2024 (6) TMI 974 - AT - Income Tax

Denial of registration u/s 12AB - assessee is a Public Charitable Trust running a Primary School for physically disabled kids - charitable activity u/s 2(15) - HELD THAT - The materials available on record including the submissions and details filed by the assessee namely detailed note on the nature of activities, previous registration u/s. 12AA and 80G(5), Copy of the Trust Deed, no business undertaking under provisions of section 11(4) or 11(4A) - assessee filed before us Copies of Income Tax Returns and Audit Report for the preceding three Asst. Years and requested to grant one more opportunity, so that the assessee can clarify and produce any further documents to prove the genuineness of the activities carried out by the Trust. For Registration of a Trust u/s. 12AB, different Forms to be filed with necessary documents as enumerated in Rule 17A of the I.T. Rules. Even Ld. CIT(E) is bound to dispose of the Application either for granting Registration or refusing Registration, before the expiry of six months from the end of the month in which the Application was received, u/s. 12AA(2) of the Act, after giving proper opportunity of hearing to the assessee. In this case, three hearing opportunities were given by the Ld. CIT(E), however the assessee Trust failed to file the Income Tax Returns and Audit Report for the previous three preceding Financial Years. Now the assessee undertook the file the same, as well as other details before Ld. CIT(E). The assessee who wish to claim exemption u/s. 12AB should always make their application with relevant details as enumerated under Rule 17A of the Rules, so that the Statutory Authorities can consider the Application for Registration within the provisions of law. Therefore in order to prevent miscarriage of justice, we find it fit and proper to provide one more opportunity of being heard to the assessee in support of its case for registration of the trust u/s. 12AB of the Act. Therefore we dispose of this appeal by restoring this issue to the file of the Ld. CIT(E) with a direction upon him to provide further opportunity of being heard to the assessee and consider the documents, evidences which the assessee would file as per the notice issued by the Ld. CIT(E). Appeal filed by the Assessee is hereby allowed for statistical purposes.

Summary

Issues Involved:
The judgment deals with the denial of registration under section 12AB of the Income Tax Act, 1961 to a Public Charitable Trust running a Primary School for physically disabled kids.

Issue 1: Denial of Registration under Section 12AB
The Commissioner of Income Tax (Exemption) denied the registration under section 12AB of the Income Tax Act, 1961 to the Assessee due to incomplete submission of required details/documents, leading to a lack of verification of the genuineness of the Trust's activities and adherence to legal requirements. The rejection was based on the failure of the Assessee to provide essential documents like bank statements, identity proofs, previous year returns, and necessary undertakings as mandated by the Act. The Commissioner emphasized the need to establish the genuineness of activities and ensure compliance with the Trust's objects before granting registration under section 12AB.

Issue 2: Appeal Against Rejection
The Assessee appealed against the rejection, arguing that they had submitted relevant documents like the Trust Deed, Registration Certificates, and Income Tax Returns for the past years, indicating a history of compliance and genuineness in their activities. The Assessee contended that they had been granted provisional registration under section 12AA after due verification by the Commissioner, and requested another opportunity to provide the necessary documents for registration under section 12AB. The Revenue, on the other hand, supported the rejection based on the Assessee's failure to submit Income Tax Returns and Audit Reports, which hindered the verification process.

Issue 3: Tribunal's Decision
After considering the submissions and details provided by the Assessee, the Tribunal observed that the Assessee had now produced the required Income Tax Returns and Audit Reports for the preceding years. The Tribunal acknowledged the importance of filing necessary documents as per Rule 17A of the Income Tax Rules for registration under section 12AB. In order to prevent any injustice, the Tribunal decided to grant the Assessee one more opportunity to be heard and present additional documents to establish the genuineness of their activities. The Tribunal directed the Commissioner to consider the new submissions and issue a speaking order on the registration application, warning that failure to cooperate would result in a decision strictly in accordance with the law.

In conclusion, the Tribunal allowed the appeal filed by the Assessee for statistical purposes, emphasizing the importance of providing complete and accurate documentation to support the application for registration under section 12AB of the Income Tax Act, 1961.