2011 (3) TMI 1635 - AT - Income Tax

Tribunal Reinstates Society's Registration, Finds No Evidence of Activities Misaligned with Charitable Objectives.

The Tribunal overturned the CIT's decision to cancel the assessee society's registration under Section 12AA(3) of the I.T. Act, 1961. It found that the ... The activities of the society not being carried out in accordance with the objects of the society - Order passed by the CIT, canceling the Registration granted to the society u/s 12A - Interpretation of provisions of Section 12AA(3) of the I.T. Act, 1961 - HELD THAT:- In the present case, the ld. CIT invoked the provisions of section 12AA(3) of the I.T. Act, which provides that the CIT has to satisfy himself about either of the two conditions prescribed therein, namely, that the activities were not genuine or that the activities were not being carried out in accordance with the objects of the trust or the institution, as the case may be. However, in the instant case, the ld. CIT has not brought any material on record to substantiate that the activities of the assessee were not genuine or that the activities were not being carried out in accordance with the objects of the assessee. On a similar issue, this Bench of the Tribunal vide order dated 30.8.2010 in the case of Chaturvedi Har Prasad Educational Society vs.CIT [2010 (8) TMI 757 - ITAT LUCKNOW]. In the instant case, the ld. CIT without bringing on record that the activities of the assessee were not genuine or were not being carried out in accordance with the objects of the assessee-society, cancelled the registration which amounts to reviewing of his earlier order when the registration was granted u/s 12A of the Act after considering and on being satisfied that the conditions specified were fulfilled by the assessee. We, therefore, considering the totality of the facts, are of the view that the action taken by the ld. CIT does not fall within the parameters of sub- Section (3) of Section 12AA of the I.T. Act. Therefore, his action in cancelling the registration by invoking the provisions of section 12AA(3) of the I.T. Act is not sustainable. In that view of the matter, we set aside the order of the ld. CIT passed u/s 12AA(3)of the I.T. Act and allow the appeal of the assessee. In the result, the appeal is allowed. Issues Involved:1. Cancellation of registration granted to the assessee society u/s 12A of the I.T. Act, 1961.2. Interpretation of provisions of Section 12AA(3) of the I.T. Act, 1961.3. Whether the activities of the society are genuine and in accordance with its objects.4. Determination of whether the objects of the trust are charitable.Summary:Issue 1: Cancellation of Registration u/s 12AThe Commissioner of Income Tax-I, Lucknow, cancelled the registration granted to the assessee society u/s 12A of the I.T. Act, 1961, citing that the assessee-society had credited LIC commission to the Income and Expenditure Account without maintaining separate books of accounts, and had revised its 'Smriti Patra' and objects without departmental permission. The CIT also noted that the revised objects included welfare for minorities, SC/ST/OBCs, which he interpreted as benefiting a particular community.Issue 2: Interpretation of Section 12AA(3)The CIT invoked Section 12AA(3) of the I.T. Act, 1961, to cancel the registration, arguing that the activities were not in accordance with the objects of the society. However, the assessee contended that the objects remained charitable and that separate books of accounts for LIC commission were maintained and produced before the CIT.Issue 3: Genuineness of ActivitiesThe Tribunal observed that the CIT did not provide evidence that the activities of the society were not genuine or not in accordance with its objects. The assessee maintained that the objects were translated from English to Hindi without changing their charitable nature and that the activities were for the welfare of various disadvantaged groups, not a particular community.Issue 4: Charitable Nature of ObjectsThe Tribunal referred to previous judgments, including the case of M/s. R.B.N. Social & Educational Society vs. CIT, Lucknow, which held that the inclusion of minorities in the objects does not restrict the society to a particular community. The Tribunal concluded that the objects were charitable in nature and for public utility.Conclusion:The Tribunal set aside the CIT's order, stating that the cancellation of registration u/s 12AA(3) was not justified as the CIT did not substantiate that the activities were not genuine or not in accordance with the objects. The appeal of the assessee was allowed, and the registration u/s 12A was restored.Order Pronounced:The order was pronounced in the open Court on 16.3.11.