2024 (5) TMI 1481 - AT - Income Tax

Rejection of application for registration u/s 12AB - no Charitable activity u/s 2(15) - HELD THAT - According to the financials of the assessee placed nothing is transpired to doubt the genuineness of the activities carried out by the assessee society, further there was no negative remark by the revenue toward such financials apart from incomplete information about the doners. Since the genuineness of activities and conduct of the assessee society towards its objects is not dislodged by the revenue with any plausible reason or reasonable explanation to doubt the same, we are of the considered opinion that the assessee society cannot be deprived of from their eligibility to obtain registration as a charitable institution under the provisions of section 12AB, only for the reason that the certain details of donation received could not be furnished by them. Since, in order to check the genuineness of donations received further details are furnished by the society u/r 29 as additional evidence before us which could not be furnished before the Ld. CIT(E), therefore, we find it appropriate to restore the issue to the files of Ld. CIT(E), with directions to re-visit the application of the assessee and grant them registration u/s 12AB according to the provisions of the law. Reasonable opportunity of being heard and liberty to furnish necessary information / explanations / documents / evidence shall be afforded to the assessee in the set aside proceedings.Appeal of the assessee is partly allowed.

Summary

Issues:
1. Rejection of application for registration u/s 12AB of the Income Tax Act, 1961 by Ld. CIT(E).
2. Compliance with requirements for registration by the assessee society.
3. Consideration of additional evidence by the ITAT.

Analysis:

The judgment pertains to an appeal filed by an assessee society against the rejection of their application for registration u/s 12AB of the Income Tax Act, 1961 by the Ld. CIT(E). The assessee society, involved in providing medical relief to children with thalassemia, submitted an application in form 10AB for registration. However, the Ld. CIT(E) rejected the application citing incomplete information provided by the assessee regarding donors and donations received. The rejection was based on the absence of complete donor details and incomplete responses submitted by the assessee. Consequently, the provisional registration granted earlier was also canceled.

The ITAT considered the grounds of appeal raised by the assessee, emphasizing that the rejection order by the Ld. CIT(E) was arbitrary, illegal, and unjustified. The assessee contended that despite submitting necessary details, certain donor information could not be furnished due to small amounts received from numerous donors. The Ld. CIT(E) had not provided a show-cause opportunity before rejecting the application, leading to a challenge on the basis of natural justice principles. The assessee requested admission of additional evidence, including donor details, to support their charitable activities.

Upon review, the ITAT found that the assessee society was indeed engaged in charitable activities, as evidenced by their objectives and financial records. The society's activities included medical assistance to thalassemia-affected children, education of the underprivileged, and environmental preservation. The ITAT noted that the genuineness of the society's activities was not in question, except for incomplete donor details. Considering the additional evidence furnished before the ITAT, the genuineness of the donations was further substantiated. Hence, the ITAT directed the matter to be sent back to the Ld. CIT(E) for a reevaluation of the registration application, emphasizing that the society should be granted registration u/s 12AB in accordance with the law. The ITAT stressed the importance of providing the assessee with a fair opportunity to present necessary information during the reassessment.

In conclusion, the ITAT partially allowed the appeal of the assessee society, highlighting the need for a fair assessment of the registration application based on the charitable nature of the society's activities and the additional evidence provided.