TMI Blog2022 (8) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... ny legally sustainable merits in the approach adopted by the learned Commissioner. Learned Commissioner's guidance about the conduct of the assessee- which is what in substance, the conditions attached to the registration, signify, cannot be treated, no matter how well intended is it, as a condition attached to the registration, nor this fact per se will govern, or limit, the consequences of lapses in this regard. While the assessee will be well advised to bear in mind and carefully examine his conduct vis- -vis the points made by the learned Commissioner, these observations cannot be construed as legally binding in the sense that non-compliance with such guidance will not have any consequence, unless and beyond what is specifically envisaged by the statute- such as in Section 12AB(4) and (5) as indeed elsewhere, nor the implications of not doing what is set out in the conditions will remain confined to the cancellation of registration when the law stipulates much harsher consequences. To this extent, and in these terms, the legal effect of these conditions, as visualized in the conditional grant of registration dated 24th September 1991, stands vacated. Appeal is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution, surplus and assets shall be given to an organization, which has similar objects and no part of the same will go directly or indirectly to anybody specified in section 13(3) of the Income Tax Act. 1961. c. In case the trust/institution is converted into any form, merged into any other entity or dissolved in any previous year in terms of provisions of section 115TD, the applicant shall be liable to pay tax and interest in respect of accreted income within specified time as per provisions of section 115TD to 115TF of the Income Tax Act, 1961 unless the application for fresh registration under section 12AB for the said previous year is granted by the Commissioner. d. The Trust/Institution should quote the PAN in all its communications with the Department. e. The registration us 12AB of the Income Tax Act, 1961 does not automatically confer any right on the donors to claim deduction u/s. 80G. f. Order u/s. 12AB read with section 12A does not confer any right of exemption upon the applicant u/s. 11 and 12 of Income Tax Act, 1961. Such exemption from taxation will be available only after the Assessing Officer is satisfied about the genuineness of the activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of any fact, the registration so granted is liable to be cancelled as per the provision u/s. section 12AB(4) of the Act. o. This certificate cannot be used as a basis for claiming non-deduction of tax at source in respect of investments etc. relating to the Trust Institution. p. All the Public Money so received including for Corpus or any contribution shall be routed through a Bank Account whose number shall be communicated to Office of the Jurisdictional Commissioner of Income Tax. q. The applicant shall comply with the provisions of the income Tax Act, 1961 read with the Income Tax Rules, 1962. r. The registration and the Unique registration number has been instantly granted and if, at any point of time, it is noticed that form for registration has not been duly filled in by not providing, fully or partly, or by providing false or incorrect information or documents required to be provided under sub-rule (1) or (2) of rule 17A or by not complying with the requirements of sub- rule (3) or (4) of the said rule, the registration and Unique Registration Number (URN), shall be cancelled and the registration and URN shall be deemed to have never been granted or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said clause, pass an order in writing registering the trust or institution for a period of five years; (b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) of the said clause,-- (i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about-- (A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),-- (A) pass an order in writing registering the trust or institution for a period of five years; or (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard; (c). where the application is made under sub-cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opportunity of being heard, cancel the registration of such trust or institution. 7. As a plain look at the above statutory provision shows, under the scheme of the Act, all that the Commissioner of Income Tax, or the Principal Commissioner of Income Tax- as the case may be, is empowered, in the process of exercising discretion for the registration of a charitable institution in terms of an application under section 12A(1)(ac)(i)- that the application in question admittedly is, is to (i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about--(A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects . Once he does so, he may take a call on grant of registration, or decline to grant the registration, (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i) . The Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing part of the scheme of the registration being granted to the applicant trust, learned Commissioner cannot supplement the law by laying down these conditions either. 9. Learned Commissioner ought to have realized the limitation of the role he plays when the registration of trust, under section 12A, comes up for his consideration. As we have seen earlier, while looking at the scheme of Section 12AB, there is a limited role that the learned Commissioner could have played under section 12AB(1). It was open to him to call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about--(A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects and then proceed to take a call on whether to grant the registration under section 12A or not after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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