When Trust had no activities, it was incumbent upon the CIT(E) to evaluate such explanation objectively then rejecting application for registration.
In a recent judgment, ITAT Rajkot has held that when the trust has explicitly stated that it has not filed returns as it had no activities and thus no income chargeable to tax, it was incumbent upon the CIT(Exemption) to evaluate such explanation objectively and to call for any further clarifications or proposed activity plan rather than summarily rejecting the application for registration under section 12A..
ABCAUS Case Law Citation:
4635 (2025) (07) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the Commissioner of Income Tax (Exemption) rejecting the application for registration under section 12AB of the Income Tax Act, 1961 (the Act).
The appellant-assessee was a charitable trust carrying out the charitable activities of having built the cowsheds for cows. serve cows, prevent cow killing and atrocities on cows.
The trust carrying the above mentioned charitable activities applied for registration u/s. 12A of the Act, which was rejected by the CIT(E) without considering the written submission along with the supporting documentary evidences furnished before him against the notices issued by him calling for various details/ information/ explanation.
The assessee had requested adjournment for notices issued by the CIT(Exemption), Within the extended time given, the assessee thus submitted the detailed reply along with necessary documentary evidences via Email as the particular tab for furnishing the reply against the said notice at the Income Tax Portal was unavailable at that time. The applicant had explained these facts to the CIT(E), however, the same was not considered by the CIT(E). The reply furnished by the applicant via email was also not considered and the Rejection Order was passed, stating that the application for Final Registration had been rejected and that applicant’s Provisional Registration was also cancelled stating that the applicant had not filed any reply to the notice.
Before the Tribunal, the assessee submitted that that, instead of verifying the genuineness of the trust or examining its charitable objects and proposed activities, rejected the application. The approach of the CIT(E) was excessively technical and contrary to the scheme of registration, particularly in a case where the assessee asserted that activities have not commenced.
The Tribunal observed that the assessee trust had furnished documents apart from documents uploaded along with the application filed and had also never claimed exemption under section 11, 12 or section 10(23C) of the Act. In light of such disclosure, the application was rightly filed under section 12A(1)(ac) of the Act.
The Tribunal stated that it is a settled principle of law that the process of registration under section 12AB of the Act is not an assessment of income, but rather a preliminary stage to examine the genuineness of the trust’s objects and proposed activities. When the trust has explicitly stated that it has not filed returns as it had no activities and thus no income chargeable to tax, it was incumbent upon the Ld. The CIT(E) to evaluate such explanation objectively and to call for any further clarifications or proposed activity plan rather than summarily rejecting the application.
The Tribunal restored the issue to the file of the CIT(E) for de novo adjudication. The assessee was directed to co-operate in the proceedings and furnish any further details that may be required to ascertain the genuineness of its claim. At the same time, the CIT(E) was also directed to decide the matter on merits and in accordance with law, after granting due opportunity of being heard. The assessee was also permitted to make necessary correction in the application in Form No.10AB under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act.
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