2013 (1) TMI 628 - HC - Income Tax

Registration under Section 12A - assessee has failed to prove the genuineness of its activities - Held that - The list of 87 donors shows that the only names are mentioned without any address. The lack of information in respect of parentage, age, address or PAN Numbers in the list of donors are the good reasons for declining the registration of the assessee as a charitable trust. The list of such donors is sufficient to infer that about the genuineness of the activities of the trust as contemplated and required to be considered by the AO in terms of Section 12AA(1)(aa). Thus on the basis of enquiry conducted and the information submitted by the respondent, the introduction of donors, shows in-genuineness of activities of the trust. Therefore, it is a sufficient reason to decline registration in terms of Section 12AA(1) (a) - in favour of the Revenue

Summary

Issues:
Registration of assessee as a charitable trust under Section 12A of the Income Tax Act, 1961.

Analysis:
The case involves an appeal by the Revenue under Section 260A of the Income Tax Act, challenging the order passed by the Income Tax Appellate Tribunal regarding the registration of the assessee as a charitable trust under Section 12A of the Act. The main issue raised is whether the Tribunal was correct in granting registration under Section 12A when the genuineness of the trust's activities was not adequately proven. The Commissioner of Income Tax had initially declined registration, citing concerns that the donations received by the trust lacked specific directions towards corpus and did not comply with the provisions of the Act.

Upon appeal, the Tribunal set aside the Commissioner's order, stating that the genuineness of the activities should be examined by the Assessing Officer during the assessment process. The Tribunal emphasized that the exemption would not be available if the Assessing Officer was not satisfied with the genuineness of the activities claimed by the trust. During the proceedings, the list of donors presented by the respondent lacked crucial information such as addresses, parentage, age, or PAN numbers, which are essential for verifying the genuineness of the trust's activities as required by Section 12AA(1)(aa) of the Act.

The respondent relied on a judgment from the Delhi High Court to argue that incomplete donor information does not necessarily indicate unaccounted money and should not be a reason to decline registration. However, the Court found that the lack of essential donor information was sufficient to infer the in-genuineness of the trust's activities. The Court highlighted that at the time of registration, the Commissioner of Income Tax is obligated to assess the genuineness of the trust's activities and conduct necessary inquiries.

Ultimately, the Court ruled in favor of the Revenue, concluding that the trust's activities lacked genuineness based on the information provided, and therefore, registration was rightfully declined under Section 12AA(1)(a) of the Act. The appeal was allowed in favor of the Revenue, emphasizing the importance of proving the genuineness of activities for charitable trust registration under the Income Tax Act.