2018 (3) TMI 79 - AT - Income Tax

Registration u/s 12AA rejected - there was no cogent or corroborative evidence to prove the genuineness of activities - Held that - The fact remains that the assessee had filed copies of audited balance sheet and income and expenditure account as at 31st March, 2016 and had also filed copies of income tax return which clearly establish that assessee was rendering the services which are charitable in nature. Therefore, this finding of CIT (Exemptions) that genuineness of the activities could not be verified is not based upon the facts. The argument of Learned D. R. that books of account and vouchers were not produced does not carry any force in view of the specific letters written by assessee on 02/11/2016, 10/10/2016 whereby the assessee had produced books of account and vouchers etc. In the present case, undoubtedly the objects of the assessee are charitable in nature and the assessee is rendering services for achievement of its objects as given in the Memorandum and Articles of the Samiti. Therefore, the registration cannot be denied by holding that the activities of the assessee were not genuine. In view of the above, CIT (Exemptions) is directed to grant registration to the assessee u/s 12AA of the Act. - Decided in favour of assessee.

Summary

Issues:
Registration u/s 12AA denied by CIT (Exemptions) - Object of the assessee and genuineness of activities questioned.

Analysis:
The appeal was filed against the order of CIT (Exemptions) denying registration u/s 12AA. The appellant argued that the society's objects are charitable, supported by audited financials and income tax returns, indicating alignment with its objectives. The appellant cited relevant case laws to support their claim, emphasizing that CIT (Exemptions) should only examine the objects and genuineness of activities at the time of registration, not delve into Section 13(1)(c) matters, which are under the Assessing Officer's purview during assessment.

The respondent contended that the appellant failed to provide books of account and vouchers, raising doubts about the genuineness of unsecured loans. However, the appellant refuted this claim by presenting letters confirming the submission of books of account for verification.

Upon review, the Tribunal found that the society's objects were charitable, undisputed by CIT (Exemptions). The rejection was based on a lack of evidence for the genuineness of activities, despite the appellant submitting audited financials and income tax returns. The Tribunal dismissed the respondent's argument regarding unproduced books of account, as evidence showed otherwise.

The Tribunal highlighted that at the time of granting registration u/s 12AA, CIT (Exemptions) is empowered to assess the objects and genuineness of activities. Citing the Allahabad High Court judgment in CIT vs. Red Rose School, it was emphasized that the CIT (Exemptions) must ensure activities align with the trust's objectives and are genuine. The Tribunal concluded that since the appellant's activities were charitable and aligned with its objectives, registration could not be denied on the grounds of activity genuineness. Therefore, the Tribunal directed CIT (Exemptions) to grant registration to the appellant u/s 12AA.

In conclusion, the appeal was allowed, and the decision was pronounced in open court on 28/02/2018.