2021 (3) TMI 1176 - HC - Income Tax

Exemption u/s 11 - details as regards the registration of Trust under Section 12A / 12AA not furnished - HELD THAT - We are at one with Revenue that in the absence of the registration number, to be mentioned in the course of E-filing of the return, the benefit of exemption under Section 11 of the Act cannot be granted, but, at the same time, we find it difficult to accept the stance of the department that as the record is not available with the Trust as well as with the department, it should be presumed that at no point of time, the certificate of registration under Section 12A of the Act was granted. We take notice of the fact that there is contemporaneous record available with the Trust, which should be looked into minutely by the department so as to satisfy itself that the Trust had been issued a registration certificate under Section 12A and had been availing the benefit of exemption over a period of time under Section 11 of the Act. The department is expected to undertake some homework in this regard seriously. The Trust should not be denied the benefit of exemption under Section 11 of the Act only on account of its disability to produce the necessary records, which got destroyed during the floods of 1978. We do not find anything doubtful or fishy as regards the Trust. We are of the view that whatever record is available with the Trust, as on date, should be produced before the department and the department should look into the records minutely and also give an opportunity of hearing to the Trust or its legal representative and take an appropriate decision in accordance with law. We dispose of this writ application with a direction that the writ applicant Trust shall produce the entire record available with it as on date before the department and the department shall look into the entire record closely and threadbare and ascertain whether the Trust being a registered charitable Trust had been issued the registration certificate under Section 12A.

Summary

Issues:
1. Granting of fresh registration certificate to a charitable Trust.
2. Denial of exemption benefits under Section 11 of the Income Tax Act due to lack of registration certificate.
3. Dispute regarding the Trust's registration under Section 12A of the Act.
4. The obligation to quote registration number during E-filing of returns.
5. The burden of proof in establishing registration status on the Revenue Department.

Issue 1: Granting of fresh registration certificate to a charitable Trust.
The writ applicant, a charitable Trust, sought a writ of mandamus to obtain a fresh registration certificate from the Department, or alternatively, grant fresh registration from a specific assessment year. The Trust faced challenges due to the loss of records during a devastating flood in 1978, hindering its ability to provide necessary documentation for registration.

Issue 2: Denial of exemption benefits under Section 11 of the Income Tax Act due to lack of registration certificate.
The Trust had been availing exemption benefits under Section 11 of the Act until the introduction of E-filing requirements. The Department insisted on a registration certificate for granting benefits, leading to a dispute as the Trust had lost its records. The Trust argued for exemption for the years 2013-14 to 2016-17 despite the absence of the registration certificate.

Issue 3: Dispute regarding the Trust's registration under Section 12A of the Act.
The Revenue Department contended that the Trust failed to provide proof of registration under Section 12A and did not quote the registration number during E-filing, resulting in the denial of benefits. The Trust's counsel argued that past assessments had accepted the exemption claim under Section 11 without emphasizing the registration number requirement.

Issue 4: The obligation to quote registration number during E-filing of returns.
The Department insisted on the Trust quoting the registration number during E-filing from 2013-14 onwards, highlighting the necessity for compliance with online filing requirements. The inability to provide the registration number led to the denial of benefits and raised demands by the CPC, Bengaluru.

Issue 5: The burden of proof in establishing registration status on the Revenue Department.
The Tribunal's order emphasized that the Revenue Department bears the burden of proving non-registration of the Trust, especially when past assessments had granted exemptions under Section 11. The Tribunal highlighted the permanent nature of registration under Section 12A and the Department's responsibility to maintain accurate registration records.

In the judgment, the Court directed the Trust to provide available records to the Department for verification, emphasizing the need for a thorough examination to ascertain the Trust's registration status. The Court urged the Department to conduct a detailed review and make a decision based on the existing records. The interim order was to remain in effect until a final decision was reached, with a four-week timeline provided for the resolution of the matter.