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2025 (5) TMI 953 - AT - Income TaxRejection of application for registration u/s 12AB - Charitable activity or not? - donations received - HELD THAT - Full details in respect of donations were not furnished by the assessee trust and only a few receipts as mentioned above which does not contain all the requisite details was furnished and therefore Ld. CIT Exemption Pune was of the view that the source and genuineness of these transactions have remained unproved. CIT Exemption Pune on the issue of ration distribution observed that the assessee was required to estimate the value of food grain collected and distributed and also required to disclose it in its financial statements but this was also not done by the assessee. In this regard we find that in the ground no.6 of appeal the assessee trust himself admitted that even if the activity is undertaken by the assessee trust monetary value is not recorded in the financial statements since the valuation was difficult and whatever food grains was received the same was distributed amongst the beneficiaries. In view of all the above discrepancies/short comings Ld. CIT Exemption Pune was not satisfied about the charitable nature and genuineness of the assessee trust and compliance to requirements of any other law for the time being in force by the trust as are material for the purposes of achieving its objects therefore in our opinion the application was rightly rejected by Ld. CIT Exemption Pune and we do not see any reason to interfere in the order passed by Ld. CIT Exemption Pune. Accordingly the grounds raised by the assessee are dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Qualification for Permanent Registration under Section 12AB Legal Framework and Precedents: Section 12AB of the Income Tax Act mandates that trusts or institutions seeking exemption must apply for registration by furnishing requisite details to demonstrate their charitable nature and compliance with applicable laws. The registration process involves scrutiny by the Commissioner of Income Tax (Exemption) to verify the genuineness of activities and adherence to statutory requirements. Court's Interpretation and Reasoning: The Tribunal noted that the assessee trust had applied for permanent registration under clause (iii) of section 12A(1)(ac) through Form No. 10AB. The Commissioner issued notices seeking clarifications on the objectives, activities, donations, and expenses. The Tribunal observed that the Commissioner had conducted a detailed examination of the trust's submissions and found significant discrepancies and inadequacies in the information provided. Key Evidence and Findings: The Commissioner found that the trust's objectives, as per the trust deed, were primarily aimed at the spiritual needs of the Christian community, focusing on propagation of the teachings of Jesus Christ and related religious ceremonies. The activities were therefore considered to benefit a particular religious community rather than the public at large. Further, the trust failed to provide specific details such as dates, places, and identification of beneficiaries for its activities. Application of Law to Facts: Since section 12AB requires that the activities be charitable and for the benefit of the public at large, the Tribunal agreed with the Commissioner's view that the trust's objectives and activities did not meet this requirement. The focus on a particular religious community was held to be insufficient to qualify for exemption under the statute. Treatment of Competing Arguments: The assessee argued that all requisite details were furnished and that the trust's objects were charitable. However, the Tribunal found that the replies were general and lacked the specificity required by the Commissioner's notices. The assessee's failure to provide point-wise clarifications weakened its position. Conclusions: The Tribunal upheld the Commissioner's finding that the trust did not qualify for permanent registration under section 12AB due to the nature of its objects and activities. Issue 2: Compliance with Documentary and Procedural Requirements Legal Framework and Precedents: The registration process under section 12AB requires the trust to furnish detailed information about its activities, donors, donations, and expenses, including documentary evidence such as receipts, bills, and audited financial statements. This is essential to establish the genuineness of the trust's operations and compliance with applicable laws. Court's Interpretation and Reasoning: The Commissioner found that the assessee failed to provide comprehensive details of donors, including full addresses, PAN/Aadhar numbers, dates of donations, receipt numbers, and mode of donations. The list submitted contained only five names with incomplete information. The source and genuineness of donations aggregating significant sums across multiple financial years remained unverified. Key Evidence and Findings: The Commissioner also noted discrepancies in the financial statements, such as the absence of disclosure of ration distribution activities despite mention in the activity notes. The assessee admitted difficulty in valuing food grains collected and distributed, and did not record their monetary value in financial statements. Additionally, the assessee failed to explain the purpose and recipients of honorarium payments included under object expenses. Bills and invoices submitted lacked explanation linking them to specific activities. Application of Law to Facts: The Tribunal concurred with the Commissioner that such deficiencies in documentation and disclosure undermined the trust's claim of genuine charitable activities. The absence of required particulars and supporting evidence was fatal to the application for registration. Treatment of Competing Arguments: The assessee contended that requisite documents and submissions were made, including trust deed, registration certificate, audited financials, and written submissions. However, the Tribunal found that these did not adequately address the specific queries raised by the Commissioner, particularly regarding donor details and activity particulars. Conclusions: The Tribunal upheld the rejection of the application on grounds of non-compliance with documentary and procedural requirements under section 12AB. Issue 3: Cancellation of Provisional Registration Legal Framework and Precedents: Provisional registration granted under section 12AB read with section 12A(1)(ac)(vi) is subject to cancellation if the trust fails to meet the conditions or provide satisfactory evidence of its charitable nature and compliance with law. Court's Interpretation and Reasoning: The Commissioner cancelled the provisional registration granted on 01.10.2021 due to the trust's failure to satisfactorily respond to queries and demonstrate the charitable nature of its activities. The Tribunal found this cancellation justified given the deficiencies highlighted. Key Evidence and Findings: The same evidentiary gaps and inadequate clarifications that led to the rejection of the permanent registration application also supported the cancellation of provisional registration. Application of Law to Facts: The Tribunal agreed that the cancellation was in accordance with statutory provisions and justified on facts. Treatment of Competing Arguments: The assessee did not produce compelling evidence to counter the cancellation decision. Conclusions: The cancellation of provisional registration was upheld. 3. SIGNIFICANT HOLDINGS The Tribunal made the following significant determinations and established core principles: "The objectives of the charitable trust reflect a commitment to the teachings of Jesus Christ as conveyed in the Holy Bible. By focusing on the propagation of these teachings, the trust aims to serve the specific spiritual needs of the Christian community... these objectives are aimed at benefitting and strengthening of the Christian community by promoting its spiritual growth and adherence to the teachings of Christ, rather than serving the people at large." "The assessee has merely stated that the objectives of the trust are for the benefit of public at large and not for a particular community. However, on perusal of the objectives, it is observed that the objectives of the charitable trust reflect a commitment to the teachings of Jesus Christ... The source and genuineness of these transactions has remained unproved." "The assessee was required to estimate the value of food grain collected and disclose it in the financial statements. The assessee has attached few bills/invoices; however, the activities in connection with which said expenses are incurred have not been explained." "In view of the above, the undersigned is not satisfied about the charitable nature and the genuineness of activities of the assessee and compliance to requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects." Final determinations:
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