Loladi Mataji Madh Trust vs. Pr.CIT(Exemption) Asst.Year : - NA
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 05/05/2025 at Rajkot.
Sd/- Sd/- (DR. ARJUN LAL SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT; Dated 05/05/2025 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent. 2. संबं�धत आयकर आयु�त / Concerned CIT 3. आयकर आयु�त(अपील) / The Pr.CIT(E)-Ahmedabad 4. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण,राजोकट/DR,ITAT, Rajkot गाड� फाईल / Guard file. 6. // True Copy // आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, राजोकट / ITAT, Rajkot