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Income Tax Appellate Tribunal, VARANASI CIRCUIT BENCH, VARANASI
SHRI VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 14.5.2019 of CIT(E) passed under section 12AA(1)(b)(ii) of the Income Tax Act, whereby the application of the assessee for registration under section 12A was rejected. The assessee has raised the following grounds:- “1. The appellate order dated 14.05.2019 is opposed to the law and facts of the case because ld. CIT(Exemptions) has not given proper opportunity to produce the relevant record regarding charity activities conducted by the appellant trust. 2. The conclusion withdrawn by the ld. CIT(Exemptions) without physical verification of the activities carried/carrying out by the appellant trust is against the law and justice. 3. The ld. CIT(Exemptions) ought not have acted upon in oblivious of the facts and the records. That the appellant trust is newly constituted and required infrastructure was under construction.” 2. The learned AR of the assessee has submitted that the assessee is a newly constituted trust vide deed dated 11.12.2017. The main object of the assessee
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trust is imparting education to the poor and educationally remote areas. The learned AR has further submitted that the necessary infrastructure required for imparting the education was under construction at the time of filing the application for registration on 21.11.2018 and therefore, no activity was started by the assessee trust till the impugned order was passed by the CIT(E). Thus the learned AR has contended that the rejection of the application for registration under section 12A by the CIT(E) on the ground that no record of charitable functions carried out by the assessee has been produced for verification is not justified when the assessee was yet to commence its activity till the necessary infrastructure was to be completed. The learned AR has submitted that now the construction is completed and the assessee has commenced the activities of imparting education therefore, he has pleaded that the impugned order may be set aside and the assessee trust may be granted registration under section 12AA of the Act. In support of his contention, he has relied upon the following judgments as under:- 1. Saraswathi Swetha Educational Trust vs. (DIT Exemption) ITA No. 495/Mds/2011. 2. DIT(E) vs. Meenakshi Amma Endowment Trust (2011) 50 DTR (Karnataka HC) 243. 3. Vidyadayani Shiksha Samiti vs. CIT(ITAT Delhi) ITA No. 309/Del/2016 Order dated 14.12.17. 4. M.L. Meyyappan Charitable Trust v. DIT(E) in ITA Nos. 2073 & 2074/Mds Hc / 2010).” 3. On the other hand, learned DR has submitted that the CIT(E) has rejected the application of the assessee for want of necessary record to be produced by the assessee for verification and his satisfaction to arrive at the conclusion that the activities of the assessee are genuine and carried out for achieving the charitable objects of the assessee trust. He has relied upon the impugned orders of the CIT (Exemption).
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We have considered the rival submissions as well as relevant material on record. The CIT (Exemption) has observed in para 3 and 4 as under:- “3. On perusal of the material available on record, it is found that the applicant has merely submitted the trust deed and no material has been provided that could throw some light upon the activities, if any, carried out by the applicant as claimed in the trust deed. The applicant has failed to any material which could have provided an insight into the activities of the applicant. There is literally no material available on record so as to form even the slightest satisfaction regarding the genuineness of the activities carried out, if any, by the applicant. The applicant need to retrospect the fact that mere submission of the trust deed carrying high sounding lofty ideals does not make a trust or institution eligible for exemption which has been specifically targeted towards institutions carrying out genuine charitable activities and furthering the cause of charity. It is re-iterated that the section 12AA(1)(a) of the Income Tax Act, 1961 states that “The Commissioner shall call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of the trust or institution”. Thus it becomes imperative on the part of the applicant trust to provide corroborating evidences that form the satisfaction regarding the genuineness of the activities of the applicant which is mandated by law. In the absence of such satisfaction, the applicant loses it its eligibility for consideration for according the said registration. In the instant case neither has the applicant provided any ratification by providing the books of accounts nor have any vouchers been provided for the various expenses with respect to various activities as claimed to have been carried out. The above mentioned facts place serious doubts on the genuineness of the activities of the applicant and thus render the application deficient. 4. I have considered the material available on record. On perusal of material available on record, it is seen that the applicant trust is not carrying out any activities of charitable nature. In light of the above facts that the applicant trust could not produce the books of accounts and vouchers, the genuineness of activities could not be verified. As per provision of section 12AA(1)(b) of the Act, two factors namely the object of charitable purpose and the genuineness of activities have to be proved before granting the registration. However, the applicant failed to prove the same. Hence, the applicant trust has not made a case for granting the registration u/s 12AA(1)(b).”
It is clear from para 3 and 4 of the impugned order that the CIT(Exemption) was of the view that in the absence of any record and books of accounts to show that the assessee has carried out any charitable activity it is a serious doubt about the genuineness of the activities of the applicant. The CIT 3
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(Exemption) has finally rejected the application of the assessee by giving the finding in para 8 to 10 as under: “8. The law requires a conjunctive test whereby objects of the applicant trust have to be charitable and genuineness of charitable activities should be established for registration of application u/s 12A. Mere recital of objects or activities without cogent or corroborative evidence is not sufficient by themselves to enable a registering authority to arrive at the satisfaction mandated by law. In the instant case, part reply has been filed and the documents on record do not suffice to establish the genuineness of activities. As such the findings of facts regarding its charitable activities or rather the lack thereof arrived at on the basis of the evidence filed and arguments addressed stand uncontroverted. This is fatal to the claim of the applicant. 9. It is clear that applicant has failed to provide sufficient material to corroborate the charitable nature of the objects and genuineness of the activities. Despite being provided timely opportunity the applicant has not been able to substantiate its claim. 10. In view of the facts and above decisions, I am unable to accept the applicant’s claim in absence of sufficient material required for formation of satisfaction. Therefore, I do not find the case fit for grant of registration u/s 12A(1) of the Income Tax Act, 1961.”
It appears from the impugned order that the assessee has not brought out this fact to the knowledge of the CIT(E) that the assessee was yet to commence its activity and the necessary infrastructure was under construction. Without going into the merits of the issue when the assessee has now completed the infrastructure and commenced its activity as stated by the learned AR of the assessee at Bar, we find it appropriate that the matter should be reconsidered by the CIT(E) after verification of the necessary recorded to be produced by the assessee regarding the activities carried out by the assessee after completion of necessary infrastructure. Accordingly, we set aside the impugned order of the CIT(E) and remanded the matter to the record of CIT(E) for fresh adjudication of the application for registration under section 12A of the Income Tax Act after considering the relevant record to be filed by the assessee. Needless to say the
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assessee be given an appropriate opportunity of hearing before passing a fresh order. 7. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on conclusion of hearing on 26.05.2022. Sd/- Sd/- [RAMIT KOCHAR] [VIJAY PAL RAO] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27/05/2022 Varanasi Sh Copy forwarded to: 1. Appellant- Gona Foundation Trust 2. Respondent-CIT(Exemption), Lucknow 3. CIT(A),Varanasi 4. CIT 5. DR
By order Sr. P.S.
ITA No.217/VNS/2019 Gona Foundation Trust