2022 (4) TMI 446 - AT - Income Tax

Exemption u/s 11 - voluntary donations received by the assessee have been claimed as exempt - HELD THAT - We do not find any infirmity in the order of the ld. CIT(A) who has restored the matter to the AO directing that the AO will investigate the genuineness of the voluntary donations and will apply the provisions of section 12A(2) of the Act as per law. There is no infirmity in the order of the CIT(A) and the same is upheld. Appeal of the Revenue is hereby dismissed.

Summary

Issues:
1. Appeal against the order of the National Faceless Appeal Centre under section 250 of the Income Tax Act.
2. Direction to verify the genuineness of donors contributing voluntary donations to the assessee Trust.
3. Inquiry into all receipts and expenditures of the appellant during the relevant year.
4. Re-examination of the effective date of registration under section 12AA in light of the proviso to section 12A(2).
5. Distinction between an assessment order and an order of processing for determining the effective date of registration.

Analysis:

The appeal was filed by the Revenue against the order of the National Faceless Appeal Centre under section 250 of the Income Tax Act. Despite the absence of the assessee, the Tribunal proceeded to decide the appeal on merit after reviewing the records and hearing the ld. DR. The grounds of appeal raised by the Revenue included issues regarding the direction given by the CIT(A) to verify the genuineness of donors contributing voluntary donations to the assessee Trust and to inquire into all receipts and expenditures of the appellant during the relevant year.

The brief facts of the case revealed that the assessee-trust had applied for registration under section 12A of the Act and had also filed a return for the assessment year in question. The Assessing Officer disallowed the exemption claimed by the assessee in respect of voluntary donations received, citing the lack of registration as a charitable institution under section 12A of the Act. The assessee moved an application under section 154 of the Act, which was rejected by the Assessing Officer.

Upon appeal, the CIT(A) directed the Assessing Officer to investigate the genuineness of the voluntary donations, examine all receipts and expenditures of the appellant, and re-examine the effective date of registration under section 12AA in light of the proviso to section 12A(2). The CIT(A) emphasized the need for a thorough investigation to determine the status of the appellant as a registered charitable organization eligible for exemptions under the Income Tax Act.

The Tribunal, after hearing the ld. DR, found no infirmity in the order of the CIT(A) and upheld the decision. The Tribunal agreed with the direction given by the CIT(A) to the Assessing Officer to conduct a detailed investigation into the genuineness of donations and to apply the relevant provisions of the Act. Consequently, the appeal of the Revenue was dismissed, affirming the decision of the CIT(A) in the matter.

In conclusion, the Tribunal's judgment emphasized the importance of verifying the genuineness of donations, examining all financial transactions, and ensuring compliance with the provisions of the Income Tax Act regarding registration and exemptions for charitable organizations.