2021 (9) TMI 1096 - AT - Income Tax

Exemption u/s 11 - denying for registration u/s 12AA - As per revenue assessee not furnished details of receipts and payments as reflected in the bank statement - activities of the assessee is not genuine as there is large cash deposits and the same is immediately transferred to one Mehul C Shah and Amee/ vesu Refrigeration and that the camp picture are not of HN Hospital - HELD THAT - Assessee was filed application under section 12AA and furnished required details alongwith application. The assessee-trust again in response to show cause notice filed its reply on reply dated 23.05.2017. The reply of assessee is duly acknowledged by Ld. PCIT(E) in its order. We find that the assessee instead of filing detail explanatory submission relied on various documents furnished alongwith original application. PCIT(E) again issued final show cause notice dated 01.08.2017 seeking various details as mentioned therein. The assessee instead of giving para-wise reply filed as short and cryptic reply dated 26.08.2017, which was received by Ld. PCIT(E) on 29.08.2017. PCIT(E) rejected the application of assessee by taking view that assessee-trust failed to file documentary evidence about the genuineness of activities in consonance with object. Considering the fact that the assessee-trust has furnished almost or requisite detail vide reply dated 26.05.2017, the Ld. PCIT(E) instead of referring all those documentary evidence rejected the application of the assessee-trust - We set aside the impugned order of Ld. PCIT(E) and restore the mater back to the file of Ld. PCIT(E) for considering the application afresh - Appeal of assessee is allowed for statistical purpose.

Summary

Issues:
1. Denial of registration under section 12AA of the Income Tax Act by the Principal Commissioner of Income tax (Exemptions).
2. Rejection of the application by the Principal Commissioner of Income tax (Exemptions) due to lack of documentary evidence regarding the genuineness of activities carried out by the charitable trust.

Analysis:
1. The appeal was against the order of the Principal Commissioner of Income tax (Exemptions) denying registration under section 12AA of the Income Tax Act. The assessee contended that the order was contradictory to law and facts, and the denial was arbitrary and unjustified. The Principal Commissioner held that the trust failed to provide details of receipts and payments, lacked charitable activities, and did not establish a corpus for such activities, indicating a lack of intention to engage in charitable endeavors. The rejection was based on the failure to submit documentary evidence to prove the genuineness of activities in line with the trust's objectives.

2. During the hearing, the Authorized Representative for the assessee argued that all required details were furnished with the initial application and subsequent responses to notices from the Principal Commissioner. The representative requested another opportunity to provide further documentary evidence to support the trust's charitable activities and objectives. Reference was made to a previous ITAT decision where an order denying registration was set aside due to unverified documents. Conversely, the Commissioner of Income Tax - Departmental Representative supported the original decision, emphasizing the lack of charitable activities and intention by the trust, along with the absence of satisfactory documentary evidence.

3. Upon reviewing the submissions and available material, the ITAT found that while the documents submitted by the trust did not align with procedural requirements, the trust had indeed provided necessary details initially and in response to subsequent notices. It was noted that the trust's responses were acknowledged by the Principal Commissioner. The ITAT concluded that the rejection was premature, considering the trust had furnished significant details previously. Therefore, the ITAT set aside the Principal Commissioner's order and remanded the matter for a fresh consideration, directing the trust to provide comprehensive details and explanations to support the genuineness of its activities in line with its objectives.

4. Ultimately, the appeal of the assessee was allowed for statistical purposes, with the ITAT's decision to set aside the Principal Commissioner's order and provide the trust with an opportunity to present additional evidence for the registration under section 12AA of the Income Tax Act. The order was pronounced on 23/09/2021, with the direction to display the result on the notice board.