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Facts
The assessee filed two appeals challenging the orders of the CIT(Exemption) rejecting their applications for registration under Section 12AB of the Income Tax Act and for exemption under Section 80G. The assessee failed to provide evidence of registration under the Rajasthan Public Trust Act, 1959, and did not sufficiently demonstrate the genuineness of its activities.
Held
The Tribunal held that registration under the Rajasthan Public Trust Act is mandatory for obtaining registration under Section 12AB of the Income Tax Act. The assessee failed to comply with this mandatory requirement and did not provide sufficient evidence of its charitable activities.
Key Issues
Whether the assessee is eligible for registration under Section 12AB and exemption under Section 80G of the Income Tax Act without being registered under the Rajasthan Public Trust Act and without providing sufficient evidence of its activities.
Sections Cited
Section 12AB, Section 80G, Section 12A, Section 10(23C), Rajasthan Public Trust Act, 1959
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES “A” :: JAIPUR
Before: DR.S.SEETHALAKSHMI & DR. DIPAK P. RIPOTE
ORDER PER DR. DIPAK P. RIPOTE, AM: These two appeals filed by the assessee against two separate orders of ld.Commissioner of Income Tax(Exemption), Jaipur both dated 25.02.2023. The assessee in has raised the following ground of appeal : & 810/JPR/2023 Aagaz Samajik Vikas Sanstha [A]
1. On the facts and circumstances of the case, the Ld.CIT(Exemption) grossly erred in law and facts by rejecting the application of assessee for registration under Section 12AB on the ground of mere non registration of trust under Rajasthan Public Trust act without making any observation on materiality of such non compliance on achievement of the objects of the trust. Further, such rejection was made on the basis of erroneous interpretation of Honorable Supreme Court Judgement in the case of New Noble Education Society. It is thus hereby prayed for quashing the rejection order so passed and order for grant of registration.
2. On the facts and circumstances of the case, the Ld.CIT(Exemption) grossly erred in law and facts by rejecting the application of assessee for registration under Section 12AB without affording it a reasonable opportunity of being heard. Thus, the order so passed is against the principles of natural justice and thus hereby prayed for being quashed.
3. On the facts and circumstances of the case, the Ld.CIT(Exemption) grossly erred in law and facts by rejecting the application of assessee for registration under Section 12AB on the ground of incomplete Form 10AB whereas the registration was allowed to assessee on the strength of same form and after consideration of same. It is hereby thus prayed for quashing the order so made.
On the facts and circumstances of the case and without prejudice to other grounds of appeal, the Ld.CIT(Exemption) grossly erred in law and facts by rejecting application under Section 12AB on the ground of non satisfaction about the genuineness of activities of the trust whereas the fact is that assessee did not get the chance to Aagaz Samajik Vikas Sanstha [A] reply to the notices of the Ld. Authority. Thus, as no proper opportunity of being heard was provided to assessee for submitting additional documents and almost all the documents and almost all the documents so asked were already submitted by the assessee at the time of provisional registration, a fresh opportunity is hereby prayed by the assessee.
5. The assessee hereby craves the leave to add, delete, amend or abandon any grounds of this appeal at the time of or before the hearing of the case.”
1.1 The assessee in has raised the following grounds of appeal :
1. On the facts and circumstances of the case, the Ld.CIT(Exemption) has grossly erred in law and facts by rejecting the application of assessee seeking exemption under Section 80G on the ground of rejection of assessee’s application for registration under Section 12AB when such rejection was itself not as per provisions of law. it is hereby thus prayed for quashing the said rejection order and direct for accepting the application so made by the assessee.
2. On the facts and circumstances of the case, The Ld.CIT(Exemption) grossly erred in rejecting the application made by the assessee for seeking exemption under Section 80G without affording reasonable opportunity of being heard to the assessee. It is thus hereby prayed for quashing the said rejection order so made as it was against the principles of natural justice. Aagaz Samajik Vikas Sanstha [A]
3. The assessee hereby craves the leave to add, delete, amend or abandon any grounds of this appeal at the time of or before the hearing of the case.” 2. At the outset of hearing, no one appeared on behalf of the assessee.
