2024 (9) TMI 269 - AT - Income Tax

Denial of Registration u/sec.12AB - assessee is not registered under Rajasthan Public Trust Act, 1959, genuineness of the activities of the assessee could not be verified due to non-compliance; and Assessee has filed incomplete Form No.10AB - HELD THAT - The provisions of the Andhra Pradesh Charities Act and provisions of the Rajasthan Public Trust Act are almost identical. Therefore, decision of the Hon ble Supreme Court in the case of New Noble Education Society 2022 (10) TMI 855 - SUPREME COURT on this issue is squarely applicable to the assessee. As also observed that assessee had not submitted the details called by the ld.CIT(E), therefore, ld.CIT(E) observed that genuineness of the activities of the assessee could not be verified. After the amendment in the registration procedures for Charitable Trust parliament in its wisdom has introduced provisional registration and permanent registration w.e.f 01.04.2021. The provisional registration is issued almost automatically relying on the assessee s submissions. However, at the time of issuing permanent registration as per Section 12AB(1), it is mandatory for CIT(E) to verify genuineness of the activities of the assessee. In this case, assessee has not submitted the relevant details. Therefore, the ld.CIT(E) could not verify genuineness of the activities of the assessee. Even before this tribunal, assessee has not filed single document to prove genuineness of the activities of the assessee trust. In these facts and circumstances of the case, we agree with the ld.CIT(E) that assessee is not eligible for registration u/sec.12AB of the Act as assessee could not prove genuineness of the activities. Appeal of the assessee is dismissed.

Summary

Issues:
- Rejection of application for Registration under section 12AB of the Income Tax Act
- Cancellation of provisional registration under section 12A
- Failure to comply with documentation requirements
- Genuineness of activities of the assessee

Analysis:

The appeal was filed against the rejection of the assessee's application for Registration under section 12AB of the Income Tax Act by the ld. Commissioner of Income Tax(Exemption), Jaipur. The grounds of appeal included the rejection based on incomplete Form 10AB, non-registration under Rajasthan Public Trust Act, 1959, and doubts regarding the genuineness of activities. The Tribunal noted that the assessee did not appear during the hearing despite an adjournment request, which was rejected. The Departmental Representative for the Revenue relied on the order of the ld.CIT(E).

The ld.CIT(E) rejected the application primarily due to the non-registration of the assessee under the Rajasthan Public Trust Act, 1959, incomplete Form No.10AB, and failure to provide necessary documentation to verify the genuineness of activities. The Tribunal referred to legal precedents highlighting the mandatory nature of registration under public trust acts for charitable organizations. The assessee failed to respond to queries and provide essential documents despite multiple opportunities, leading to the conclusion that the activities were not genuine.

The Tribunal emphasized the importance of compliance with applicable laws, citing the requirement for registration under the Rajasthan Public Trust Act within three months of creation. The Tribunal also referenced a Supreme Court decision emphasizing the need for charitable institutions to comply with state laws regulating them. The Tribunal upheld the ld.CIT(E)'s order based on the failure to prove genuineness of activities and non-compliance with registration requirements.

In conclusion, the Tribunal dismissed the appeal, affirming the rejection of the application for Registration under section 12AB of the Income Tax Act. The decision was based on the non-registration under the Rajasthan Public Trust Act, incomplete documentation, and the inability to demonstrate the genuineness of activities. The Tribunal upheld the ld.CIT(E)'s order, emphasizing the importance of compliance with legal requirements for charitable organizations.