2020 (11) TMI 261 - AT - Income Tax

Exemption u/s 11 - grant of registration u/s 12AA - proof of charitable activities - HELD THAT - CIT-E called for certain information in order to satisfy himself, that the activities of the trust are genuine or not. It appears that the appellant trust had failed to comply with the said notice, but from the perusal of the impugned order it is not clear that whether the CIT (Exemption) had granted reasonable opportunity of being heard since the impugned order mentioned only one date of hearing notice. In the case of Ananda Social and Educational Trust 2020 (2) TMI 1293 - SUPREME COURT held that even in the absence of any activities a trust can be considered for registration u/s 12AA of the Act and the term activities contemplated u/s 12AA includes proposed activities . At the time of grant of registration, the only issue to be examined by CIT (Exemption) is regarding the true nature of the objects of the trust i.e. whether the charitable in nature or not - matter requires remand to the ld. Commissioner of Income Tax (Exemption) to re-examine the issue of grant of registration u/s 12AA - Decided in favour of assessee statically.

Summary

Issues:
1. Denial of registration u/s 12AA of the Income Tax Act.
2. Opportunity of being heard not granted.

Analysis:
Issue 1: The appellant trust filed an appeal against the order denying registration u/s 12AA of the Act. The Commissioner concluded that the trust failed to establish the genuineness of charitable activities carried out in the last three years. Despite the absence of the appellant during the appeal, the CIT-DR argued that without information on the nature of activities, the denial of registration was justified. The Tribunal noted that the trust did not comply with the notice for information. However, it was unclear if a reasonable opportunity of being heard was granted. Referring to the Supreme Court case of Ananda Social and Educational Trust vs. CIT, the Tribunal emphasized that registration can be considered even in the absence of activities, including proposed activities. The focus during registration should be on the charitable nature of the trust's objects. As per the Court's ruling, the matter required re-examination by the Commissioner with a proper opportunity for the appellant to be heard. Consequently, the appeal was partly allowed for statistical purposes.

Issue 2: The primary contention raised by the appellant was the lack of opportunity to be heard during the registration denial process. The Tribunal observed that the order only mentioned one date of hearing notice, raising doubts about the adequacy of the opportunity provided. Citing the case law, the Tribunal stressed the importance of affording a reasonable opportunity of being heard, especially in matters concerning the registration of trusts under Section 12AA of the Act. Consequently, the Tribunal decided to partly allow the appeal, emphasizing the necessity of a fair hearing in such cases.

In conclusion, the Tribunal's judgment focused on the denial of registration under Section 12AA of the Income Tax Act and the crucial aspect of providing a fair opportunity of being heard during such proceedings. The decision highlighted the significance of examining the charitable nature of a trust's objects and the need for a thorough re-examination with proper hearing procedures in place.