2012 (11) TMI 857 - HC - Income Tax

Registration of Trust - application for registration was filed by the assessee after 29 years of it being registered under the Society Registration Act 1960 - held that - Not providing information for the returns since inception is not fatal because only inquiry which the Commissioner of Income Tax can make while granting registration is regarding genuineness of the Trust and as to whether the objects as mentioned in the Trust Deed are for charitable purpose or not. The matter was remanded by the Tribunal to the Commissioner to grant registration under Section 12-AA of the Act. However in the penultimate paragraph of the order the Tribunal has directed the Commissioner to afford an opportunity for filing explanation regarding delay in making the application - order passed by the Tribunal does not give rise to any substantial question of law for the reason that non-filing of the returns for the last several years cannot be a ground for declining to grant registration as the Commissioner is only enjoined to see as to whether the Trust is genuine and whether the object for which it has been formed is for charitable purpose or not - order passed by the Tribunal does not suffer from any legal infirmity - appeal fails and is dismissed.

Summary

Issues:
1. Grant of registration under Section 12-AA of the Income Tax Act, 1961.
2. Rejection of registration application due to failure to provide necessary details and documents.

Analysis:
1. The appeal before the Allahabad High Court pertained to the grant of registration under Section 12-AA of the Income Tax Act, 1961. The Commissioner of Income Tax, Agra had proposed substantial questions of law regarding the delay in filing the registration application by the assessee after being registered under the Society Registration Act, 1960 for 29 years. The Tribunal directed the Commissioner to grant registration, emphasizing the genuineness of the Trust and the charitable nature of its objects. The High Court upheld the Tribunal's decision, stating that the non-filing of returns for several years does not justify denying registration, as the focus should be on the Trust's genuineness and charitable purpose.

2. The rejection of the registration application was based on the assessee's failure to furnish details and documents as required by the Commissioner under Section 12-AA (1) (a) of the Act. The Commissioner raised concerns about the delay in applying for registration and the lack of compliance with queries regarding income tax returns. However, the Tribunal ruled that the absence of return filings since inception was not fatal, as the Commissioner's inquiry should primarily focus on the Trust's genuineness and charitable objectives. The Tribunal remanded the matter to the Commissioner for registration under Section 12-AA, with a directive to allow an explanation for the delay in application. The High Court concurred with the Tribunal's decision, emphasizing that the Commissioner's scrutiny should center on the Trust's authenticity and charitable purposes, rather than on procedural issues like late application submissions.

In conclusion, the High Court dismissed the appeal, affirming the Tribunal's direction to grant registration to the assessee under Section 12-AA of the Income Tax Act, 1961. The judgment underscored the importance of assessing the Trust's genuineness and charitable objectives in registration matters, rather than penalizing procedural lapses such as delayed application submissions or non-filing of income tax returns.