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Facts
The assessee, Radhe Shamka Foundation, appealed against the CIT(E)'s rejection of its applications for registration u/s 12(1)(ac)(iii) (later referred to as 12A/12AB) and approval u/s 80G(5) of the Income Tax Act. The CIT(E) rejected the applications due to alleged insufficient evidence, absence of charitable activity, issues with salary to a trustee, donations from a single entity, common trustees, and non-display of a sign board, despite the assessee providing voluminous documentary evidence of its charitable work.
Held
The Tribunal observed that the assessee was provisionally registered and its activities were within its trust objectives, finding no bar in receiving single-entity donations or having common trustees. It noted that the CIT(E) arbitrarily rejected extensive documentary evidence of charitable activities without disproving them. Consequently, the Tribunal remanded both the registration application u/s 12AB and the 80G(5) approval application back to the CIT(E) for fresh consideration, directing a re-evaluation of all submitted evidence and allowing the assessee a proper hearing.
Key Issues
Whether the CIT(E) erred in rejecting the assessee's applications for registration u/s 12A/12AB and approval u/s 80G(5) by disregarding voluminous documentary evidence of charitable activities and raising objections not supported by law.
Sections Cited
12(1)(ac)(iii), 12A, 12AB, 80G, 80G(5), Income Tax Act, 1961
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
This appeal is filed by the assessee against the order of the Ld. CIT (E) Chandigarh, dated 12/03/2025, rejecting the application for registration u/s 12(1)(ac)(iii) of the Act 61, filed on 23/09/2024, on the ground of insufficient evidences and in absence of any charitable activity being carried out as found from physical enquiry and verification of the earmarked premises by the departmental authorities.
The grounds of appeal preferred by the assessee in the memo of appeal are as follows:
“1. That on the facts, circumstances and legal position of the case, the Worthy CIT(E) in Order No. CIT EXEMPTIONS CHANDIGARII/2024-25/12AA/12544 has erred in passing the order in contravention of the provisions of S. 12A1B of the Income Tax Act, 1961.
2. That on law, facts and circumstances of the case, the Worthy CIT(E) has erred in rejecting the application of the applicant seeking registration u/s 12A even when the single Questionnaire was itself issued as a SCN on 03.01.2025 vide Notice No. ITBA/EXM/F/EXM43/2024-25/1071862594(1) and no separate SCN was issued by the respondent
3. That un law, facts and circumstances of the case, the Worthy CIT(E) has erred in rejecting the application of the appellant seeking registration u/s 124 without considering the submissions made and more-so when the expenses incurred were through tanking channels only and all supporting evidences thereof were fled.
4. That on law, facts and circumstances of the case, the Worthy CIT(E) has erred in rejecting the application of the applicant seeking registration u/s 124 by erroneously rejecting the request letters of donation seekers even when such charitable work had been genuinely done by the appellant.
That on law, facts and circumstances of the ease, the Worthy CIT(E) has creed in rejecting the application of the applicant seeking registration u/s 124 by erroneously holding that the appellant failed to produce documentary evidence of expense of Rs. 1,34,160/- incurred on treatment of poor people in Prakruti Ayurveda and Panchkarma Clinic even when the documentary evidences thereof were duly submitted before the Worthy CIT(E)
6. That on law, facts and circumstances of the case, the worthy CIT(E) has erred in rejecting the application of the applicant seeking registration u/s 12A on erroneous holding that salary of Rs. 1,20,000/ being paid to one of the trustees is not mentioned in any clause of the Trust deed even when there is no such requirement of mentioning this in the Trust deed.
That on low, facts and circumstances of the ease, the Worthy CIT(E) has erred in rejecting the application of the applicant seeking registration u/s 12A by erroneously making a fictional basis that donations are being received from a single entity Stone Universe Pvt. Ltd.) even when there is no such bar of receiving donation from a single entity/ person.
