2004 (12) TMI 322 - AT - Income Tax

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Deficiencies in the application for registration under section 12AA.
3. Genuineness of the activities of the assessee society.
4. Compliance with procedural requirements under section 12A and rule 17A.

Detailed Analysis:

1. Delay in Filing the Appeal:
The assessee society filed an appeal with an 18-day delay. The delay was attributed to the serious ailment of its local counsel. The Tribunal condoned the delay after considering the reasons provided.

2. Deficiencies in the Application for Registration under Section 12AA:
The Commissioner of Income Tax (CIT) identified several deficiencies in the application filed by the assessee society:
- The application was late, and no reasons were provided for the delay.
- The society did not provide a certified copy of the original instrument under which it was established, only a photocopy attested by the authorized representative.
- Financial statements for only one year (ending 31-3-2001) were submitted, and no accounts for earlier years were provided.
- The submitted financial statements were not attested as true copies.
- The society did not show receipt of fees from its members, nor were these shown as receivable in the financial statements, indicating that the financial statements did not reflect the true state of affairs.

3. Genuineness of the Activities of the Assessee Society:
The CIT raised doubts about the genuineness of the society's activities based on several observations:
- The society's objective was to provide free education to economically backward children and widows' children. However, the establishment of the Somani Institute of Technology & Management, which charged fees, did not align with these objectives.
- A donation of Rs. 25,000 to Somani Asha Nand Ashram was not covered by the society's objectives.
- Land given by Somani family members to the society was not irrevocably transferred and did not appear as an asset of the society, despite significant expenditure on conversion charges.
- The society maintained substantial cash in hand, which was controlled by office bearers closely tied to the Somani family, suggesting possible violation of section 13 provisions.

4. Compliance with Procedural Requirements under Section 12A and Rule 17A:
The Tribunal emphasized that for availing benefits under sections 11 & 12, a trust or institution must fulfill conditions prescribed in section 12A, including making an application for registration in the prescribed form and manner. The application must be accompanied by:
- The original instrument or a certified copy thereof.
- Copies of accounts for up to three years prior to the financial year in which the application is made.

The Tribunal found that the assessee society did not fully comply with these requirements:
- The original document evidencing the creation of the trust was not produced, nor a certified copy.
- Only one year's accounts were submitted, contrary to the requirement of up to three years' accounts.
- No documentary evidence was provided to show the society was dormant in the remaining two years.

The Tribunal upheld the CIT's decision, stating that the CIT was within his rights to refuse registration based on the deficiencies in the application and doubts about the genuineness of the society's activities. The appeal by the assessee was dismissed.