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2018 (4) TMI 87 - HC - Income TaxEntitlement to registration u/s 12A - proof of charitable activities - non-furnishing of explanation regarding registration of the assessee society twice - Held that - The contention of the Ld. CIT that the assessee had offered no explanation about the registration of the society twice is not correct. In any case registration of a society is not a pre condition for granting registration under Section 12AA. A perusal of Rule 17A of the Income Tax Rules 1962, referred to above would show that the only requirement is to furnish the documents evidencing the creation of the trust or establishment of the institute in original, which we find, the assessee society has furnished in the form of Trust Deed. In view of the facts stated above we hold that Ld. CIT was not right in refusing registration to the assessee society for non-furnishing of explanation regarding registration of the assessee society twice.- Decided in favour of assessee.
Issues Involved:
1. Whether the order passed by the ITAT is contrary to the facts and law, hence perverse? 2. Whether the ITAT was justified in holding that the assessee was entitled to registration under Section 12A despite the lack of documentary evidence and audited financial statements? 3. Whether the ITAT was justified in holding that bona fide registration of a society is not a pre-condition for granting registration under Section 12AA despite ongoing civil and criminal proceedings among the society's members? Issue-wise Detailed Analysis: 1. Contrary to Facts and Law: The appellant-Revenue contended that the ITAT's order is perverse and contrary to the facts and law. The Tribunal's decision was scrutinized, and it was found that the CIT had not commented adversely on the objects of the assessee society. The Tribunal noted that the non-furnishing of audited financial statements and the fact that the society was registered twice were not relevant for establishing the genuineness of the activities. The Tribunal's findings were based on the documents and information provided by the assessee, which demonstrated the society's activities. 2. Justification for Registration under Section 12A: The Tribunal held that the assessee was entitled to registration under Section 12A of the Act. The CIT had refused registration on grounds including the non-production of documentary evidence, absence of audited financial statements, and non-explanation regarding the society's dual registration. The Tribunal observed that these reasons were not pertinent for establishing the genuineness of the society's activities. It was emphasized that the Act does not mandate audited financial statements for registration under Section 12AA. Rule 17A of the Income Tax Rules, 1962, requires only the accounts of the trust or institution, not necessarily audited ones. The Tribunal concluded that the CIT's insistence on these conditions was not justified. 3. Bona Fide Registration and Ongoing Proceedings: The Tribunal also addressed the issue of the society's bona fide registration and ongoing disputes among its members. It was noted that the registration of a society is not a pre-condition for granting registration under Section 12AA. The Tribunal found that the assessee had provided explanations regarding the dual registration and that these explanations were not contested by the CIT. The Tribunal cited the case of CIT vs. R.M.S. Trust (Madras) [2010] 326 ITR 310, which held that at the stage of considering an application for registration under Section 12A, the inquiry should focus on whether the application is made and accounts are maintained, not on the amended trust-deed or other conditions not contemplated by the statute. Conclusion: The Tribunal's decision to grant registration under Section 12A was upheld. The Tribunal's findings were based on a detailed examination of the documents and explanations provided by the assessee. The appellant-Revenue failed to demonstrate that the Tribunal's view was erroneous or legally unsustainable. Consequently, the appeal was dismissed, and no substantial question of law was found to arise.
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