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2025 (5) TMI 745 - AT - Income TaxRejection of recognition of appellant u/s. 80G - assessee could not file the required details in support of the activities done and registration of the applicant trust under RPT Act - HELD THAT - Bench noted that the reasons advanced for rejecting the recognition of the applicant assessee trust are curable in nature as argued before us and prayed to contest the case for that they prayed for one chance. Considering that aspect of the matter the Bench feels that the issue of recognition u/s 80G is required to be restored to the file of ld. CIT(E) to be decided afresh. Appeal of the assessee is allowed for statistical purposes.
Issues Presented and Considered
The core legal questions considered by the Appellate Tribunal (AT) in this appeal are:
Issue-wise Detailed Analysis 1. Validity of Rejection of 80G Registration Application on Grounds of Non-registration under RPT Act and Non-genuineness of Activities Legal Framework and Precedents: Section 80G of the Income Tax Act allows donors to claim deduction for donations made to certain funds or charitable institutions recognized by the Income Tax Department. The recognition under section 80G is granted to entities carrying out genuine charitable activities and complying with prescribed statutory requirements, including registration under relevant state laws such as the Rajasthan Public Trust Act, 1959, where applicable. Registration under section 12A of the Act is a prerequisite for recognition under section 80G, but separate registration under state public trust laws may also be mandated. Court's Interpretation and Reasoning: The CIT(E) rejected the application primarily on two grounds: (i) the assessee was not registered under the Rajasthan Public Trust Act, 1959, and (ii) the genuineness of the charitable activities was not established due to non-furnishing of requisite details and documents. The Tribunal noted that the assessee had submitted various documents including trust deed, bank statements, ledger accounts, bills, vouchers, and registration under section 12A. However, the assessee failed to provide registration under the RPT Act at the time of the CIT(E)'s order and did not furnish certain details such as particulars of persons under section 13(3), bank transaction details above Rs. 10,000, and evidence such as photographs, newspaper cuttings, or beneficiary details to establish genuineness of activities. Key Evidence and Findings: The assessee submitted multiple documents including trust deed, Income Tax Returns, balance sheets, Form 10BB for various assessment years, details of donations and charitable expenses, and a 12A registration certificate issued on 24.09.2021. The assessee also filed an application for registration under the RPT Act on 29.06.2024, after the CIT(E)'s order. The CIT(E) had granted four opportunities to furnish details but the assessee did not provide all required information timely. Application of Law to Facts: The Tribunal observed that the grounds for rejection were procedural and curable in nature. The registration under section 12A confirms the assessee's status as a charitable trust under the Income Tax Act, which involves scrutiny of genuineness of activities. The non-registration under the RPT Act was a procedural lapse that the assessee was in the process of rectifying by filing an application. The deficiencies in furnishing details and evidence were not conclusive proof of non-genuineness but rather gaps that could be remedied. Treatment of Competing Arguments: The assessee argued that registration under section 12A is sufficient proof of genuineness of activities and that the non-registration under the RPT Act was a curable defect. The Revenue relied on the CIT(E)'s order but did not oppose the prayer for restoration of the matter to the file of the CIT(E) for fresh adjudication. The Tribunal accepted the assessee's contentions that the defects could be cured and that the matter deserved reconsideration on merits. Conclusions: The Tribunal concluded that the rejection of the 80G registration application on the grounds of non-registration under the RPT Act and non-genuineness of activities was premature and not sustainable. The issues were curable and required fresh consideration by the CIT(E) after allowing the assessee an opportunity to furnish the missing details and complete the registration process under the RPT Act. 2. Effect of Registration under Section 12A on 80G Recognition Legal Framework and Precedents: Registration under section 12A of the Income Tax Act is a prerequisite for claiming exemption under various provisions including section 80G. It involves verification of the genuineness of the charitable trust and its activities. Recognition under section 80G is a further step that allows donors to claim deductions for donations made to the trust. Court's Interpretation and Reasoning: The Tribunal noted that the assessee's registration under section 12A, obtained on 24.09.2021, demonstrates that the trust is recognized as a charitable entity and its activities have been scrutinized for genuineness by the tax authorities. This registration supports the assessee's claim that the activities are genuine and that the rejection of 80G recognition on this ground alone is not justified. Key Evidence and Findings: The 12A registration certificate and related documents submitted by the assessee were considered as evidence of genuineness of charitable activities. Application of Law to Facts: Since section 12A registration is granted only after verifying the genuineness of activities, the Tribunal held that this registration is a strong indicator that the assessee's activities are bona fide. Therefore, the CIT(E)'s rejection on grounds of non-genuineness was not sustainable without further inquiry. Treatment of Competing Arguments: The Revenue did not dispute the validity or effect of 12A registration but supported the CIT(E)'s order. The Tribunal gave weight to the assessee's argument that 12A registration subsists and should be considered in the 80G recognition process. Conclusions: The Tribunal concluded that the existence of 12A registration is a significant factor favoring the assessee and that the genuineness of activities must be reconsidered in light of this registration. 3. Procedural Fairness and Opportunity to Cure Deficiencies Legal Framework and Precedents: Principles of natural justice and procedural fairness require that an assessee be given adequate opportunity to comply with statutory requirements and cure defects before adverse orders are passed. Rejection of applications on curable grounds without allowing opportunity to rectify is not sustainable. Court's Interpretation and Reasoning: The Tribunal observed that the assessee was granted four opportunities to furnish details but certain documents and information were still missing at the time of the CIT(E)'s order. However, the assessee had filed the application for registration under the RPT Act and submitted extensive documents supporting genuineness. The Tribunal held that the defects were curable and the assessee should be given one more chance to contest the issue on merits. Key Evidence and Findings: The assessee's submission of application for RPT Act registration and extensive documentary evidence was noted. The Revenue did not oppose the prayer for restoration to the CIT(E) for fresh adjudication. Application of Law to Facts: The Tribunal applied the principle that procedural defects, especially those curable by subsequent compliance, should not result in outright rejection. The assessee's willingness to comply and provide missing details justified restoration of the matter for fresh consideration. Treatment of Competing Arguments: The Revenue's acquiescence to restoration and the assessee's insistence on opportunity to cure were balanced by the Tribunal in favor of allowing the assessee to rectify deficiencies. Conclusions: The Tribunal concluded that the issue of recognition under section 80G should be restored to the file of the CIT(E) for fresh adjudication after allowing the assessee to cure the deficiencies and complete registration under the RPT Act. Significant Holdings The Tribunal held that:
Core principles established include:
Final determinations on each issue were that the CIT(E)'s order rejecting the application under section 80G was set aside and the matter was remanded for fresh adjudication after allowing the assessee to cure deficiencies and complete registration under the RPT Act.
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