2020 (3) TMI 122 - AT - Income Tax

Tribunal grants final chance for charity registration & approval under Income Tax Act

Action Alliance for Recycling Beverage Cartons (AARC) Versus Commissioner of Income Tax (Exemption), New Delhi

The Tribunal directed the CIT(E) to grant the assessee a final opportunity to substantiate charitable activities for registration u/s. 12AA. The issue of ... Exemption u/s 11 - registration u/s. 12AA and approval u/s. 80G - HELD THAT:- We find the CIT(E) refused to grant registration 12A/12AA on the ground that the assessee failed to substantiate that the objects of the society / trust are charitable in nature and the activities of the society/ trust are genuine, since the assessee failed to produce the requisite details called for by him. We find the assessee in the grounds of appeal has specifically taken grounds that the CIT(E) has not granted him reasonable opportunity of being heard. In the interest of justice we deem it proper to restore the issue to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate the charitable activity of the society for grant of registration 12AA of the Act. The assessee is also hereby directed to appear before CIT(E) and file the requisite details as called for by him without seeking any adjournment under any pretext. CIT(E) shall decide the issue as per fact and law after giving reasonable opportunity of being heard to the assessee. Since we are restoring the issue of registration 12A/ 12AA, which is one of the pre condition for granting of approval u/s. 80 G of the Act, therefore, we also restore the grounds challenging the denial of approval u/s. 80G CIT(E) for fresh adjudication. Appeals filed by the assessee are accordingly allowed for statistical purpose. Issues involved:- Denial of registration u/s. 12AA and approval u/s. 80G by CIT (Exemption), New Delhi.Analysis:- The assessee, a society, applied for registration u/s.12AA and exemption u/s.80G.- The CIT(E) requested documents to support the claim, but the assessee provided only partial details.- Several notices were issued to the assessee to submit required details, including financial statements, list of donors, and evidence of charitable activities.- The CIT(E) noted discrepancies in the financials, questioning the genuineness of activities and expenses.- The CIT(E) held that the assessee failed to establish the charitable nature of its activities, leading to the rejection of registration u/s. 12A/12AA and subsequently denial of approval u/s. 80G.- The assessee appealed to the Tribunal, arguing denial of reasonable opportunity to be heard, and challenging adverse inferences drawn by the CIT(E).- The Tribunal directed the CIT(E) to grant one final opportunity to the assessee to substantiate charitable activities for registration u/s. 12AA.- The issue of approval u/s. 80G was also remanded for fresh adjudication by the CIT(E).- Both appeals by the assessee were allowed for statistical purposes, emphasizing the importance of substantiating charitable activities for registration and approval under the Income Tax Act.