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TMI Blog2021 (8) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... gation 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 ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the grounds of appeal. 2. The appellant society has been in operation since 28.05.2016 and filed an application in this office of CIT(E) on 01.02.2017 for seeking registration u/s 12AA of the Income Tax Act, 1961. 3. This is 2nd round of appeal before us. In the 1st round of appeal Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has allowed the appeal of the applicant Society for statistical purposes in ITA No. 682 683(Asr)/2017 dated 08.02.2018. 4. The stated ostensible aims and objects of the trust is to impart education to the public at large without discrimination of caste, creed etc. Again, the Ld. CIT(E) rejected the instant application for registration u/s 12AA(1)(b)(ii) of the Act by observing that on the fixed date neither did any one attend nor was any request for adjournment received, in order to follow the principles of natural justice another opportunity was accorded to the applicant on 01.07.2020 and the matter was fixed for 06.07.2020, Again, on the fixed date neither did any one attend nor was any request for adjournment received. In order to follow the principles of natural justice another opportunity was accorded to the applicant on 07.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench. The Order was passed by the Ld. CIT Exemption on 20, July 2020 when almost whole the country was functioning and arbitrarily passed the order thereby denying the registration stating the reason of non attendance when almost physical appearance was not allowed in the Income Tax Department due to COVID-19. The appellant had submitted deed of trust and note on activities of the trust besides Balance Sheet or Income and Expenditure account. The Ld. Commissioner wanted to go into investigate into genuineness of activities of the of the trust when it is stated that the stage at which the Ld. Commissioner of Income Tax desired deep investigation into the matter is quite pre mature. I may invite kind attention of Honorable Bench towards page No 42 of the Paper book where the appellant has submitted all the information required and page No 10 11 wherein all the requisite questions are properly replied. However section 12A of the Income Tax Act 1961 clearly that the appellant can make application U\S 12AA of the Income Tax Act 1961 within one year from the date of Creation of the trust or establishment of the institution. So the application is not premature. Secondly mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the pres-cribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.] (c) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made. The procedure for registration of the trust or institution as provided U\S 12AA of the Income Tax Act 1961, reads as follows:- (1) On receipt of an application for registration of a trust or institution; the Commissioner shall - (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself; and (b) after satisfying himself about the objects or the trust of institution, he shall pass an order in writing registering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manner as suggested by the said section. Beyond that, the scope of enquiry would not go. In insisting upon the society changing or amending its bye-laws and in refusing to consider the application on the ground that those bye-laws have not been changed so as to exclude the religious aspect from those bye-laws, the Commissioner would be overstepping his limits. In general at the stage of application for registration under Section 12AA the Ld. Commissioner of Income Tax Exemption need not to go in deep and only to see from the annexed documents the following:- 1. Activities of the Trust are genuine. 2. That the Trust activities are carried in accordance with the objects of the trust/Institution. Procedure of registration is a first step and a preliminary stage where the Commissioner shall restrict the enquires as to whether the trust is actually and whole heartedly performing all the duties and activities for which it was created On careful reading of this section it was gathered that at this initial stage there is no scope of any apprehension of mis-utilization of funds or to judge the taxability of income. The scheme of the Act otherwise do not subscribe and allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd grounds of appeal raised it prayed that registration U/S 12AA of the income Tax Act 1961 may be granted to the appellant so that the appellant can claim exemption U\S 11 of the Income Tax Act 1961 on income that the appellant may derive. 6. The Ld. CIT(DR) on the other side placed reliance on the impugned order. 7. We have heard rival contentions, perused the material relevant on record and citations relied in support. 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. 8. It is also admitted fact on record that 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 docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 12A, all that the Commissioner may examine is whether the application is made in accordance with the requirements of that section read with rule 17A, and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. At that stage, it is not proper to examine the application of income. 13. In case of UP Forest Corporation Vs CIT , the Honorable supreme Court has held that unless and until institution is registered U/S 12AA, of the Income Tax Act 1961 it cannot claim exemption U/S 11 or 12 Of the Income Tax Act 1961. Therefore, registration U/S 12AA is not blanket exemption that the Ld. Commissioner of Income Tax Should consider at this stage but it is a pre requisite and a formality to be complied with and the Ld. CIT is depriving off the appellant from claiming any legal exemption with otherwise law provides to the appellant on account of promotion of education. 14. In the matter of CIT vs. Shreedhar Sewa Trust , (Allahabad High Court) held that at the time of registration of a charitable institution u/s 12AA, the CIT is not required to look into the activities, where such activities have not or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. However, benefit of section 11 is subject to application of income for charitable activities and the Assessing Officer is well entitled to see whether such application has been made and other conditions of section 11 have been complied. The Assessing Officer has to see whether exemption under section 11 is barred by application of section 13 of the Act. An institute though registered under section 12AA, would still be taxed on the income which has not been applied in accordance with section 11 or in respect of which section 13 comes into play. Even in respect of income hit by section 13, other provisions of the Act regarding levy of tax on 'maximum marginal rate' would come into play. Thus, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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