Loading judgment…
Facts
The appellant/assessee, Shri Ram Darbar Sewak Pariwar Dharmarth Trust, applied for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, using Form 10AB. The Ld. CIT(E) issued a questionnaire and subsequently rejected the application on 23/02/2024. The rejection was based on non-satisfaction of the genuineness of activities and the appellant's alleged failure to submit complete details.
Held
The Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal for statistical purposes. The matter was restored to the file of the Ld. CIT(E) for reconsideration of the Form 10AB application and to grant registration as per law. The tribunal emphasized that the CIT(E) should consider whether the objects of the Trust and its proposed activities are genuinely charitable, referencing a Supreme Court ruling on Section 12AA.
Key Issues
Whether the CIT(E) was justified in rejecting the registration application under Section 12AB/12A(1)(ac)(iii) without properly considering the genuineness of the trust's activities and providing adequate opportunity to the appellant.
Sections Cited
12A(1)(ac)(iii), 12AB, 2(15), 12AA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
The appeal of the Assessee arises out of order of the Learned Commissioner of Income Tax (Exemptions), Chandigarh, [hereinafter referred to as ‘Ld. CIT(E)’] dated 23/02/2024, in form of 10AB of the Income Tax Act, 1961 (hereinafter the ‘the Act’) vide which application to CIT (Exemption), Delhi 2023-24/12AA/10933 was rejected.
Brief facts of the case are that appellant/assessee filed applications dated 31/08/2023 in Form No. 10AB seeking registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961. Appellant was issued a questionnaire dated 27/09/2023 with request to furnish certain details/documents/clarification in support of claim of registration. The appellant filed reply on 26/01/2024 with copy of note of activity and photographs. Ld. CIT(E) vide order dated 23/02/2024 rejected application for registration.
Being aggrieved appellant/assessee preferred appeal with following grounds:- “
1. That having regard to the facts and circumstances of the case, the order u/s 12AB of the Income Tax Act, 1961 (the Act) dated 23.02.2024 passed by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh rejecting the application for registration is bad both in the eyes of law and on facts.
2. That having regard to the facts and circumstances of the case, Ld. Commissioner of Income Tax (Exemptions) erred in rejecting the application for registration u/s 12AB of the Income Tax Act on account of non-satisfaction of genuineness of activities of the appellant Trust overlooking and not properly considering the tangible material furnished by the appellant during the proceeding u/s 12AB of the Act.
3. That having regard to the facts and circumstances of the case, Learned Commissioner of Income Tax (Exemptions) erred in rejecting the application for registration u/s 12AB of the Act without clearly specifying any deficiency in the documents submitted by the applicant and without seeking any further clarifications/explanation on the documents furnished by the applicant regarding charitable activities undertaken by the applicant trust.
4. In any view of the matter and in any case, the Ld. Commissioner of Income Tax (Exemptions) erred in rejecting the application for registration u/s 12AB of the Act without giving proper and reasonable opportunity to the appellant and, hence, the impugned order has been passed in clear breach of the principle of natural justice and, therefore, the impugned order deserves to be quashed.
That the appellant craves the leave to add, modify, amend, or delete any of the grounds of appeal
at the time of hearing and all the above grounds are without prejudice to each other.”
4. Learned Authorized Representative for appellant/assessee submitted that Learned CIT(Exemption) without considering documents erred in rejecting application for registration on the ground that appellant had not carried out any charitable activity as envisaged under section 2(15) of the Income Tax Act, 1961.
5. Learned Authorized Representative for department of revenue submitted that appellant/assessee failed to submit complete details regarding activities undertaken as per aims and objectives of the trust.
6. From examination of record in light of aforesaid rival submissions it is crystal clear that the applications dated 31/08/2023 in Form No. 10AB seeking registration u/s. 12A(1)(ac)(ii) of the IT Act was filed. As per notice dated 27/09/2023 appellant/assessee filed final reply dated 26/01/2024 along with copies of documents and sought some more time to copies of Bank Statement, current year electricity bill in respect of premises for which NOC has been submitted. Ld. CIT(E) reject the application for not filing complete details regarding activities.
Hon’ble Supreme Court of India in Ananda Social & Educational Trust vs. Commissioner of Income Tax reported as 426 ITR 340 (SC) has held as under: “12. Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term ‘activities’ in the previous includes ‘proposed activities’, That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust.”
In view of above material facts and well settled principle of law passing of impugned order has led to miscarriage of justice which is required to be remedied. Accordingly impugned order is not just, fair and legal.
Hence the appeal of the assessee is allowed for statistical purpose. The matter is restored to the file of Ld. CIT(E) for consideration of Form 10AB and consider granting of registration as per law.
Order pronounced on 11th September, 2024.