2.1 It is observed that this is the 8th hearing opportunity given to the assessee. However, no one appeared on behalf of the assessee nor any submission has been filed.
2.2 On 25.01.2024, the assessee’s case was scheduled for hearing. However, the Authorised Representative CA-Mr.Vishal Gupta from Goyal Rajesh & Co. Chartered Accountants filed a request for adjournment by Email. In the said Email, it is mentioned that adjournment may kindly be allowed, as we need some more time for preparation of the matter. Accordingly, the case was adjourned from 25.01.2024 to 27.02.2024. Again ld.AR of the assessee requested for the adjournment on 27.02.2024 stating that his father has undergone Angioplasty and therefore, ld.AR was busy. The hearing was adjourned to 20.03.2024. Again Aagaz Samajik Vikas Sanstha [A] the ld.AR filed a letter requesting for adjournment. Next hearing was scheduled on 13.05.2024. On 13.05.2024 at 10.12AM the ld.AR filed an Email requesting for adjournment on the ground that they need more time for preparation of matter. The case was adjourned to 05.06.2024. On 04.06.2024, ld.AR filed adjournment letter stating that they need time for preparation of the matter. The hearing of appeal was adjourned to 09.07.2024. None appeared on 09.07.2024 on behalf of the assessee. The case was adjourned to 22.07.2024. None appeared for hearing on behalf of assessee on 22.07.2024. In these facts and circumstances of the case we are convinced that the assessee is not interested in pursuing the appeal. Therefore, on 22.07.2024, we heard the ld.Departmental Representative of the Revenue, perused the records and decided the case.
Submission of ld.DR : 3. The ld.Departmental Representative(ld.DR) for the Revenue submitted as under : Aagaz Samajik Vikas Sanstha [A]
Further assessee has also filed application for condonation of delay wherein assessee has not submitted supporting documents of his plea of being abroad supported by copy of the relevant pages of the passport and for medical grounds supported by the relevant medical records for assessee in the condonation to be granted. During the course of today hearing, AR of assessee has neither filed adjournment application nor appeared before the Hon’ble Bench which shows the casual and non serious attitude of the assessee.
Therefore, considering the above facts and non seriousness of the assessee for pursuing the appeal, the present appeal may be dismissed.
3.1 The ld.DR further pleaded that assessee has not filed copies of annual reports, evidence of charitable activities, before the ld.CIT(E). The ld.DR submitted that Assessee is not registered under Rajasthan Public Trust Act and hence, assessee is not eligible registration u/sec.12AB of the Income Tax Act.
Findings & Analysis : 4. We have heard ld.DR for the Revenue and perused the records.
4.1 On perusal of the order of the ld.CIT(E), it is observed that assessee has filed application in Form No.10AB for registration Aagaz Samajik Vikas Sanstha [A] u/seec.12AB of the Act on 30.09.2022. Ld.CIT(E) had issued three notices requesting assessee to file specific documents mentioned in the order, however, assessee failed to submit any details before ld.CIT(E). Assessee in Ground No.2 stated that “Assessee was not provided sufficient opportunity”. However, as discussed in above para it was apparent that assessee was provided sufficient opportunities. Therefore, Ground No.2 of the assessee is hereby dismissed.
4.2 During the proceedings, the ld.CIT(E) requested assessee to file copy of Annual Accounts for last three years, note on activities, evidence of activities, copy of bank statements etc., to verify the genuineness of the activities of the assessee.
