Tribunal rules in favor of registration application, rejects reasons for denial under Section 12A.

The Tribunal held that the absence of a dissolution clause in the Memorandum of Association should not be a reason for rejecting registration under Section 12A of the Act. The rejection based on aims and objects not falling under charitable purposes, specifically running a coaching center, was deemed unjustified as no evidence of such activity was presented. The allegation of non-systematic financial maintenance was rejected, noting previous acceptance of income tax returns. Consequently, the rejection of the registration application was deemed erroneous, and the appellant was granted registration under Section 12AA.

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Issues:
1. Absence of dissolution clause in the Memorandum Of Association.
2. The aims and objects of the trust include running a coaching center, technical, and professional institute not covered under charitable purposes.
3. The accounts of the assessee are not being maintained in a systematic manner.

Analysis:

Issue 1: Absence of dissolution clause in the Memorandum Of Association
The appellant argued that the dissolution clause is not mandatory for maintaining the society. They presented an amended Memorandum of Association (MOA) with the dissolution clause inserted on 02/12/2013. The appellant highlighted that the certified copy of the amended MOA was submitted after the rejection order, denying a reasonable opportunity. The appellant relied on various decisions to support their argument. The Tribunal concluded that the absence of a dissolution clause should not be a reason for rejecting registration under Section 12A of the Act.

Issue 2: The aims and objects of the trust not covered under charitable purposes
The appellant contended that although the MOA mentioned running a coaching center, no such activity was conducted. They provided evidence from the Income and Expenditure Account to support their claim. The appellant referenced legal precedents to argue that ancillary objects should not be a basis for denying registration. The Tribunal noted that the revenue authorities did not pinpoint any specific instances of running a coaching center. It was established that rejection based on the ancillary object of running a coaching center was unjustified.

Issue 3: The accounts of the assessee are not being maintained in a systematic manner
The appellant defended against the allegation of non-maintenance of financial statements systematically. They highlighted that the department accepted their income tax returns for previous years without any issues. The appellant emphasized that even if accounts were not perfectly maintained, it should not impact the genuineness of the trust's activities. Legal references were cited to support this argument. The Tribunal observed that the assessing authority did not raise concerns about bookkeeping during assessments. The rejection based on the alleged lack of systematic financial maintenance was deemed unwarranted.

In conclusion, the Tribunal found that the rejection of the application for registration under Section 12AA was erroneous. The ld. CIT(E) was directed to grant registration to the assessee. The appeal of the assessee was allowed, and the order was pronounced on 10.05.2022.

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