Income Tax

Rejection of approval u/s 12AA for non filing of return of income Set aside

Rejection of approval u/s 12AA for non filing of return of income set aside. CIT(E) to find if objects of trust are charitable in nature or not

ABCAUS Case Law Citation
ABCAUS 3519 (2021) (07) ITAT

Important case law relied referred:
Ananda Social & Educational Trust v/s Commissioner of Income tax
Commissioner of Income-tax, (Exemption) vs. Association of Third Party Administrators

In the instant case, the assessee society had challenged the order passed by the CIT(A) in rejecting application for registration u/s 12AA of the Income Tax Act, 1961 (the Act) even when the objects of the trust were charitable as provided in section 2(15).

In the instant case the reason for rejection of the application for registration u/s 12AA of the Act was that the assessee had not filed a certain document which were required for deciding the application of the assessee for the grant of registration.

The case of the assessee was that at the stage of grant of registration the financial statement of the assessee are not required to be examined by the Commissioner exemption in terms of the decision of the Hon’ble Supreme Court.

The Department justified the rejection on the basis of the non-fulfilment of the conditions namely non-supply of the original memorandum of association and filing the returns of income.

The Tribunal pointed out that the at the time of grant of  registration the only’s conspectus in which the application is required to be examined had been succinctly laid down by the Hon’ble Supreme Court that Commissioner exemption is duty bound to examine the objects of the assessee and to find out whether the assessee was carrying of the charitable activities or not.  

It was noted that in the present case, needful was not done by the Commissioner exemption who summarily dismissed the application for non-filling of return of income etc.

The Tribunal set aside the issue to the file of the Commissioner exemption for deciding afresh with direction to examine the objects of the assessee and find out whether the objects of the assessee are charitable in nature or not on the basis of the material available on record. 

It was further directed that in case the Commissioner finds that the objects of the assessee are charitable in nature, then the Commissioner shall issue the registration u/s 12AA to the assessee society from the date of application filed by the assessee.

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