2024 (7) TMI 711 - AT - Income Tax

Trust registration rejected for failing to comply with mandatory three-month registration period under section 12AB

Lokesh Agarwal Dharmarth Charitable Trust Versus The Commissioner of Income Tax (Exemption), Jaipur.

Lokesh Agarwal Dharmarth Charitable Trust Versus The Commissioner of Income Tax (Exemption), Jaipur. - TMI Issues:1. Rejection of application for registration u/sec.12AB of the Income Tax Act, 1961.2. Non-registration with Rajasthan Public Trust Act.3. Genuineness of activities and compliance with Form 10AB.Analysis:1. The appeal was filed against the rejection of the application for registration u/sec.12AB of the Income Tax Act, 1961. The grounds of appeal included delay in filing due to the main trustee's illness, rejection based on incomplete Form 10AB, and non-registration with the Rajasthan Public Trust Act. The appellant sought condonation of the delay and challenged the rejection by CIT(Exemption).2. The rejection was based on several grounds, including non-registration with the Rajasthan Public Trust Act, incomplete Form 10AB, and doubts regarding the genuineness of the activities. The appellant, a Trust formed in 2012, had not registered under the Rajasthan Public Trust Act, which was mandatory within three months of creation. The failure to comply with applicable laws rendered the Trust ineligible for registration u/sec.12AB.3. The appellant's submission during the hearing included the Trust Deed, amendments, and evidence of charitable activities. However, these documents were not submitted to the ld.CIT(E) earlier. The Trust's pending application for registration under the Rajasthan Public Trust Act did not absolve it from the requirement to be registered at the time of applying for registration u/sec.12AB. The Supreme Court's decision emphasized compliance with state laws for charitable institutions, which applied to the appellant's case.4. The Tribunal upheld the ld.CIT(E)'s order due to the Trust's lack of registration under the Rajasthan Public Trust Act. The genuineness of activities could not be verified as required for permanent registration under Section 12AB(1). The Trust's failure to provide necessary details hindered the verification process, leading to the dismissal of the appeal on this ground.5. The Tribunal also noted a delay in filing the appeal but condoned it after reviewing the appellant's affidavit. The order was pronounced on 4th July, 2024, dismissing the appeal and upholding the rejection of registration u/sec.12AB due to non-compliance with the Rajasthan Public Trust Act.