Trust registration denial overturned due to inadequate hearing and unspecified document deficiencies in section 12AB application

ITAT Ahmedabad allowed the appeal for statistical purposes after CIT(E) denied registration u/s 12AB to a Trust. CIT(E) rejected the application citing concerns about 30% donation transfers to Red Cross Society branches, claiming these were contractual rather than voluntary donations. ITAT held that CIT(E) failed to specify document deficiencies or provide adequate hearing opportunity. The matter was remanded to CIT(E) with directions to afford proper hearing and consider fresh evidence before deciding on registration.

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Issues Involved:
- Denial of registration under section 12AB and u/s. 80G(5) of the Income Tax Act, 1961.

Summary of Judgment:

Issue 1: Denial of registration under section 12AB
The assessee, a Trust registered under the Bombay Public Trust Act for charitable purposes, filed an application for registration under section 12AB of the Income Tax Act. The Commissioner of Income Tax (Exemption) rejected the application citing that 30% of total donations were compulsorily transferred to other branches, which did not align with voluntary donation requirements. The CIT(E) held that the genuineness of the Trust's activities could not be ascertained due to this compulsory transfer. The assessee appealed, arguing that proper opportunity was not given to clarify the issue. The ITAT found that the CIT(E) did not specify the deficiencies in the documents submitted by the assessee and did not provide a proper opportunity for clarification. Therefore, the ITAT allowed the appeal, directing the CIT(E) to provide another opportunity for the assessee to be heard and to consider the documents and evidences submitted by the Trust.

Issue 2: Rejection of registration u/s. 80G(5)
Since the registration under section 12AB was rejected, the registration under section 80G(5) was also denied. Following the decision to set aside the registration under section 12AB and provide another opportunity for the assessee to be heard, the ITAT set aside the registration under section 80G(5) as well, directing the CIT(E) to decide the case on merits after giving the assessee another opportunity for hearing.

In conclusion, both appeals filed by the Assessee were allowed for statistical purposes, and the matters were remanded back to the CIT(E) for further consideration and decision in accordance with the directions provided by the ITAT.

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