8. That on law, facts and circumstances of the case, the Worthy CIT(E) has erred in rejecting the application of the applicant seeking registration u/s 12A on incorrect basis that there are Common trustees vir Mrs. Kavita Arora and Mes. Babita Wahi in M/s Dignity Homes Trust and the appellant trust even when the provisions of the Act do not bar this situation of common trustees in 2 or more trusts,
9. That on law, facts and circumstances of the ease, the Worthy CITIE) has erred in rejecting the application of the applicant seeking registration u/s 12A on incorrect basis that Sign Board was not earlier put up at the Registered office of the appellant trust.
10. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.”
In course of hearing the Ld. AR of the assessee filed a short paper book containing copies of trust deed , provisional registration u/s 12AB and 80G of the Act, along with copies of financials , bank statements, and copies of communications and department , which also contains documentary evidences of various services rendered under the head education service , Health care Services, community services, copies of letters of appreciation received from various patients, hospitals, vendors relating to community services, and photographs, of activities carried out.
The Ld. AR submitted that the application for registration has been arbitrarily rejected without considering the voluminous documentary evidences produced before the Ld. CIT (E) as contained in the paper book, which are all evidences of various charitable activities carried out by the assessee supported by invoices and all payments routed through bank channel as evident from bank statements. He further submitted that the various request letters from various persons seeking relief are arbitrarily rejected without any verification and the letters of appreciations supported by documentary evidences of work actually carried out has also been rejected without bringing any material on record to disprove the same and completely ignoring the documentary evidences of charitable work carried out at M/s Nirmal Eye Hospital for treatment of so many patients whose full summary of expenses supported by hospital records are filed, donation of medicines made to M/s Prakriti Ayurveda and Pankarma Clinic, and other evidences relating to community services has been overlooked , simply on the basis of a report submitted by the departmental inspector , without assessee , and he prays for proper and adequate relief .
5. The Ld. DR relied on the order of the Ld. CIT (E) , and the departmental inspector report to submit that the sign board of the assessee has been newly put up and the office is located at the residence of the trustee and there are common trustees with M/s Dignity Homes Trust (Ms Babita Wahi being the common person ) and the source of funds are emerging from a common business entity “ Stone Universe Private Limited ” which point towards diversion of taxable income of commercial entities under the guise of philanthropy , and prayed for sustaining the rejection order , but could not point out any discrepancy in the documentary evidences submitted in the voluminous paper book by the assessee as proof of charitable work carried out.
We have heard the rival submissions and considered the materials contained in the PB filed before us, and we find that the assessee is provisionally registered and the application for registration is properly filed and the activities carried out by the assessee are within the object clause contained in the deed of trust and there is no bar either in receiving donations from any single entity or in the existence of common trustees , as pointed out by the Ld. CIT ( E ) , as long as the activity carried out by the assessee is charitable in nature carried out for the benefit and welfare of the public at large and are as per the purpose of which the same has been established. book , supported by photographs , as carrying out of various welfare and charitable activities , as envisaged in the trust objectives, has not been proved to be false and the existence of various patient who received the actual medical benefits, has not been found to be bogus and we are of the opinion that the documentary evidences cannot be discarded or rejected without verification and bringing any evidence on record, contrary to the same .
As such in the interest of justice we remand the matter back to the Ld. CIT (E) to consider the application for registration afresh in tandem with the documentary evidences produced as proof of carrying out of various charitable activities, supported by bank statement, invoices and ledger accounts and proof of appreciation letters and photographs, all brought on record and to proceed with the registration process as per provisions of law.
The assessee will be allowed reasonable opportunity of being heard and the assessee is also directed to file all supporting documentary evidences and to fully cooperate in registration proceedings.
In the result, the appeal of the assessee is allowed for statistical purposes.
This appeal is against the rejection order of the Ld. CIT (E) dated 12/03/2025, in respect of an application filed by the assessee in form 10AB, dated 07/10/2024, seeking approval u/s 80G (5) of the Act 61.
Since we have remanded the matter to the Ld. CIT (E), Chandigarh, relating to the application for registration of the assessee u/s 12AB of the Act 61, we remand this application for approval u/s 80(5) of the Act, to be considered afresh in tandem with the registration application. appeal also.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 14.11.2025 Sd/- Sd/- (Manoj Kumar Aggarwal) (Udayan Dasgupta) Accountant Member Judicial Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT concerned