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TMI Blog2015 (6) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favour of assessee. - I.T.A. No. 9003/Mum/2010 - - - Dated:- 20-2-2015 - SHRI D. MANMOHAN AND SHRI SANJAY ARORA, JJ. For The Appellant : Shri Dharmesh Shah For The Respondent : Shri S.J. Singh ORDER Per Sanjay Arora, A. M.: This is an Appeal by the Assessee directed against the Order by the Director of Income Tax (Exemption), Mumbai ( DIT(E) for short) dated 25.10.2010, u/s. 12AA(1)(b)(ii) r/w s.12A of the Income Tax Act, 1961 ( the Act hereinafter). The issue 2. The only issue arising in the instant appeal is the validity or otherwise in law of the rejection of the assessee s application for registration u/s.12AA of the Act. The appellant-trust, formed on 05.10.2009, moved the said application with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration as a charitable entity under the Act: Procedure for registration. 12AA. (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1) of section 12A, shall- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the non-commencement of the activities by the trust or the entity seeking registration. The whole premise of the provision, as we understand from its holistic reading, is a state of satisfaction by the competent authority with regard to the nature of the objects, i.e., qua their being charitable, legitimate, etc., and a genuine and bona fide intent to pursue those objects. The decision rejecting the assessee s application could after all only be based on an absence of such satisfaction or, rather, existence of a positive non-satisfaction, i.e., dis-satisfaction, with either the appellant s objects or its activities. A satisfaction with regard to the genuineness of the activities presupposes their existence. The law, however, does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, enabling a finding of nonsatisfaction qua the genuineness of the activities of the trust. 3.3 The provision of law, thus, read meaningfully and contextually, leads to an existence of dissatisfaction as regards the genuineness of its activities as a qualifying condition for denial of registration on that ground. This is further supported by the legal position that if at any time subsequently the entity is found to be pursuing activities which are not genuine or not in accordance with its objects, the registration granted could be cancelled u/s.12AA(3). This view is in fact supported by a series of decisions relied upon before us by the ld. AR, as under, so that the issue is no longer res integra: 1) DIT(E) vs. Pannalalb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prior to the application, and it was only after the discrepancies in the form of non-deduction of tax at source surfaced that it applied for registration. Substantial amounts had in fact been collected and kept in the bank in the form of fixed deposits without any corresponding charitable activity. In the present case, as explained during hearing by the ld. AR, the assessee was in fact in the process of acquiring land, i.e., for the construction of an old age home, in the name of one of it s trustees. The same being under process at the relevant time, was explained to the ld. DIT(E), and for which reference was made by him to para 3 of the impugned order. The efforts have since borne fruit, he would inform us, with the appellant acquiring ..... X X X X Extracts X X X X X X X X Extracts X X X X
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