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Facts
Seth Panna Lal Charitable Trust, a registered charitable entity, applied for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, using Form 10AB. The CIT(E) rejected the application on 23/02/2024 without adequately considering the documents submitted by the trust in response to a questionnaire, which detailed its charitable activities.
Held
The Tribunal held that the CIT(E)'s order was bad in law and facts, as it failed to provide a reasonable opportunity of being heard and did not refer to the documents submitted by the assessee demonstrating its charitable activities. Citing Supreme Court precedent, the Tribunal reiterated that the genuineness of the trust's objects and proposed activities must be considered. Consequently, the Tribunal remitted the case back to the CIT(E) for fresh consideration.
Key Issues
1. Whether the rejection of the application for registration under Section 12A(1)(ac)(iii) was valid given the assessee submitted documents showing charitable activities. 2. Whether the CIT(E) violated principles of natural justice by not providing a reasonable opportunity of being heard and not considering the submitted documents.
Sections Cited
12A(1)(ac)(iii), 12AA
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Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
Date of Hearing 14/08/2024 Date of Pronouncement 28/08/2024 O R D E R
PER VIMAL KUMAR, JM:
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 application to CIT (Exemption), Chandigarh 2023-24/12AA/11404 was rejected.
Brief facts of the case are that appellant/assessee is a registered trust vides trust deed dated 15/10/2019. The trust is irrecoverable, its activities are charitable in nature and none of the objects of the trust involve carrying on of any activity for profits. Appellant/assessee filed application in Form No.10AB on 30/09/2023 seeking registration under sub-clause (iii) of clause (ac) of sub-section 12A of the Income Tax Act, 1961. A questionnaire was issued electronically on 14/11/2023 requesting the applicant to furnish the following documents/details online through e-proceedings on e-filing portal along with the supporting documents/evidence, point wise in the sequence by 29/11/2023. The appellant/assessee filed reply dated 08/01/2024 along with copies of documents. The Learned CIT(E) vide order dated 23/02/2024 rejected the application.
Being aggrieved appellant/assessee preferred the present appeal with following grounds:- “
1. On the facts and circumstances of the case, the order passed under by Commissioner of Income Tax (Exemptions), Chandigarh {CIT(E)} rejecting the application for registration under section 12A(1 )(ac)(iii) of the Income Tax Act is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, learned CIT(E) has been erred both on facts and in law in rejecting the application of the assessee for approval u/s 12A(1)(ac)(iii) of the act, despite the fact assessee has filed the application within the prescribed time limit and fulfilled all the conditions as provided under the Income Tax Act and thus, eligible for registration.
3. On the facts and circumstances of the case, the learned CIT(E) has erred both on facts and in law in passing the order without providing reasonable opportunity of being heard in clear violation of the principle of natural justice.
On the facts and circumstances of the case, the order passed by learned CIT(E) is in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed.
On the facts and in the circumstances of the case, Ld CIT(E) erred in rejecting the application for registration u/s 12A(1 )(ac)(iii) of the Act, 1961 despite the fact that there is no adverse finding regarding the aims, objects and genuineness of activities of the trust and hence application for registration cannot be rejected.
The appellant craves leave to add, amend or alter an of the grounds of appeal
.”
4. Learned Authorized Representative for appellant/assessee submitted requisite copies of documents which clearly shows the charitable activities as per objects of Memorandum of Association (MoA).
5. Learned Departmental Representative (DR) submitted that appellant/assessee failed to show any charitable activities.
6. From examination of record in light of aforesaid rival submissions it is crystal clear that in response to questionnaire dated 14/11/2023 appellant/assessee had submitted reply dated 08/01/2024 along with copies of documents which are at page 61 to 124 of the Paper Book. The Ld. CIT(E) failed to refer to any of the documents of regarding charitable activities as per objects of the MoA.
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 purposes. The matter is restored to the file of Learned CIT(E) for consideration of Form 10AB for registration as per law.
Order pronounced on this day 28th August, 2024.