2021 (9) TMI 1482 - AT - Income Tax

Exemption u/s 11 - refusing to grant registration u/s 12AA (1)(b)(ii) - utilization of the fund and receipt thereof from the agriculture activities - whether the activities of the assessee are genuine, and the object of the assessee are charitable in nature or not? - HELD THAT - We have gone through the record from the record it is discernible that the ownership document per duly placed by the assessee before the CIT exemption and also before us which clearly shows that the ownership of the land vested in the assessee. Assessee had also placed on record the sale of agricultural produce by filing the form J - The documents clearly shows that the finding recorded by the CIT exemption was against the record. In any case at the time of grant of registration under section 12 AA of the of the Income Tax Act what is required to be seen is whether the activities of the assessee are genuine, and the object of the assessee are charitable in nature or not. No comments were made by the CIT exemption in respect of above said two aspect and the whole premise of rejection order of the registration was based on utilization of the fund and receipt thereof from the agriculture activities. In our view the same is not permitted in view of the law laid down by the Hon ble Supreme Court in the matter of Anand Social 2020 (2) TMI 1293 - SUPREME COURT , Dawoodi Bohara Jamat 2014 (3) TMI 652 - SUPREME COURT . In the present case the finding recorded by the CIT exemption is not arising out of the record, rather it is contrary to the record. In our view the assessee was able to prove that the objects of the assessee are charitable, and the activities of the assessee are also genuine. Therefore, respectfully following our decision in the case of Saraswati Education 2021 (9) TMI 840 - ITAT AMRITSAR we direct the CIT exemption to grant registration to the assessee society from the date of application. Decided in favour of assessee.

Summary

Issues Involved:
1. Refusal to grant registration under Section 12AA(1)(b)(ii) of the Income Tax Act, 1961.
2. Alleged discrepancies in facts presented by the assessee.
3. Examination of the genuineness of activities and charitable nature of the trust.

Issue-wise Detailed Analysis:

1. Refusal to grant registration under Section 12AA(1)(b)(ii) of the Income Tax Act, 1961:
The appeal was directed against the order dated 29.09.2018 by the Commissioner of Income Tax (Exemptions), Chandigarh, who refused to grant registration to the assessee under Section 12AA of the Income Tax Act, 1961. The assessee contended that the Commissioner erred in law and facts in refusing the registration.

2. Alleged discrepancies in facts presented by the assessee:
The Commissioner of Income Tax (Exemptions) observed several discrepancies:
- The trust claimed agricultural income from the sale of Toor Dal but failed to provide documentary evidence for the ownership of the agricultural land.
- The vouchers submitted by the trust showed inconsistencies in serial numbers and amounts, casting doubt on their genuineness.
- The Commissioner noted that the trust did not provide evidence that properties of Shri Swami Shankar Nath Parvat Monastery & Mata Shri Jawala Ji Mandir were vested in the trust.
- The Commissioner also observed that the charitable expenses incurred by the trust were minimal.

The assessee responded by providing detailed replies and documents to support their claims, including letters, affidavits, and copies of J-Forms. They argued that the discrepancies noted by the Commissioner were either clerical errors or misinterpretations of the documents provided.

3. Examination of the genuineness of activities and charitable nature of the trust:
The Tribunal examined whether the activities of the trust were genuine and charitable in nature. The stated aims and objects of the trust included promoting spiritual values, Indian culture, and Sanskrit language, among other charitable activities. The Tribunal noted that at the stage of granting registration, the Commissioner is required to examine whether the activities are genuine and charitable, not the utilization of funds or the receipts from agricultural activities.

The Tribunal found that the ownership documents and sale of agricultural produce were duly placed on record by the assessee, contradicting the findings of the Commissioner. The Tribunal emphasized that the examination at the registration stage should focus on the genuineness of activities and charitable objectives, as per the law laid down by the Supreme Court in Anand Social Welfare Trust and other decisions.

The Tribunal also referenced similar cases, such as Saraswati Educational & Welfare Society and Dr. Madan Lal Atri Charitable Trust, where the courts held that minor discrepancies or accounting treatments should not disqualify an assessee from registration if the primary activities are genuine and charitable.

Conclusion:
The Tribunal concluded that the findings of the Commissioner were not supported by the record and were contrary to the evidence provided by the assessee. The Tribunal directed the Commissioner to grant registration to the assessee under Section 12AA from the date of application, as the objects of the trust were charitable and the activities were genuine.

Order:
The appeal was allowed, and the order of the Commissioner of Income Tax (Exemptions), Chandigarh, was set aside. The Tribunal directed the Commissioner to grant registration to the assessee under Section 12AA of the Income Tax Act, 1961.