2020 (8) TMI 675 - AT - Income Tax

Exemption u/s 11 - Application for granting registration u/s.12AA rejected - Charitable activity u/s 2(15) or not? - HELD THAT - CIT(Exemption) in his entire order has not dealt with the examination of the objects of the assessee Trust/Institution and has also not given specific findings on the genuineness of the activities carried on by the Trust vis- -vis facts as well as documents on records. This is more so, because the assessee Trust/Institution has not furnished the requisite details as called for by the Ld. CIT(Exemption) and therefore in the interest of justice, the CIT(Exemption) should re-adjudicate the matter on examining facts viz. (i) charitable nature of the objects of the assessee Trust/Institution (ii) genuineness of the activities carried on by the assessee Trust/Institution. We set aside the order of the Ld. CIT(Exemption) and remit the matter back to his file for adjudicating the same as per directions mentioned aforesaid following the principles of natural justice. At the same time, the assessee Trust/Institution is directed to furnish requisite details as called for by the Ld. CIT(Exemption) for determining the case on merits. CIT(Exemption) should come out with a speaking order. The matter is therefore, restored to the file of the Ld. CIT(Exemption). Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Rejection of application for registration u/s.12AA of the Income Tax Act, 1961.

Analysis:
The appeal pertains to the rejection of the assessee's application for registration under section 12AA of the Income Tax Act, 1961. The assessee, a Trust, applied for approval under the category of Charitable Trust/Institution, having previously been registered under the Bombay Public Trust Act, 1950. The application was scrutinized, and additional information was requested, which the assessee provided. However, the application was rejected by the Ld. CIT(Exemption) citing reasons in the order dated 31.12.2019.

The crux of the matter lies in the contention that the Ld. CIT(Exemption) exceeded jurisdiction by delving into the sources of income of the Trust instead of focusing solely on the application of such income. The assessee argued that the Trust's activities were charitable in nature, aimed at promoting Indian Art and Culture, and providing a platform for artists. On the other hand, the Ld. CIT(Exemption) emphasized that the Trust failed to provide crucial details such as the list of donors and explanations for significant fluctuations in expenses related to organizing art festivals, leading to doubts about the genuineness of the Trust's activities.

Upon reviewing the case records and arguments presented, the ITAT Pune found that the Ld. CIT(Exemption) did not adequately assess the charitable nature of the Trust's objects or the genuineness of its activities due to the lack of essential details provided by the assessee. Consequently, the Tribunal set aside the order and remitted the matter back to the Ld. CIT(Exemption) for a fresh adjudication. The assessee was directed to furnish the necessary details for a comprehensive review, emphasizing the importance of a speaking order. The decision to allow the appeal was made solely for statistical purposes.

In conclusion, the judgment highlights the importance of providing complete and accurate information when seeking registration under section 12AA of the Income Tax Act, ensuring transparency in the Trust's activities and finances to establish eligibility for charitable status.