Society wins appeal after registration denied under section 12AB for charitable activities assessment error

The ITAT Raipur allowed an appeal against rejection of registration under section 12AB. The court held that registration cannot be denied based on assessment of actual activities carried out by the society. Following SC precedent in Ananda Social Educational Trust, the court emphasized that charitable objects of the society, not actual activities, should be the determining factor for registration. Since the society had charitable objects and previously obtained registration under section 12AA, the rejection was deemed erroneous application of law. The ITAT directed grant of registration under section 12AB.

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Issues Involved:
1. Rejection of application for registration under Section 12AB of the Income-tax Act, 1961.
2. Rejection of application for approval under Section 80G(5) of the Income-tax Act, 1961.
3. Condonation of delay in filing the appeal.

Summary:

1. Rejection of Application for Registration under Section 12AB:
The assessee challenged the order of the Commissioner of Income Tax (Exemption) [CIT(E)], Bhopal, which rejected the application for registration under Section 12AB of the Income-tax Act, 1961, and canceled the provisional registration granted by CPC under the same section. The CIT(E) rejected the application on the grounds that no charitable activities were conducted, and the activities carried out were commercial in nature. The Tribunal observed that the society has charitable objects and that the term 'activities' in Section 12AA includes 'proposed activities.' The Tribunal referenced the Supreme Court's decision in Ananda Social & Educational Trust v. CIT, which held that the Commissioner must consider whether the trust's objects are genuinely charitable and whether the proposed activities align with those objects. Consequently, the Tribunal set aside the CIT(E)'s order and directed the grant of registration under Section 12AB.

2. Rejection of Application for Approval under Section 80G(5):
The assessee also challenged the rejection of their application for approval under Section 80G(5) of the Income-tax Act, 1961, and the cancellation of the provisional approval granted by CPC. However, the assessee requested to withdraw this appeal (ITA No. 93/RPR/2023), which was granted by the Tribunal, leading to the dismissal of the appeal.

3. Condonation of Delay in Filing the Appeal:
The appeal in ITA No. 312/RPR/2023 was filed with a delay of 173 days. The assessee applied for condonation of delay, explaining that they were unaware of the separate cancellation order for registration under Section 12A due to identical wording and the issuance of separate DIN numbers. The Tribunal found the assessee's explanation bona fide and allowed the condonation of delay, permitting the appeal to be adjudicated.

Conclusion:
The Tribunal allowed the appeal regarding the rejection of registration under Section 12AB, directing the CIT(E) to grant registration in accordance with the law. The appeal concerning the approval under Section 80G(5) was dismissed following the assessee's request for withdrawal. The delay in filing the appeal was condoned based on the bona fide explanation provided by the assessee.

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