Section 12AB of the is reproduced here as under : 12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,— (a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub- clause (iv) or sub-clause (v) 66[or item (B) of sub-clause (vi)] of the said clause,— Aagaz Samajik Vikas Sanstha [A]
(i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about— (A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),— (A) pass an order in writing registering the trust or institution for a period of five years; or 67[(B) if he is not so satisfied, pass an order in writing,— (I) in a case referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (v) of clause (ac) of sub-section (1) of section 12A rejecting such application and also cancelling its registration; (II) in a case referred to in sub-clause (iv) or in item (B) of sub- clause (vi) of sub-section (1) of section 12A, rejecting such application, after affording a reasonable opportunity of being heard;] 68[(c) where the application is made under item (A) of sub-clause (vi) of the said clause or the application is made under sub-clause (vi) of the said clause, as it stood immediately before its amendment vide the Finance Act, 2023, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought,] and send a copy of such order to the trust or institution. (2) All applications, pending before the Principal Commissioner or Commissioner on which no order has been passed under clause (b) of sub-section (1) of section 12AA before the date on which this section has come into force, shall be deemed to be applications made under sub-clause (vi) of clause (ac) of sub-section (1) of section 12A on that date. (3) The order under clause (a), sub-clause (ii) of clause (b) and clause (c), of sub- section (1) shall be passed, in such form and manner as may be prescribed, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received. 69[(4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,— Aagaz Samajik Vikas Sanstha [A]
(a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or (c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall,— (i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation.—For the purposes of this sub-section, the following shall mean "specified violation",— (a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or (b) the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c) the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public; or (d) the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or (e) any activity being carried out by the trust or institution,— (i) is not genuine; or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and Aagaz Samajik Vikas Sanstha [A] the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality 70[; or] 71[(g) the application referred to in clause (ac) of sub-section (1) of section 12A is not complete or it contains false or incorrect information.] (5) The order under clause (ii) or clause (iii) of sub-section (4), as the case may be, shall be passed before the expiry of a period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1st day of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) of sub-section (4).] 4.3 The section 12AB lays down the procedure for registration under the Income Tax Act. As per section 12AB(1), the ld.CIT(E) has to call-for documents and make enquiries in order to verify Genuineness of Activities of the assessee trust. Accordingly, in this case, the ld.CIT(E) has called-for documents. However, assessee failed to file evidence regarding Charitable Activities of the assessee trust. Assessee has not even explained what are the activities of the assessee. In these facts and circumstances of the case, ld.CIT(E) was right in stating that Genuineness of the Charitable Activities of the assessee trust could not be verified. Therefore, ld.CIT(E) was right in rejecting the application of the assessee for registration u/sec.12AB read with section 12A of the Act. Aagaz Samajik Vikas Sanstha [A] Not registered under Rajasthan Public Trust Act, 1959 : 4.4 It is observed that ld.CIT(E) in the rejection order stated that assessee is not eligible for registration u/sec.12AB of the Act as assessee failed to prove that assessee is registered under Rajasthan Public Trust Act, 1959. The relevant paragraph 3.2 & 3.3 of ld.CIT(E)’s order is reproduced here as under : “3.2. Section 17 (1) of Rajasthan Public Trust Act, 1959, mandates that every public trust shall register itself under this act. Further, section 2(11) of Rajasthan Public Trust Act. 1959 defines public trust, which include all public charitable or religious or both, societies, trusts, endowments, institutions etc. Thus combined reading of both the sections and the act as a whole makes it clear that registration under Rajasthan Public trust Act, 1959, in mandatory for charitable or religious or charitable and religious organization by whatever name they are called, except Waqf (section 80 of R.P.T.Act) which separate act is enforceable, It is further important to mention here that Section 70 of R.P.T. Act also provides penal provisions for nat adhering the provisions of section 17, this further makes it clear that not only the registration under R.P.T. Act is mandatory but also non adherence is penal. RPT Act, 1959 provides statutory frame work for all charitable and religious organizations, and deal with how the management of such public trust need to be, so the trustees should not misuse the authority of being trustees/management committee Aagaz Samajik Vikas Sanstha [A] members. Section 30-31 deals with how the public money can be invested by these public trusts and previous sanction for transfer of properties to stop the misuse. Section 32-36 give the framework for management of accounts, audit. and its inspection by government authorities, Section 37-65, gives detail framework stating inter-alia that, being a public trust, on the basis of application from public or suo-moto authorities can inspect the working of such public trusts, and if needed for the interest of public may appoint trustees on their own and in extreme case can even takeover the trusts, as public trusts are actually for public, and trustees are just trustees, and if they fails in their duties of trustee, government is empowered to give management to some other persons and even take on their own. This entire scheme of frameworks shows that, it's necessary for any charitable or religious institution, Society or trust to get it registered under R.PT Act which it should not be considered charitable or religious. The relevant provisions of section 2(11) and 17(1) are reproduced as under: - Section 2(11) of R.P.T. Act:- "(11) "Public trust" means an express or constructive trust for either a public religious or charitable purpose or both and includes a temple, a math. dharmsala or any other religious or charitable endowment or institution and a society formed either for a religious or charitable purpose or for both;"
Section 17(1) of R.P.T. Act. 17. Registration of Public Trusts. (1) Within three months from the date of the application of this Aagaz Samajik Vikas Sanstha [A] section to a public trust or from the date on which a public trust is created, whichever is later, the working trustee thereof shall apply to the Assistant Commissioner having jurisdiction for the registration of such public trust.”
