MAHARASHTRA ENVIRONMENTAL ENGINEERING TRAINING RESEARCH ACADEMY,NASHIK vs. COMMISSIONER OF INCOME-TAX - 1,

The assessee has raised the following grounds of appeal:-

The Hon’ble Commissioner has erred in relying on the ‘non- recommendation’ of registration advised by the ld. A.O. and Jt. CIT without intimating the reasons thereof.

The order dt. 30/09/2014 pronounced by the Hon’ble Commissioner of Income Tax-I, Nashik rejecting the registration of trust u/s 12AA be set aside and the Hon’ble Commissioner of Income Tax-I, Nashik be directed to grant the registration of the same under the Income Tax Act, 1961 to the appellant trust.

The assessee is aggrieved by the order of Commissioner in rejecting application made for registration of trust under section 12AA of the Act without giving reasonable time to explain the facts.

Briefly, in the facts of the case, the assessee had filed application in Form No.10A of the Act for registration of charitable or religious trust under section 12AA of the Act on 30.03.2014. The Commissioner noted that trust was created on 19.11.2012 and was registered under the Bombay Public Trusts Act on 19.11.2012. The Assessing Officer had submitted his report dated 22.09.2014 through Joint CIT, Range-1, Nashik. Both the Assessing Officer and Joint CIT, Range-1, Nashik did not recommend the application for registration under section 12A of the Act. The Commissioner further notes that letter dated 18.09.2014 was issued to the trust providing an opportunity of being heard on 24.09.2014 and he was also requested to produce the books of account/bills/vouchers for verification. In response, Shri A.D. Deshpande, Administrative and Finance Officer attended on 24.09.2014 and 29.09.2014. He was again asked to produce books of account for verification and proof of carrying out the charitable activities. Since the assessee trust did not produce books of account, the Commissioner held that it was not carrying out the charitable activities, hence the application for registration under section 12AA of the Act was rejected by Commissioner.

The assessee is in appeal against the order of Commissioner.

The learned Authorized Representative for the assessee pointed out that trust was constituted as an autonomous institute and was in the process of development and no activities were being carried out at the relevant time. The learned Authorized Representative for the assessee further stated that for financial year 2013-14, the trust had carried out its audit and hence, books of account were now available with the assessee. He further stated that the Commissioner has failed to give a reasonable opportunity of hearing to the assessee since the hearing took place towards the fag-end of order passing deadline of 30.09.2014. 7. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of Commissioner.

We have heard the rival contentions and perused the record. Under the provisions of section 12A of the Act, it is provided that the Commissioner on receipt of an application for registration of trust or institution under section 12A of the Act, shall, call for such documents or information from the trust or institution, in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such enquiries as he may deem necessary in this behalf under clause (b). It is further provided that after satisfying himself about the object of trust or institution and the genuineness of activities, Commissioner shall pass an order in writing registering the trust or institution, or shall, if he has not so satisfied, pass an order in writing refusing to register the trust or institution. Under the proviso, it is further provided that no order shall be passed by the Commissioner under sub-clause (2) unless the applicant has been given reasonable opportunity of being heard. It is further provided under sub-section (2) to section 12AA of the Act that every order granting or refusing registration shall be passed before the expiry of six months from the end of month in which application was received. As per requirement of the Act, the Commissioner after receiving application for registration of trust or institution under section 12A of the Act has to be satisfied about the objects of trust or institution and genuineness of its activities in which regard, he can make any enquiry, he may deem fit. The satisfaction of trust and genuineness of its activities is not necessarily to be seen from the books of account because in many cases, the trust or institution may apply for its registration before start of its activities, hence an applicant cannot be pressed to produce books of account. In the facts of present case, the trust was created on 19.11.2012, it was registered under the Bombay Public Trusts Act on 31.01.2013. The trust had filed application for registration under section 12A of the Act on 30.03.2014. The order had to be passed by the Commissioner under section 12AA of the Act by 30.09.2014. The perusal of order reflects that for the first time a letter was issued to the applicant trust on 18.09.2014 and the representative had attended on 24.09.2014 and 29.09.2014. The order was passed on 30.09.2014. The assessee for the first time has prepared its accounts for the financial year 2013-14 which could not be produced. In the first instance, the Commissioner while verifying the objects of trust and 5 genuineness of its activities need not only consider the books of account but can also take into consideration evidence which proves the genuineness of activities carried on by the assessee and come to a finding whether the same are charitable or not. The assessee before us has also filed audited report for financial year 2012-13, wherein there was no income & expenditure in the hands of assessee. He has further filed copy of Income & Expenditure Account for the financial year 2013-14 and 2014-15. Hence, we find no merit in the order of Commissioner in this regard.

Now, coming to the second aspect of the order passed, wherein the Commissioner has referred to the letters of Assessing Officer and Joint CIT, who have not recommended application for registration under section 12A of the Act. First of all, the reasons for not recommending application are not clear and secondly, the said letter has not been show caused to the assessee, hence the Commissioner has erred on relying on the same.

Another aspect of the proceedings before the Commissioner is failure to provide reasonable opportunity of hearing to the assessee. The Commissioner started the proceedings at fag end of period of six months available to him and did not provide reasonable opportunity. In the totality of the above said facts and circumstances, we hold that the order of Commissioner suffers from not giving reasonable opportunity of hearing to the assessee. Hence, we remit this issue back to the file of Commissioner to look into the objects of trust and genuineness of its activities and decide the issue of grant of registration to the assessee under section 12AA of the Act. The Commissioner shall afford reasonable opportunity of hearing to the assessee while deciding the issue.

In the result, the appeal of assessee is allowed for statistical purposes.