2016 (5) TMI 1003 - AT - Income Tax

Grant of Registration under section 12AA rejected - time period prescribed for disposal of the application - whether the condition for grant of Registration are not met by the Society as the applicant is not engaged in any charitable activity as such? - Held that - Assessee has filed an application for registration on 19.6.2015, but the ld. Commissioner of Income Tax (Exemption) did not opt to initiate proceedings for grant of registration by making necessary enquiries. The time period prescribed for disposal of the application is six months and the ld. Commissioner of Income Tax (Exemption) has issued first notice on 26.11.2015 for the appearance of the assessee on 15.12.2015 along with certain documents. On 15.12.2015, the ld. counsel for the assessee appeared and filed written submissions and also filed relevant evidence, but the ld. Commissioner of Income Tax (Exemption) did not ask anything further from the assessee and on the same very day he dismissed the application for registration only for the simple reason that the assessee could not produce the books of account and activities could not be verified. Whereas from the record, it is evident that the assessee has filed complete details of its activities, bylaws, audit report, balance sheet and various other evidence to establish the activities undertaken by the assessee. All these evidences were not looked into by the ld. Commissioner of Income Tax (Exemption). If the ld. Commissioner of Income Tax (Exemption) feels that he has to make necessary enquiries into the activities, he should have initiated proceedings for grant of registration in time after receipt of application for registration, but he has not done so. He has issued only one notice to the assessee, which was duly complied with by the assessee by filing relevant evidence. The ld. Commissioner of Income Tax (Exemption) did not look into it and has denied registration. Therefore, we are of the view that denial of registration under section 12A of the Act is not correct. Since the assessee has filed all the relevant evidence on record wherefrom it is established that it is engaged in charitable activities, the registration ought to have been granted to the assessee. We accordingly set aside the order of the ld. Commissioner of Income Tax (Exemption) and direct him to grant registration under section 12A(a) of the Act within a period of one month from the receipt of this order. - Decided in favour of assessee.

Summary

Issues:
1. Denial of registration under section 12AA(1)(b)(ii) of the Income Tax Act, 1961.
2. Failure to produce books, bank statements, and vouchers for verification.
3. Alleged errors in the decision-making process by the Commissioner of Income Tax (Exemption).
4. Lack of proper examination of evidence by the Commissioner.
5. Discrepancies in the decision regarding charitable activities of the society.
6. Insufficient opportunity provided to the appellant society for compliance and submissions.
7. Overall denial of registration under section 12A(a) of the Income Tax Act, 1961.

Analysis:

1. The appeal was filed against the denial of registration under section 12AA(1)(b)(ii) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Exemption). The appellant contended that the society was engaged in charitable activities, including the preservation of the environment, forests, and wildlife. The Commissioner's decision was based on the belief that the society did not meet the conditions for registration due to a lack of charitable activities.

2. The Commissioner denied registration due to the society's failure to produce essential documents like books, bank statements, and vouchers for verification. The appellant argued that all necessary documents were submitted, but the Commissioner did not consider them adequately before making the decision.

3. Various errors were alleged in the decision-making process of the Commissioner, including misinterpretation of facts and laws. The appellant claimed that the decision was based on false premises and requested the order to be quashed.

4. The Tribunal found that the Commissioner did not properly examine the evidence provided by the appellant, which clearly demonstrated the charitable nature of the society's activities. Despite submitting relevant documents, the Commissioner dismissed the application without thorough consideration.

5. There were discrepancies in the Commissioner's assessment of the society's charitable activities, leading to a misunderstanding of the nature of the appellant's work. The Tribunal emphasized the importance of examining the prima facie activities of an organization before denying registration under section 12A of the Act.

6. The appellant argued that they were not given sufficient opportunity to present their case and comply with the Commissioner's requirements. The Tribunal noted that proper consideration was not given to the documents and submissions made by the appellant, highlighting procedural deficiencies in the decision-making process.

7. Ultimately, the Tribunal set aside the Commissioner's order and directed the grant of registration under section 12A(a) of the Act to the appellant society. The decision was based on the clear evidence of the society's charitable activities and the failure of the Commissioner to conduct a thorough examination before denying registration.