2022 (1) TMI 146 - AT - Income Tax

High Court directs Tribunal for reassessment on Trust's activities, stresses genuineness for registration.

The High Court remitted the case back to the Tribunal for re-adjudication, emphasizing the need for findings on the object and genuineness of the Trust's ... Exemption u/s 11 - registration claimed by the assessee u/s 12A - DR submitted that Hon'ble High Court has rightly remitted back the issue back to the Tribunal as the Tribunal had allowed appeal of the assessee by granting registration u/s.12A without recording the satisfaction regarding genuineness of the activities of the trust and therefore it was prayed that the appeal filed by the assessee may be dismissed - HELD THAT:- Assessee filed index of all ledger account along with bank passbook along with corpus donations and acknowdgment of ITRs on earlier years. At pg.12 again there is a copy of letter addressed to CIT-1 by the assessee wherein the supporting documents regarding genuineness of activities were stated to have been filed before him. However, the paper book filed by the assessee does not contain any evidences regarding genuineness of activities filed before CIT(E). Therefore, in this obtaining situation, we are unable to record such necessary satisfaction, as ordered by the Hon'ble High Court regarding genuineness of activities of the Trust. Accordingly, we remit the issue back to ld. CIT(E) who, on the basis of documents filed by assessee or to be filed by the assessee, will readjudicate the issue and will decide the appeal accordingly. The assessee will be at liberty to file any other documents in support of its claim for registration - Appeal of the assessee is allowed for statistical purposes. Issues Involved:1. Denial of registration under Section 12A of the Income Tax Act.2. Genuineness of the activities of the Trust.3. Satisfaction of the Commissioner of Income-tax (Exemptions) regarding the charitable nature of the Trust's activities.4. Compliance with procedural requirements for registration.5. Applicability of deemed registration under Section 12AA.Detailed Analysis:1. Denial of Registration under Section 12A:The assessee initially applied for registration on 27.7.2011, which was denied on 30.1.2012. The Tribunal set aside this denial and remitted the matter back to the CIT(E) for proper adjudication. Despite compliance with several queries, the CIT(E) denied the exemption again, leading the assessee to appeal to the Tribunal, which granted the registration on 7.9.2018. However, the High Court remitted the issue back to the Tribunal for re-adjudication, emphasizing the need for findings on the object and genuineness of the Trust's activities.2. Genuineness of the Activities of the Trust:The Tribunal initially granted registration based on the documents provided, which included details of the Trust's activities such as scholarships to needy students, temple renovations, and organizing public feasts. However, the High Court found that the Tribunal failed to record satisfaction regarding the genuineness of these activities as required under Section 12AA. The Tribunal was directed to reassess the documents to ensure they demonstrate the genuineness of the Trust's charitable activities.3. Satisfaction of the Commissioner of Income-tax (Exemptions):The High Court emphasized that the satisfaction of the CIT(E) regarding the charitable nature and genuineness of the Trust's activities is crucial before granting registration under Section 12AA. The Tribunal's previous order was criticized for not recording such satisfaction, which is mandatory under the Act. The Tribunal was instructed to ensure that the CIT(E) examines the documents thoroughly to establish this satisfaction.4. Compliance with Procedural Requirements for Registration:The Tribunal noted that the assessee had complied with procedural requirements by submitting necessary documents, including the Trust deed, Form 10A, list of trustees, bank passbook, and other correspondence with the Department. However, the High Court highlighted that mere submission of documents is insufficient; there must be an assessment of the genuineness of the Trust's activities.5. Applicability of Deemed Registration under Section 12AA:The Tribunal initially considered the concept of deemed registration, referencing the case of Society for Promotion of Education, Adventure Sport and Conservation of Environment vs. CIT, upheld by the Supreme Court. However, it concluded that deemed registration did not apply in this case due to the active decision-making by the Revenue authorities. The High Court did not address this concept directly but focused on the need for recorded satisfaction of the Trust's activities.Conclusion:The Tribunal, upon reassessment, found that the paper book did not contain sufficient evidence regarding the genuineness of the Trust's activities. Consequently, the matter was remitted back to the CIT(E) for re-evaluation based on existing or additional documents to be provided by the assessee. The appeal was allowed for statistical purposes, emphasizing the need for a thorough examination of the Trust's activities to establish their genuineness and compliance with the requirements for registration under Section 12AA.