2018 (9) TMI 1627 - AT - Income Tax

Entitlement to registration u/s 12AA denied - information not provided by the assessee society - Held that - There is no dispute with regard to the fact that the Ld. CIT(Exemption) is empowered to call for such documents or information from the Trust or Institution as he thinks necessary, in order to satisfy himself about the genuineness of the activities of the Trust or Institution and may also make such enquiries as he may deem necessary in this behalf. In the present case, Ld. CIT(Exemption) had asked for certain information which were not provided by the assessee society. As perused the objects of the association. From the objects, it cannot be inferred that it is purely for the benefit of a particular religious community. Set aside the order of the Ld. CIT(Exemption) and restore the application for reconsideration. The assessee would furnish requisite details along with supporting evidences in respect of its activities before the Ld. CIT(Exemption). Appeal filed by the assessee is allowed for statistical purposes.

Issues involved:
1. Registration under section 12A of the Income Tax Act, 1961 for a society.
2. Denial of registration based on beneficiaries belonging to a particular religious community.
3. Adequate opportunity for defense not provided by the authorities.

Analysis:

Issue 1: Registration under section 12A
The appellant, an association, sought registration under section 12AA of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemption) issued a notice to the appellant to show cause as to why registration should not be denied due to the perceived focus on a particular religious community. Despite the appellant's submission of details of charitable work and objectives, the registration application was rejected. The appellant appealed against this decision, emphasizing that its objects were for charitable work for all sections of society without discrimination. The Appellate Tribunal noted that the objects of the association did not indicate exclusive benefit to a particular religious community. Therefore, the Tribunal set aside the order of the CIT(Exemption) and directed the appellant to provide necessary details and evidence for reconsideration.

Issue 2: Denial of registration based on beneficiaries from a particular community
The primary contention was that the appellant's beneficiaries were predominantly from one minority community, which led to the denial of registration under section 12A. The appellant argued that despite the beneficiaries being from a specific community, the society's objects were aimed at charitable activities for all sections of society. Citing precedents, the appellant highlighted cases where registration was granted even though the beneficiaries belonged to a particular community. The Tribunal considered the objects of the society and concluded that the denial of registration solely based on the beneficiaries' community was not justified. The Tribunal emphasized the need for evidence supporting the charitable nature of activities.

Issue 3: Adequate opportunity for defense
The appellant raised concerns about not being given a fair opportunity to present a defense during the proceedings. The Tribunal acknowledged the appellant's written submissions and considered both parties' arguments. The Tribunal emphasized the authority of the CIT(Exemption) to request necessary information to verify the genuineness of the association's activities. However, it noted that certain information requested was not provided by the appellant. Despite this, the Tribunal allowed the appeal for statistical purposes, indicating a procedural victory for the appellant.

In conclusion, the Appellate Tribunal's judgment emphasized the importance of providing a fair opportunity for defense, considering the nature of charitable activities, and ensuring that registration decisions are based on concrete evidence rather than assumptions about beneficiaries' communities.

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