3.3. It is also important to note here that earlier the Hon'ble Bombay High Court in case of Shyamabal Surajkaran Joshi vs Madan Mohan Mandir Sanstha (AIR 2010 Bom 88), and Andhra Pradesh High Court in case of Aurora Educational Society 339 ITR 333 (2011) and RRM educational society 339 ITR 323 (2011) has held that registration under respective charities act is mandatory. Further, recently, the Hon'ble Supreme Court in its para no. 64-70 of order dated 19.10.2022 in the case of M/s New Noble Education Society in civil appeal no. 3795 of 2014 has opined that registration under respective public trust acts or charities act is mandatory. Para 70 of said order is reproduced as follows:
......In view of the above discussion, it is held that charitable institutions and societies, which may be regulated by other state laws, have to comply with them-just as in the case of laws regulating education (at all levels) Compliance with or registration under those laws, are also a relevant consideration which can legitimately weigh with the Commissioner or other concerned authority, while deciding applications for approval under section 10(23C)." Aagaz Samajik Vikas Sanstha [A] It is also pertinent to mention in respect of recent Supreme Court decision the Hon'ble Apex Court has clarified that it is applicable for approval u/s 10(23C) and also for registration under section 12AB of the Act.”
4.5 Thus, ld.CIT(E) has relied on the decision of the Hon’ble Bombay High Court, Hon’ble Andhra Pradesh Court and the Hon’ble Supreme Court. The assessee has not distinguished any of the case laws relied by the ld.CIT(E).
4.6 The Hon’ble Supreme Court in the case of M/s.New Noble Educational Society vs. CCIT-1 & ANR in Civil Appeal No.3795 of 2014 dated 19.10.2022 has held as under “: “68. The assessees had argued that since they were registered under the Andhra Pradesh Societies Registration Act, 2001 or were trusts duly registered, they could not be compelled to comply with state laws as a condition for consideration of their application as charitable institutions, under Section 10 (23C).
This court is of the opinion that the findings in the impugned judgment on this aspect are sound. The requirement of registration of every charitable institution is not optional. Aside from the fact that the consequences of non-registration are penal, which indicates the mandatory nature of the provisions of the A.P. Charities Act, such local laws provide the regulatory framework by which annual accounts, manner of choosing the Aagaz Samajik Vikas Sanstha [A] governing body (in terms of the founding instrument: trust, society, etc.), acquisition and disposal of properties, etc. are constantly monitored. Entry 32 of List II of the Seventh Schedule to the Constitution reads as follows:
32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific, religious and other societies and associations; cooperative societies.
By Entry 28, List III of the Seventh Schedule, the states have undoubted power to enact on the subject of charities:
28. Charities and charitable institutions, charitable and religious endowments and religious institutions.
The A.P. Charities Act provides a statutory regulatory framework in regard to activities of charitable institutions in the state. Sections 72- 74 deal with surplus funds and their treatment; Sections 75-77 deal with properties of trusts and charitable institutions and restrictions on transfers. These and other provisions enable the State, which is concerned in the proper administration of such organizations, to ensure that they are managed efficiently without misfeasance. They also contain provisions to protect the interests of trusts, especially funds and properties.
In view of the above discussion, it is held that charitable institutions and societies, which may be regulated by other state laws, have to comply with them just as in the case of laws regulating Aagaz Samajik Vikas Sanstha [A] education (at all levels). Compliance with or registration under those laws, are also a relevant consideration which can legitimately weigh with the Commissioner or other concerned authority, while deciding applications for approval under Section 10 (23C).” (emphasis supplied.)
