2023 (9) TMI 1493 - AT - Income Tax

Tribunal Overturns Rejection of Trust Registration Applications Due to Inadequate Scrutiny and Unfounded Assumptions.

The Tribunal overturned the ld. Commissioner's rejection of trust registration applications under section 12AB of the Income Tax Act, 1961, citing ... Rejection of registration u/s 12AB - non satisfaction of genuineness of the activities of the trust - Assessee contended that non-consideration of the material available on record is clear in violation of principle of natural justice - HELD THAT:- We find that the primary rationale behind the Commissioner’s rejection of the application of the assessee for registration of the Trust was that the assessee had only partly given the details as called for by the Commmissioner during the proceedings. As we go through the details submitted by the assessee, it is evident that the Commissioner made his decision without a proper scrutiny of these records and, relying on unfounded assumptions, summarily dismissed the applicant's request based on perceived insufficiency of the details and information required for 12AB proceedings, which we are of the view, legally unsustainable. Therefore, where the CIT asserts that the assessee has only partially furnished the information requirements, while the assessee contends that substantial compliance has been made in 12AB proceedings, we are of the view that the matter requires to be considered afresh. Consequently, the impugned order of the CIT(E) is hereby set aside, and we direct the CIT to examine the matter afresh in accordance with provisions of the law, after affording reasonable opportunity of hearing to the assessee. Appeal of the assessee for statistical purpose. Issues:Appeal against rejection of trust registration under section 12AB of the Income Tax Act, 1961 due to alleged insufficiency of details and information provided by the assessee.Detailed Analysis:Issue 1: Rejection of Trust RegistrationThe appeals were filed against orders of the ld. Commissioner of Income (Exemption) rejecting the applications of different assessees for trust registration under section 12AB of the Income Tax Act, 1961. The grounds of appeal raised by the assessee highlighted the rejection of the application despite providing requisite details and documents during the proceedings. The primary issue was the alleged non-consideration of material available on record, which the assessee contended was a violation of the principle of natural justice.Issue 2: Insufficiency of DetailsThe ld. Commissioner noted that only partial details about the activities of the trust were furnished by the assessee during the proceedings, which were deemed insufficient to determine the eligibility for registration under section 12AB of the Act. Consequently, the applications were rejected based on the perceived lack of supporting details. The assessee, however, argued that all necessary details had been provided and uploaded on the Department's portal. The contention was supported by evidence in the form of a list of documents uploaded and a letter addressed to the Commissioner detailing the information submitted for registration.Issue 3: Tribunal's DecisionAfter hearing both parties and reviewing the details submitted by the assessee, the Tribunal found that the rejection by the ld. Commissioner was based on unfounded assumptions and incomplete scrutiny of the records. The Tribunal concluded that the decision to reject the application was legally unsustainable as the assessee had demonstrated substantial compliance with the requirements of the 12AB proceedings. Therefore, the Tribunal set aside the impugned order and directed the ld. Commissioner to reconsider the matter after providing a reasonable opportunity of hearing to the assessee. The appeal of the assessee was allowed for statistical purposes, and all appeals were allowed accordingly.In conclusion, the Tribunal's judgment emphasized the importance of proper scrutiny of details and information provided by the assessee during trust registration proceedings under section 12AB. The decision highlighted the need for adherence to legal principles and the provision of a fair opportunity for the assessee to present their case.