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2021 (8) TMI 709 - AT - Income TaxExemption u/s 11 - grant of registration under section 12AA(l)(b)(II) denied - Charitable activity u/s 2(15) - 2nd round of proceedings - HELD THAT - It is admitted fact that the main Object of the applicant trust are to impart education among the society without any caste, creed and Colour. We find that the trust deed submitted before the Ld. CIT was quite explanatory of the fact that the trust was created for imparting education. In the 2nd round of proceedings, the CIT(E), Chandigarh has rejected the application filed for registration u/s 12AA(1)(b)(ii) of the Act, exparte qua the assessee society during the covid period without appreciating the genuine difficultly and the circumstanced beyond the control of the assessee which prevented it to appear and make submission before the CIT(E) and that further he proceeded without considering the material documents on record and the direction of the Hon ble ITAT, Amritsar Bench, Amritsar in the instant case. CIT (E) has totally ignored the ground realities as were existing in Kashmir valley since August, 2019 due to abrogation of Article 370 and 35A of the Indian Constitution followed by complete lockdown due to COVID-19, which prevented the appellant assessee to pursue his proceedings before CIT(Exemptions) Chandigarh, certainly be considered in view of principles of natural Justice. Since, this matter has been come up in 2nd round before us, and taking into consideration of the genuine difficulty of the applicant, we proceed to decide it on merits of the case. Appellant society namely Anwar sultana Charitable Trust is solely created for imparting education. In compliance to the order of the Honorable Bench of ITAT Amritsar, the appellant submitted all the papers and documents required for the purpose of grant of Registration. However, the Worthy CIT(E) again rejected vide impugned order. CIT(E), while passing impugned order seems to be under hurry in passing exparte order in 2nd round and further to understand the definition of 'charitable activities' de hors requirement of law would only enable an institution to be granted registration under section 12AA of the Act as once registration is granted, the entire income of the institution would become exempt. The said view, in the light of precedents referred above is wholly opposed to law. The genuineness of activities would mean to see that activities are not camouflage, bogus, artificial and whether these are in accordance with the objects of the institution. The scope of enquiry does not extend beyond that point. On the other hand, the registration granted by Commissioner does not extend any exemption to an institution under section 11 except to the fact that such registration is mandatory for claiming exemption under section 11. Meaning thereby, in other words, exemption under section 11 can be availed by institution which are genuinely engaged in 'charitable activities. The registration under section 12AA is only to the objects of the institution. The activities of an institution though genuine at the time of grant of registration may not remain so during its life span and the registration granted to it cannot be life time guarantee that it would remain so, that is why the law prescribes procedure for withdrawal of registration once granted. The order under appeal is unsustainable and thus reversed. The Ld. CIT(E) is directed to grant registration to the appellant forthwith, preferably within one month time of furnishing copy of this order. - Decided in favour of assessee.
Issues Involved:
1. Rejection of the appellant's application for registration under section 12AA(1)(b)(ii) of the Income Tax Act, 1961. 2. Consideration of ground realities in Kashmir due to abrogation of Article 370 and COVID-19 lockdown. 3. Examination of the genuineness and activities of the trust at the stage of registration. Detailed Analysis: 1. Rejection of the Appellant's Application for Registration under Section 12AA(1)(b)(ii): The appellant society's application for registration under section 12AA(1)(b)(ii) was rejected by the CIT(E), Chandigarh, on the grounds of non-attendance and lack of adjournment requests on multiple occasions. The CIT(E) concluded that the applicant was not interested in pursuing the matter, making it difficult to verify the objects and genuineness of the activities of the trust. 2. Consideration of Ground Realities in Kashmir: The appellant argued that the CIT(E) ignored the ground realities in Kashmir due to the abrogation of Article 370 and the COVID-19 lockdown, which prevented the appellant from pursuing proceedings. The appellant contended that the rejection was arbitrary, especially considering the restrictions on physical appearances due to COVID-19. 3. Examination of the Genuineness and Activities of the Trust: The appellant submitted that the CIT(E) should have considered the documents and evidence provided, including the trust deed, note on activities, balance sheet, and income and expenditure account. The appellant cited precedents, arguing that at the stage of registration, the CIT(E) should only verify the genuineness of the objects and not conduct a deep investigation into the activities. Judgment Summary: Rejection of the Application: The Tribunal noted that the CIT(E) rejected the application ex-parte during the COVID-19 period without considering the genuine difficulties faced by the appellant due to the abrogation of Article 370 and the lockdown. The Tribunal emphasized that the CIT(E) should have considered the material documents on record and the directions of the ITAT in the first round of appeal. Ground Realities in Kashmir: The Tribunal acknowledged the appellant's difficulties due to the abrogation of Article 370 and the COVID-19 lockdown. It was noted that the CIT(E) failed to appreciate the genuine difficulties and circumstances beyond the control of the appellant, which prevented them from appearing and making submissions. Examination of the Genuineness and Activities: The Tribunal reiterated that at the stage of registration under section 12AA, the CIT(E) should only examine whether the objects of the trust are charitable and whether the activities are genuine. The Tribunal cited various precedents, including the cases of "Fifth Generation Education Society v. CIT" and "UP Forest Corporation Vs CIT," emphasizing that the CIT(E) should not conduct a deep investigation into the activities at this stage. Final Decision: The Tribunal found that the CIT(E) acted arbitrarily by rejecting the application without a proper hearing and without considering the genuine difficulties faced by the appellant. The Tribunal reversed the order under appeal and directed the CIT(E) to grant registration to the appellant within one month of furnishing a copy of the order. Conclusion: The Tribunal concluded that the CIT(E) should have restricted the inquiry to verifying the genuineness of the objects and activities of the trust, without delving into a detailed investigation. The order of the CIT(E) was deemed unsustainable and was reversed, with directions to grant registration to the appellant forthwith.
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