2023 (8) TMI 1526 - AT - Income Tax

Eligibility to Registration u/s 12AA - conjunctive tests to be considered at the time of registration - objects of the applicant are charitable in nature and establishment of genuineness of the charitable activities - mandation to pass the two tests cumulatively, and not alternatively - HELD THAT - Charity is the core issue for registration u/s 12AA - Charity is its soul. Mere declaration of charitable objects is not adequate. Establishing the genuineness of charitable activities is an essential requirement for registration u/s 12AA of IT Act. Even in the case of Reham Foundation Lucknow 2019 (10) TMI 151 - ALLAHABAD HIGH COURT on which the learned A.R. for assessee has placed reliance, it has been clearly enunciated that registration is subject to satisfaction over genuineness of the activities of the trust and over objects of the trust. In this background, on perusal of the impugned order of learned CIT(E), we find that she has not commented on objects of the assessee trust and on the genuineness of the activities. Further, on perusal of the materials brought for consideration by way of the paper book filed from the side of the assessee trust, we are of the view that these materials are not sufficient for us, to reach a definite conclusion on genuineness or otherwise of the activities of the assessee trust. Thus as relying on the case of Boondein 2023 (7) TMI 1461 - ITAT LUCKNOW we set aside the aforesaid impugned order of learned CIT(E) and direct the learned CIT(E) to pass a denovo order in accordance with law after providing reasonable opportunity to the assessee and after giving due consideration to the submissions made by the assessee. We specifically direct the learned CIT(E) to give findings on charitable objects of the assessee trust and on genuineness of the charitable activities of the assessee, as claimed by the assessee - Assessee appeal is partly allowed for statistical purposes.

Summary

Issues:
1. Rejection of application for registration u/s 12AA of the IT Act.
2. Adequate opportunity given to the assessee.
3. Consideration of written submissions by the CIT(E).
4. Sufficiency of materials for registration u/s 12AA.

Detailed Analysis:
Issue 1: The appeal was filed against the rejection of the application for registration u/s 12AA of the IT Act by the CIT(E). The appellant argued that the rejection was hasty and without proper consideration of written submissions. The appeal was admitted for decision on merits as there was no objection to its admission on grounds of being time-barred.

Issue 2: During the hearing, the Counsel for the assessee contended that the CIT(E) did not provide adequate opportunity to the assessee before rejecting the application. The Counsel urged the ITAT to consider whether the materials on record were sufficient for directing registration without remanding the matter. The ITAT noted that charity is the core issue for registration u/s 12AA and that the genuineness of charitable activities is essential. The ITAT found that the CIT(E) did not comment on the objects of the trust or the genuineness of activities, and the materials provided were insufficient to reach a conclusion.

Issue 3: The ITAT referred to a previous order where it was stated that the Tribunal can direct registration only after being satisfied with the genuineness of the activities. As the materials provided were not adequate to establish genuineness, the ITAT set aside the impugned order and directed the CIT(E) to pass a fresh order after providing a reasonable opportunity to the assessee and considering the submissions made.

Issue 4: The ITAT found that the materials in the paper book filed by the assessee were not sufficient to ascertain the genuineness of the activities of the trust. Following a previous order, the ITAT directed the CIT(E) to give findings on the charitable objects and genuineness of activities in the fresh order. The appeal was partly allowed for statistical purposes.

In conclusion, the ITAT set aside the rejection of the application for registration u/s 12AA, directing the CIT(E) to pass a fresh order after providing adequate opportunity to the assessee and considering the submissions to determine the genuineness of the charitable activities.