2015 (1) TMI 788 - AT - Income Tax

Tax Tribunal Upholds Rejection of Charity Registration: Lack of Verifiable Activities

Pushpadam Society Versus The Director of Income Tax (Exemptions)

The Tribunal upheld the rejection of the registration application u/s. 12A of the Income Tax Act by the Ld. DIT(E) due to lack of verifiable activities ... Grant of registration u/s. 12A of to the assessee society - Held that:- According to section 12AA of the I.T. Act the Commissioner on receipt of application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1) of section 12A shall call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he shall pass an order in writing registering the trust or institution; shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant. After going through the observations made by the Ld. DIT(E) has verified the same and held that no specific verifiable activity finds mention in the details submitted by the applicant. Due to lack of evidence of the activities, the Ld. DIT(E) has rejected the application for registration filed by the applicant and passed the impugned order. We are of the view that no interference is called in the impugned order, hence, we uphold the same by dismissing the appeal of the Assessee. - Decided against assessee. Issues:1. Grant of registration u/s. 12A of the Income Tax Act to the assessee society.Analysis:The appeal was against the order of the Ld. Director of Income Tax (Exemptions) rejecting the application for registration u/s. 12A of the Income Tax Act. The assessee society claimed to have spent a meager amount on charitable activities, which the Ld. DIT(E) found not verifiable. The Ld. DIT(E) requested documents to verify the genuineness of activities, but no specific verifiable activity was found. The Ld. DIT(E) rejected the application based on lack of evidence of activities and the meager amount spent. The appellant argued that the activities were genuine, supported by vouchers, and in line with the Act's requirements. The appellant also highlighted the charitable expenses incurred and donations received, emphasizing the genuineness of their activities.The appellant contended that the Ld. DIT(E) erred in rejecting the registration application based on the amount spent, as the genuineness of activities and alignment with the Act's objectives were not in question. The appellant provided detailed accounts of charitable expenses and donations, supported by vouchers and beneficiary details. The appellant argued that the Ld. DIT(E) did not verify the activities properly before rejecting the application. The appellant emphasized that all members were religiously professed Christian nuns engaging in charitable activities without remuneration, which should have been considered in granting registration u/s. 12A.The Tribunal considered the submissions and relevant provisions of the Income Tax Act. Section 12AA mandates the Commissioner to verify the genuineness of activities and objects of a trust or institution before granting registration. The Ld. DIT(E) had called for documents to satisfy himself about the activities, but found no specific verifiable activity mentioned in the details submitted. Due to lack of evidence and specific activities, the Ld. DIT(E) rejected the registration application. The Tribunal upheld the Ld. DIT(E)'s decision, stating that no interference was warranted, and dismissed the appeal of the Assessee.In conclusion, the Tribunal upheld the rejection of the registration application u/s. 12A of the Income Tax Act by the Ld. DIT(E) due to lack of verifiable activities and evidence, despite the appellant's claims of genuine charitable work and supporting documents. The decision was based on the Commissioner's obligation to ensure the genuineness of activities and alignment with statutory requirements before granting registration.