2023 (6) TMI 1420 - AT - Income Tax

Trust registration denial under section 12AA overturned due to wrong assumptions about missing documents

The ITAT Raipur allowed the appellant's appeal partly for statistical purposes regarding denial of registration under section 12AA. The revenue denied ... Denial of registration to the appellant u/s 12AA - Charitable activity or not? - as per revenue assessee trust has failed to furnish the self-attested copy of registered bylaws, also the assessee has failed to furnish the detail note on its activities hence the conditions of rule 17A(1)(c) were not complied by the assessee - activities of the assessee were treated as working for the benefit of its members or working for the benefit of a particular group of classes i.e. Real Estate Builder and Developers - HELD THAT:- Assessee has submitted the information as sought by the department from time to time, but content of the information shared is not discernible from the copies of acknowledgment of online submission by the assessee having name of files attached therein, however, hard copies of the documents and information submitted before ITO(E), it is clearly imminent that the assessee has complied with all the required information as requisitioned by the department. Since, the observation of the ld. CIT(E) was based on the wrong assumption that the information sought was not furnished by the assessee was a totally misconceived belief, thus, the same is bereft of merits and needs to be re-visited and the application of the assessee shall be considered again - Reasonable opportunity of being heard shall be granted to the assessee to represent its case. Appeal of the assessee is partly allowed for statistical purposes. Issues:1. Denial of registration to the appellant under section 12AA.2. Compliance with the requirements for registration under section 12AA.Analysis:Issue 1: Denial of registration under section 12AAThe appellant, a society for real estate developers, applied for registration under section 12AA, which was rejected by the Commissioner of Income Tax (Exemption) on the grounds that the society primarily benefited a specific group (real estate builders and developers) rather than the public at large. The Commissioner observed that the society's activities were commercial in nature, charging fees from members for services that enhanced their commercial activities. Consequently, the registration was denied under section 12AA.Issue 2: Compliance with registration requirementsThe appellant contended that all required information was submitted multiple times, including the copy of registered bylaws and details of activities. The appellant provided evidence of submitting the necessary documents online and physically, as well as in response to queries from the Income Tax Department. The appellant argued that the denial of registration was unjustified, as all requested information had been furnished promptly.JudgmentUpon review, the Appellate Tribunal found that the appellant had indeed submitted the required information as requested by the department. The Tribunal noted that the Commissioner's belief that the information was not provided was misconceived. Therefore, the Tribunal directed the matter back to the Commissioner for re-evaluation, emphasizing the importance of considering all available evidence and granting the appellant a fair opportunity to present their case. The appeal was partly allowed for statistical purposes, with the decision to re-visit the application for registration under section 12AA.In conclusion, the Tribunal's decision highlighted the significance of procedural fairness and thorough consideration of all evidence in matters of registration under section 12AA, emphasizing the need for a just and comprehensive evaluation of the application based on the facts and circumstances presented.