2020 (5) TMI 122 - AT - Income Tax

Exemption u/s 11 - grant of registration u/s 12AA denied - as per CIT-E assessee has failed to produce details and documents in support of his claim for registration - HELD THAT - Given the advent of e-filing of application and where all further correspondence need to be done through an online-platform, there are certain teething technological problems which needs to be addressed as observed in the present case where there are claims and counter-claims regarding seeking information and filing of submissions in relation to the processing of application filed by the assessee trust for seeking registration u/s 12AA. We deem it appropriate to set-aside the matter to the file of the CIT(E) to examine the application of the assessee trust afresh after granting appropriate opportunity to the assessee trust to appear in person through its authorized representative. The assessee shall be at liberty to raise the various contentions as advanced by the ld AR before the ld CIT(E) and is also directed to submit necessary information/documents as called for by the ld CIT(E) and the latter shall decide the same afresh as per law. - Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Rejection of application for registration U/s 12AA of the Income Tax Act, 1961.
2. Compliance with Rule 17A of Income Tax Rules, 1962.
3. Nature of activities carried out by the assessee society.
4. Failure to produce original documents regarding establishment of the trust.
5. Allegations of engaging in commercial activities.
6. Submission of details and documents in support of claim for registration.
7. Technological problems in e-filing applications and correspondence.

Analysis:

1. The appeal pertains to the rejection of the assessee's application for registration U/s 12AA of the Income Tax Act, 1961. The primary contention was that the assessee failed to produce necessary details and documents in support of the registration application. The ld CIT(E) rejected the application citing non-compliance and lack of submission of required information.

2. The issue of compliance with Rule 17A of Income Tax Rules, 1962 was raised, emphasizing the requirement for the assessee to produce original documents regarding the establishment of the trust. The failure to provide these original documents was highlighted as a reason for the rejection of the registration application.

3. The nature of activities carried out by the assessee society was a significant aspect of the case. The society's main objective was to conduct welfare activities for students and society at large, including operating a hostel. The submission detailed various charitable activities undertaken by the society in line with its objectives.

4. Concerns were raised regarding the failure to produce original documents regarding the establishment of the trust, as mandated by Rule 17A. The ld CIT(E) observed that the required original documents were not provided for verification, which contributed to the rejection of the registration application.

5. Allegations of engaging in commercial activities, specifically running hostels and receiving receipts, were made against the assessee. The ld CIT(E) noted the commercial aspect of the hostel operations, which raised questions about the charitable nature of the activities conducted by the society.

6. The submission of details and documents in support of the claim for registration U/s 12AA was a crucial point of contention. The assessee argued that all necessary evidence supporting charitable activities had been submitted, and discrepancies were not found. The failure to provide a questionnaire and the subsequent rejection of the application were challenged by the assessee.

7. The judgment highlighted technological challenges in e-filing applications and correspondence, leading to claims and counter-claims regarding information exchange. The tribunal recognized these issues and remanded the matter to the ld CIT(E) for a fresh examination, granting the assessee an opportunity to present its case effectively.

In conclusion, the appeal was allowed for statistical purposes, emphasizing the need for a fair examination of the application for registration U/s 12AA, considering all relevant aspects and providing the necessary opportunity for the assessee to present its case.