Trust registration rejection overturned due to factual error regarding Rajasthan Public Trust Act compliance under sections 12A and 80G

ITAT Jaipur allowed the appeal and set aside the CIT(E)'s order rejecting the trust's registration under section 12A and 80G recognition. The rejection was based on the trust not being registered under the Rajasthan Public Trust Act, 1959, but the assessee demonstrated valid registration with the Sub Registrar. The tribunal found this factual error curable and directed the CIT(E) to reconsider both applications afresh, giving the trust an opportunity to defend on merits.

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Issues Involved:
1. Rejection of application for registration of assessee trust under section 12A of the Income Tax Act, 1961.
2. Rejection of application for approval under section 80G of the Income Tax Act, 1961.

Issue 1: Rejection of application for registration of assessee trust under section 12A of the Income Tax Act, 1961:
The assessee filed an online application seeking registration under section 12AB. The Commissioner of Income Tax (Exemptions) issued notices and reminders requesting documents/explanations. The assessee sought adjournments multiple times, responding through DAK and email. The case was decided based on the available material as it was a time-sensitive matter. The appeal challenged the rejection of registration based on the ground that the trust was not registered under the Rajasthan Public Trust Act, 1959. The appellant argued that the trust was duly registered with the Sub Registrar, Jaipur. The Tribunal noted the mistake in fact and considered it curable. The Tribunal allowed the appeal, directing a fresh decision by the CIT(E) regarding the registration of the trust under section 12AB.

Issue 2: Rejection of application for approval under section 80G of the Income Tax Act, 1961:
The application for approval under section 80G was rejected as the trust was not approved under section 12AB. The applicant was asked to justify its claim for approval under the relevant section, but the applicant did not comply. The appeal contended that the rejection was based on the trust not being eligible for approval under a specific clause. The appellant argued that the trust was duly registered under the Rajasthan Public Trust Act, 1959. The Tribunal found that the rejection was solely due to the lack of approval under section 12AB and set aside the order. The Tribunal directed the CIT(E) to reconsider both the applications for registration under section 12AB and approval under section 80G.

In conclusion, the Tribunal allowed both appeals, setting aside the orders of the CIT(E) and directing a fresh decision on the registration of the trust under section 12AB and the approval under section 80G. The Tribunal emphasized the need for a proper evaluation based on the facts presented by the appellant.

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