2020 (9) TMI 959 - AT - Income Tax

Exemption u/s 11 - registration u/s 12AA - grant of exemption u/s 80G - charitable nature of activities of the trust or genuineness of its activities - return u/s 139(4A) was not filed by the assessee - HELD THAT - The objects of the trust were not disputed by the Department nor they have disputed the genuineness of the activities conducted by the assessee trust. The only reason for not granting exemption u/s 12AA was that the return u/s.139(4A) was not filed by the assessee and in our considered view, merely non-filing of return under the said provision cannot be the ground to deny registration u/s 12AA to the assessee when the genuineness of the activities is not disputed by the Department and when the objects are clearly laid out and all the details were uploaded by the assessee trust in the ITBA Portal. Departmental Representative could not refute these facts on record. It is well settled law that at the time of granting registration of the Trust u/s 12AA CIT(Exemption) is required to look into the objects of the trust and the activities carried out by the trust whether genuine or not and nothing else. Non-filing of return under Sec.139(4A) cannot be the ground to demonstrate that the activities of the trust were not genuine. Since the assessee has not filed any return therefore there is no question of getting any exemption under Sec.10 and 11 of the Act and hence, there is no jeopardy caused to the Revenue. AO at the time of assessment proceedings, can take appropriate steps as per law regarding the non-filing of return under Sec.139(4A) - registration u/s 12AA should be granted to the assessee trust. Accordingly, we reverse the order of the ld. CIT(Exemption) and direct him to grant registration u/s 12AA. Exemption u/s 80G(5)(vi) rejected - In this case, the assessee has failed to furnish requisite details and supporting evidences to the revenue authorities for verification and substantiating its charitable activities. That at the time of hearing before us, the learned Authorised Representative prayed for one final opportunity so that he will produce all the relevant details as called for before the ld. CIT(Exemption). That considering our decision, directing the ld. CIT(Exemption) to grant registration u/s 12AA we find it appropriate to provide another opportunity to the assessee and therefore we set aside the order of the ld. CIT(Exemption) dated 29.05.2019 and restore the matter back to his file to adjudicate the issue and we direct the assessee at the same time to represent the case on merits and substantiate the genuineness of the charitable activities before ld. CIT(Exemption) by filing supporting documents / evidences / relevant documents as and when called for by him. CIT(Exemption) shall comply with the principles of natural justice while deciding the matter. Appeal of the assessee allowed for statistical purposes.

Summary

Issues:
- Registration u/s 12AA of the Act
- Exemption u/s 80G of the Act

Registration u/s 12AA of the Act:
The appeal pertains to the denial of registration u/s 12AA of the Act by the ld. CIT(Exemption) based on the non-filing of return under Sec.139(4A) of the Act by the assessee trust. The ld. CIT(Exemption) raised concerns regarding the genuineness of the trust's activities despite the trust submitting all required documents. The Tribunal emphasized that the registration process under Sec. 12AA focuses on the trust's objects and the genuineness of its activities, not on the filing of returns. Citing judicial precedents, including a judgment by the Hon'ble Allahabad High Court, the Tribunal concluded that the non-filing of the return should not be a ground for denying registration if the trust's activities are genuine and in line with its stated objectives. The Tribunal directed the ld. CIT(Exemption) to grant registration u/s 12AA to the assessee trust.

Exemption u/s 80G of the Act:
Regarding the application for exemption u/s 80G(5)(vi) of the Act, the ld. CIT(Exemption) rejected the application due to the trust's failure to provide verifiable details and proof substantiating the genuineness of its charitable activities. The Tribunal highlighted that for exemption under Sec. 80G, the trust must furnish necessary documents for factual verification. The Tribunal observed that the trust did not provide the required details and evidences to the revenue authorities. However, considering the decision to grant registration u/s 12AA, the Tribunal provided the trust with another opportunity to submit the necessary documents and evidences before the ld. CIT(Exemption) to prove the genuineness of its charitable activities. The Tribunal directed the ld. CIT(Exemption) to decide the matter adhering to the principles of natural justice. The appeal of the assessee in this regard was allowed for statistical purposes.

In conclusion, the Tribunal allowed the appeal of the assessee for registration u/s 12AA of the Act and provided an opportunity for the trust to substantiate its charitable activities for exemption u/s 80G of the Act.