4.7 Thus, the Hon’ble Supreme Court (supra) has categorically observed that registration under respective State Law as mandatory for obtaining registration u/sec.10(23C) and upheld the order of the Hon’ble Andhra Pradesh High Court. The Hon’ble Supreme Court’s decision in the case of M/s.New Noble Educational Society(supra) is with reference to section 10(23C) of the Income Tax Act, as it was applicable at that point of time. At that point of time, there was no pre-condition in section 10(23C) regarding registration under respective State Public Trust Act, inspite of that Hon’ble Supreme Court held that it is mandatory for the trust to register under respective State Public Trust Act and Commissioner has right to verify the same. However, the present case pertains to registration u/sec.12AB of the Act. As per section 12AB(1), compliance of any other law applicable to the Trust or institution Aagaz Samajik Vikas Sanstha [A] is mandatory. In these circumstances, the conditions laid down by Section 12AB of the Act are more stringent than the “then section 10(23C)”, which has been interpreted by the Hon’ble Supreme Court(supra).
4.8 The Hon’ble Supreme Court in the case of PCIT Vs. Wipro Limited, 446 ITR 1; observed that assessee claiming exemption has to strictly and literally comply with the exemption provisions.
4.9 One arm of the law being utilized to defeat another arm of the law which would not only be opposed to public policy but would also bring the law into ridicule {Biharilal Jaiswal Vs. CIT [1996] 217 ITR 746 (SC) }.
4.9.1 Not registering under the Rajasthan Public Trust Act is against the public policy.
4.10 In this case, we have already reproduced section 12AB of the Act which categorically lays down that compliance of other applicable laws is mandatory. In this case, the Rajasthan Public Aagaz Samajik Vikas Sanstha [A] Trust Act is applicable to the assessee. The assessee has not produced any document to prove that assessee is registered under Rajasthan Public Trust Act. It means assessee has violated the condition laid down in Section 12AB(1) of the Income Tax Act. As held by Hon’ble Supreme Court(supra), Exemption Provisions have to be strictly and literally complied. In this case, assessee has not complied the provisions of section 12AB of the Act. Therefore, respectfully following the Hon’ble Supreme Court decision in the case of M/s. New Noble Educational Society and PCIT Vs. Wipro Limited, we agree with the ld.CIT(E) that assessee is not eligible for registration u/sec.12AB r.w.s 12A of the Act, as assessee has failed to comply the provisions of section 12AB of the Act. Accordingly, assessee’s Ground Numbers 1, 3 and 4 are dismissed for the elaborate reasons discussed in earlier paragraphs.
4.11 Ground No.5 is general in nature and does not need any adjudication, hence dismissed. Aagaz Samajik Vikas Sanstha [A]
In the result, appeal of the assessee is dismissed.
Condonation of Delay : 6. The Assessee’s appeal before ITAT is delayed by 241 days. Assessee has filed condonation of delay application. It is claimed in the condonation of delay application that assessee had hired Advocate-Akhilesh Sharma for filing of appeal, however, he did not file the appeal. Therefore, assessee claimed that delay is due to the negligence of the Advocate and not of the assessee. It is further mentioned in the application that assessee hired a new Consultant to file the present appeal. We are not convinced with the reasons for delay, however, in the larger interest of justice, we condone the delay. : 7. Assessee had filed application for registration u/sec.80G of the Act. The ld.CIT(E) rejected the application, because to get a registration u/sec.80G, assessee has to be registered either u/sec.12A, u/sec.12AA, u/sec.10(23C) of the Act. In this case, Aagaz Samajik Vikas Sanstha [A] assessee is not registered either u/sec.12A, u/sec.12AA, u/sec.10(23C) of the Act. Therefore, we agree with the ld.CIT(E) and uphold the order rejecting assessee’s application u/sec.80G of the Act. Accordingly, Ground No.1 and 2 of the assessee are dismissed.
Ground No.3 is general in nature, needs no adjudication, hence dismissed.
In the result, appeal of the assessee is dismissed.
To sum up, both appeal of the assessee in and ITA No.810/JPR/2023 are dismissed.