When assessee filed all details, rejecting registration u/s 12AA held wrong

When assessee filed all details rejectig registration u/s 12AA by the CIT (Exemptions) on the ground that assessee was not interested in prosecuting the application was not consistent with the facts.

ABCAUS Case Law Citation:
ABCAUS 2086 (2017) (09) ITAT

The Challenge/Grievance:
The appellant assessee had filed two appeals against the two separate orders of Commissioner of Income Tax (Exemptions), passed under Section 12AA and 80G(5)(vi) of the Income Tax Act, 1961 (‘the Act’) rejecting the application of the assessee.

Important Case Laws Cited/relied upon by the parties:
DIT (Exemptions) Vs. Meenakshi Amma Endowment Trust 354 ITR 219

Brief Facts of the Case:
The assessee trust had filed an application for Registration under Section 12A. The CIT (Exemptions) asked the assessee to file certain details and clarifications. Thereafter the CIT (Exemptions) noted that the details filed by the assessee were not complete and again called for details and clarification for filing the provisional accounts.

However, thereafter the CIT (Exemptions) rejected the application for Registration under Section 12A on the ground that the assessee is not interested in prosecuting the application.

Contention of the Appellant:
It was submitted that all the relevant documents and details were filed by the assessee however, the CIT (Exemptions) rejected the application without examining the details and documents filed by the assessee.

It was submitted that the reasons given by the CIT (Exemptions) for rejecting the application on contrary to the facts when the assessee had complied with the directions for filing the documents and details.  The CIT (Exemptions) had not disputed the objects of the assessee being charitable. He submitted that when no infirmity was found in the record filed by the assessee and further the objects of the assessee were found as charitable in nature then the CIT (Exemptions) was required to grant Registration under Section 12A of the Act.

Observations made by the Tribunal:
The ITAT observed that the application for registration under Section 12A of the Act within a period of four months from the formation of the trust. In the meantime the assessee amended the Trust Deed and also filed a copy of the same before the CIT (Exemptions). Thus in the short period of four months the assessee cannot be expected to do much on account of its activity and charity.

It was noted that even the CIT (Exemptions) had admitted the fact that the assessee filed the details in response to his query however in his view the details were not complete as the provisional accounts for the current years completed quarter were not furnished.

The ITAT opined that when the assessee-trust was formed only nine months before and then there was hardly any transaction or activity upto the quarter as demanded by the CIT(E) it was the main ground which weighed with CIT(Exemptions) in rejecting the application for Registration on the ground that the assessee did not file the details called for.

The ITAT noted that in one para of his order, the CIT (Exemptions) stated that the assessee filed the details whereas in another para he had sated that the assessee-trust did not file the details called for.

It was observed that the assessee trust had furnished the bank account details and all other details upto date and explaining the activity of the assessee carried out till the date of filing the application and subsequent date on which the assessee filed the details. Also, assessee had filed the provisional accounts for the period ending 31.3.2016

The ITAT stated that when the assessee filed all the relevant details upto the close of the financial year then rejecting the application for registration by the CIT (Exemptions) on the ground that the assessee was not interested in prosecuting the application was not in consistent with the facts and record filed by the assessee.

Decision/Held:
The ITAT set aside the impugned order and directed the CIT (Exemptions) to grant the Registration under Section 12A of the Act specifically on the facts and circumstances where the CIT (Exemptions) did not find any infirmity in the objects of the assessee-trust being charitable in nature and the relevant record was also produced by the assessee.