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Facts
The assessee filed an application for registration under section 12A(1)(ac)(iii) of the Income Tax Act, 1961, which was rejected by the CIT(E). The assessee argued that documentary evidence was filed but not considered and that the CIT(E) erred in rejecting the application based on irrelevant factors. The CIT(E) noted unsubstantiated activities of the trust and doubted the existence of trust premises.
Held
The Tribunal noted that while some reasonable evidences seem to exist, they were unable to examine them at that stage. The Tribunal set aside the order of CIT(E) and granted one more opportunity to the assessee to explain its case before the CIT(E).
Key Issues
Whether the CIT(E) was justified in rejecting the trust's application for registration without properly considering the documentary evidence provided and whether the grounds for rejection were relevant.
Sections Cited
12A(1)(ac)(iii), 12AB, Income Tax Act, 1961
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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI S.R. RAGHUNATHA
आदेश /O R D E R
PER BENCH: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Exemption), Chennai dated 30.11.2023, rejecting application in Form No.10AB filed for seeking registration/approval/recognition u/s.12A(1)(ac)(iii) of the Income Tax Act, 1961 (hereinafter the ‘Act’) respectively.
2. At the outset, the ld.counsel for the assessee stated that the CIT(E) rejected the assessee’s application for registration of trust u/s.12AB of the Act by filing application u/s.12A(1)(ac)(iii) of the Act. For this assessee stated that the assessee has filed documentary evidence but the CIT(E) has not considered the same and for this, he relied on the ground Nos.1 & 2, which read as under:- “1. For that the Ld.Commissioner of Income-Tax (Exemptions) [“CIT”] erred in rejecting the application preferred by the appellant u/s 12A(1)(ac)(iii) of the Income-tax Act, 1961 [“Act”] vide his order dated 30.11.2023, ignoring the facts and merits of the case and disregarding the evidences relied on by the appellant.
For that the Ld.CIT(E) erred in rejecting the appellant trust registration application u/s 12A(1)(ac)(iii) of the Act by invoking factors not relevant for registration u/s 12AB of the Act, such as, trust functioning from two premises, rent paid to trustee for usage of trustee’s property, and documentary evidence for usage of Ambattur property without giving any adverse finding in respect of the same.”
2.1 The ld.counsel for the assessee took us through the observations of CIT(E) given at page 5 & 6 i.e., unsubstantiative activities of the trust and the findings read as under:- “Unsubstantiated Activities of the Trust:-
Since, the existence of the trust premises is doubtful, the undersigned asked the assessee to furnish the evidences of the activities undertaken by it. In this connection, Sri W Edison Armstrong, the Managing Trustee appeared on 28-11-2023 but has not furnished any details with supporting documents regarding activities carried on by it. He has orally explained that the Trust is also carrying on its church activity in Ambattur, Chennai on a rented premise, but could not produce any evidence regarding its activities. It is also seen from the accounts that expenditure incurred towards rent was not claimed in the Income and Expenditure statement. When this was pointed out, he has no answer to explain.
Further, during the hearing, as a last chance, he was asked to bring any supporting documents, atleast some photos regarding its activities in order to satisfy myself regarding the genuineness of the activities of the trust. But, till the passing of this order, the Managing Trustee could not bring any details in support of its claim.”
The ld.counsel for the assessee stated that now he is filing evidences which were filed before CIT(E), but CIT(E) has not considered this and hence, he requested for one more opportunity. The ld.counsel for the assessee also stated that as regards to genuineness of activities of the trust, he is ready to satisfy the CIT(E) by filing documentary evidences. Hence, he requested one more opportunity. On the other hand, the ld.CIT-DR supported the order of CIT(E).
We have heard rival contentions and gone through facts and circumstances of the case. From the above facts narrated and now document filed before us, we noted that there seem some reasonable evidences but at this stage, we are unable to examine. Hence, we set aside the order of CIT(E) and allow one more opportunity to the assessee to explain its case before CIT(E).
Hence, the order of CIT(E) is set aside and matter remanded back to his file for fresh adjudication.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court at the time of hearing on 21st August, 2024 at Chennai.