2025 (6) TMI 1751 - AT - Income Tax

Rejecting the application for registration u/sec.80G - substantial charitable activities carried out by the trust - HELD THAT - CIT(A) dismissed the application filed by the assessee in a casual manner by repeating or copying the contents from some other order which is evident from the findings in CIT(E) s order where the CIT(E) observed that no substantial charitable activities are being carried out by the assessee trust which is in violation of provisions of sec.80G. The present application in Form 10AB for registration u/sec.80G is herewith rejected. We find that the learned CIT(E) has not disputed the fact that the assessee has not violated the provisions of sec.80G(v) of the Act. Assessee trust has carried-out it s activities in accordance with it s objectives which is evident from relevant evidences and photographs submitted before the authorities. CIT(E) ignored 12AB registration after satisfying with objects and activities. Therefore CIT(E) ought to have grant registration to the assessee trust. We therefore direct the learned CIT(E) to grant registration u/sec.80G. Appeal of the assessee is allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this appeal are:

(a) Whether the learned CIT(E) was justified in rejecting the application filed by the assessee-trust in Form 10AB for registration under section 80G of the Income Tax Act, 1961, on the ground that no substantial charitable activities were being carried out by the trust.

(b) Whether the assessee-trust had discharged its onus of proving that it was carrying out charitable activities in accordance with its stated objects, supported by relevant evidence, so as to merit registration under section 80G.

(c) Whether the learned CIT(E) and the learned CIT(A) properly considered the documentary evidence and submissions made by the assessee-trust before rejecting the application.

(d) Whether the rejection of registration under section 80G was in accordance with the legal provisions and principles governing charitable trusts and their registration under the Income Tax Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) & (b): Justification for rejection of registration application under section 80G and proof of charitable activities by the assessee-trust

The relevant legal framework is section 80G of the Income Tax Act, 1961, which provides for registration of charitable institutions and trusts, enabling donors to claim deduction for donations made to such entities. The registration under section 80G is contingent upon the trust carrying out charitable activities in accordance with its objects and satisfying the conditions laid down by the Act and the Income Tax Department.

Precedents emphasize the need for the trust to demonstrate actual charitable activities and not merely state objectives. Documentary evidence such as photographs, reports, and other proofs of activities undertaken are relevant to establish genuineness.

In the present case, the assessee-trust was formed on 16.08.2022 with clearly defined charitable objects including construction of orphan hostels, educational facilities for orphans and the poor, health camps, environmental activities, seminars for unemployed youth, and national integration activities.

The assessee-trust filed an application in Form 10AB seeking registration under section 80G and submitted evidences including photographs to prove that it was providing free food to the poor and general public, thereby carrying out charitable activities.

The learned CIT(E) rejected the application on the ground that no substantial charitable activities were being carried out, as stated in para-3 of the order, without discussing the evidences submitted or the specific activities undertaken by the trust. The order merely stated that the application was rejected due to violation of provisions of section 80G, without elaboration or detailed reasoning.

The Tribunal noted that the learned CIT(E) did not dispute that the assessee-trust had not violated section 80G(v) of the Act, which relates to the conditions for registration.

The Tribunal further observed that the learned CIT(E) failed to consider the documentary evidences filed by the assessee-trust, including photographs and other relevant material, which demonstrated that the trust was carrying out activities in accordance with its objects.

Moreover, the Tribunal found that the learned CIT(E) ignored the fact that the assessee-trust had obtained registration under section 12AB after satisfying the authorities with respect to its objects and activities, which is a prerequisite and relevant consideration for section 80G registration.

The Tribunal held that the rejection by the learned CIT(E) was casual and lacked proper appreciation of the facts and evidences on record. The learned CIT(A) similarly dismissed the application without adequate reasoning, merely repeating the findings of the learned CIT(E).

The Tribunal emphasized that the assessee-trust had discharged its onus of proving the carrying out of charitable activities, and the authorities below failed to properly evaluate the evidence and submissions made.

Issue (c) & (d): Proper consideration of evidence and conformity with legal principles

The Tribunal underscored the principle that registration under section 80G is a beneficial provision meant to encourage charitable activities and should not be denied on mere technicalities or without proper scrutiny of evidences.

The learned CIT(E)'s order lacked discussion on the objections raised by the assessee-trust or the evidences submitted, which is contrary to the principles of natural justice and fair administrative action.

The Tribunal referred to the statutory requirement that the authorities must examine the activities and documents submitted by the trust before rejecting registration and cannot do so in a perfunctory or casual manner.

Given that the assessee-trust had already been granted registration under section 12AB, which requires satisfaction of genuineness of objects and activities, the learned CIT(E) ought to have granted registration under section 80G, unless there was cogent material to the contrary, which was absent.

The Tribunal found that the learned CIT-DR's submission supporting the rejection was not supported by any material evidence or legal basis, as the assessee had furnished relevant proofs and the learned CIT(E) did not dispute compliance with section 80G(v).

Thus, the Tribunal concluded that the rejection was not in accordance with law and directed the learned CIT(E) to grant registration under section 80G to the assessee-trust.

3. SIGNIFICANT HOLDINGS

The Tribunal held:

"The learned CIT(E) has simply rejected the application filed by the assessee trust in Form-10AB for registration u/sec.80G of the Act, without considering the documentary evidences filed by the assessee trust... Further, the learned CIT(E) has not disputed the fact that the assessee has not violated the provisions of sec.80G(v) of the Act."

"The assessee trust has carried-out it's activities in accordance with it's objectives, which is evident from relevant evidences and photographs submitted before the authorities."

"The learned CIT(E) ignored 12AB registration after satisfying with objects and activities. Therefore, in our considered view, the learned CIT(E) ought to have grant registration to the assessee trust."

"We, therefore, direct the learned CIT(E) to grant registration u/sec.80G of the Act."

Core principles established include:

(i) The requirement for authorities to consider and evaluate documentary evidence and submissions made by charitable trusts before rejecting registration under section 80G.

(ii) Mere absence of substantial activities cannot be presumed without proper inquiry and evidence.

(iii) Registration under section 12AB is a relevant factor indicative of genuineness and compliance with charitable objectives, which should be considered while deciding section 80G registration.

(iv) Rejection of registration applications must be supported by cogent reasons and not be casual or perfunctory.

Final determination: The appeal of the assessee-trust was allowed, and the learned CIT(E) was directed to grant registration under section 80G of the Income Tax Act, 1961.