2024 (7) TMI 711 - AT - Income Tax

Rejection of application for registration u/sec.12AB - assessee s application for registration under Rajasthan Public Trust Act is pending with competent authority - HELD THAT - It is an admitted fact that on 15.06.2022, i.e. date when assessee filed application for registration u/sec.12AB of the Act assessee was not registered under Rajasthan Public Trust Act. It is also a fact that assessee had applied for registration under Rajasthan Public Trust Act after 15.06.2022. As per section 17 of Rajasthan Public Trust Act, it is mandatory for a Public Trust to register under Rajasthan Public Trust Act, within three months from the date of which the Public Trust is created. As admitted fact that assessee had not registered itself. Section 12AB(1) mandates that all the applicable laws shall be followed and if any applicable law is not followed by the Trust, then it is not eligible for registration. In this case, admittedly Rajasthan Public Trust Act is applicable to the assessee and assessee has not followed provisions of Rajasthan Public Trust Act, therefore, as per section 12AB(1), assessee is not eligible for registration u/sec.12AB r.w.s. 12A of the Act. The Hon ble Supreme Court in the case of New Noble Education Society 2022 (10) TMI 855 - SUPREME COURT have held that Charitable Institutions and Societies which may be regulated by other state laws have to comply with them. The provisions of the Andhra Pradesh Charities Act and provisions of the Rajasthan Public Trust Act are almost identical. Therefore, decision of the Hon ble Supreme Court in the case of New Noble Education Society(supra) on this issue is squarely applicable to the assessee. Therefore, respectfully following the Hon ble Supreme Court s decision(supra), we uphold the order of the ld.CIT(E). As observed that assessee had not submitted the details called by the ld.CIT(E), therefore, ld.CIT(E) observed that genuineness of the activities of the assessee could not be verified. After the amendment in the registration procedures for Charitable Trust parliament in its wisdom has introduced provisional registration and permanent registration w.e.f 01.04.2021. The provisional registration is issued almost automatically relying on the assessee s submissions. At the time of issuing permanent registration as per Section 12AB(1), it is mandatory for ld.CIT(E) to verify genuineness of the activities of the assessee. In this case, assessee has not submitted the relevant details. Therefore, CIT(E) could not verify genuineness of the activities of the assessee. Since we have uphold the order of ld.CIT(E) on the ground that assessee do not have registration under Rajasthan Public Trust Act, we do not intend to comment on the genuineness of the activities. Accordingly, grounds of appeal raised by the assessee are dismissed.

Summary

Issues:
1. Rejection of application for registration u/sec.12AB of the Income Tax Act, 1961.
2. Non-registration with Rajasthan Public Trust Act.
3. Genuineness of activities and compliance with Form 10AB.

Analysis:

1. The appeal was filed against the rejection of the application for registration u/sec.12AB of the Income Tax Act, 1961. The grounds of appeal included delay in filing due to the main trustee's illness, rejection based on incomplete Form 10AB, and non-registration with the Rajasthan Public Trust Act. The appellant sought condonation of the delay and challenged the rejection by CIT(Exemption).

2. The rejection was based on several grounds, including non-registration with the Rajasthan Public Trust Act, incomplete Form 10AB, and doubts regarding the genuineness of the activities. The appellant, a Trust formed in 2012, had not registered under the Rajasthan Public Trust Act, which was mandatory within three months of creation. The failure to comply with applicable laws rendered the Trust ineligible for registration u/sec.12AB.

3. The appellant's submission during the hearing included the Trust Deed, amendments, and evidence of charitable activities. However, these documents were not submitted to the ld.CIT(E) earlier. The Trust's pending application for registration under the Rajasthan Public Trust Act did not absolve it from the requirement to be registered at the time of applying for registration u/sec.12AB. The Supreme Court's decision emphasized compliance with state laws for charitable institutions, which applied to the appellant's case.

4. The Tribunal upheld the ld.CIT(E)'s order due to the Trust's lack of registration under the Rajasthan Public Trust Act. The genuineness of activities could not be verified as required for permanent registration under Section 12AB(1). The Trust's failure to provide necessary details hindered the verification process, leading to the dismissal of the appeal on this ground.

5. The Tribunal also noted a delay in filing the appeal but condoned it after reviewing the appellant's affidavit. The order was pronounced on 4th July, 2024, dismissing the appeal and upholding the rejection of registration u/sec.12AB due to non-compliance with the Rajasthan Public Trust Act.