2005 (10) TMI 441 - AT - Income Tax

Summary

Issues Involved:
1. Denial of registration of the trust under section 12A of the Income-tax Act, 1961.
2. Rejection of the application for condoning the delay in filing the application for registration under section 12A.
3. Rejection of exemption under section 80G of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Denial of Registration under Section 12A:
The primary issue was the refusal of registration under section 12A. The trust, created by Shri J.S. Tanwar on 6-6-1994, aimed to construct and manage temples and places of worship. The trust applied for registration on 21-12-1999, which was delayed by 4 years and 6 months. The Commissioner of Income-tax (CIT) denied the registration citing several reasons:
- No evidence of activities furthering the trust's objectives since its creation.
- No expenditure for the trust's objectives from its creation to the CIT's decision.
- Deposits of Rs. 76,40,788 and earned interest were not utilized for charitable purposes.
- False declaration in Form No. 15H to avoid tax deduction.
- Lack of proof that the donations were voluntary contributions for the corpus.
- Application for registration was made only after the Income-tax Department's inquiries.
- Huge deposits in the trustee's family members' names and subsequent settlement with the Settlement Commission.
- Non-utilization of 75% of the income for charitable purposes in India.
- The trust did not meet the criteria of a charitable trust.

The Tribunal upheld the CIT's decision, emphasizing the amendment to section 12A effective from 1-4-1997, which empowered the CIT to verify the genuineness of the trust's activities. The Tribunal found that the trust had not spent any funds for its objectives, and the delay in applying for registration, combined with the lack of credible evidence of activities, justified the CIT's refusal.

2. Rejection of Application for Condoning Delay:
The assessee contended that the delay in applying for registration should be condoned, citing previous decisions where delays were condoned. However, the Tribunal noted that the delay, combined with the lack of activities and expenditure for the trust's objectives, indicated a lack of genuineness. The Tribunal agreed with the CIT that the delay was relevant in assessing the trust's genuineness and upheld the refusal to condone the delay.

3. Rejection of Exemption under Section 80G:
The assessee's application for exemption under section 80G was also rejected. The Tribunal found that since the trust was not granted registration under section 12A, it was not entitled to exemption under section 80G. The Tribunal upheld the CIT's decision, noting that the denial of exemption was consequential to the refusal of registration.

Conclusion:
The Tribunal dismissed the appeal, affirming the CIT's decision to deny registration under section 12A, refuse to condone the delay in filing the application, and reject the exemption under section 80G. The Tribunal emphasized the importance of verifying the genuineness of the trust's activities and found that the trust had not met the criteria for registration as a charitable institution.