It is a settled position of law that while granting registration u/s 12AA CIT (Exemptions) is required to examine the objects of the assessee. If objects are charitable in nature, registration should be granted to the assessee.
ABCAUS Case Law Citation:
ABCAUS 3218A (2020) (01) ITAT
In the instant case the appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Exemptions) rejecting the applications, for registration under section 12A(a) of the Income Tax Act, 1961 (THE Act) and grant of approval under section 80G(5)(vi) of the Act.
The assessee filed an application for registration under section 12A(a) of the Act with the CIT (Exemptions). The CIT (Exemptions) issued a letter to the assessee calling for specific queries regarding its application for registration under section 12A of the Act.
However, on the date fixed for compliance, anybody appeared before the CIT (Exemptions) nor filed any application for adjournment.
The CIT (Exemptions) rejected the application moved by the assessee on the ground that the applicant had merely submitted the MoA and no material had been provided that could throw some light upon the activities, if any, carried out by the applicant as claimed in the trust deed; and that the applicant society had not been able to produce the books of account, bank statement and vouchers in respect of expenses claimed by the applicant for verification of objects and activities of the trust.
The assessee submitted that the CIT (Exemptions) had erred in law and on facts in passing the ex-parte order, without providing due opportunity of hearing to the applicant; that at the time of granting of registration under section 12AA of the Act, the books of account are not required to be examined and only the objects of the society are to be looked into; and that the CIT (Exemptions) had wrongly doubted the charitable character of the applicant society.
It was further submitted that the order of the CIT (Exemptions) was not sustainable in law, as due and appropriate opportunity of hearing was not afforded to the assessee. It was prayed that therefore, the order of the CIT (Exemptions) may be set aside and he may be directed to grant registration to the assessee society, under section 12AA of the Act.
The Tribunal noted that the CIT (Exemption) had not examined the objects of the assessee-society, whether the society was formed to undertake charitable activities or not. Moreover, the CIT (Exemption)had not pointed out any specific activity, which could be said to be a non-charitable activity.
While Granting registration u/s 12AA CIT is required to examine objects
The Tribunal stated that it is a settled position of law that while granting registration under section 12AA of the Act, the CIT (Exemptions) is required to examine the objects of the assessee. If the objects of the assessee are charitable in nature, registration should be granted to the assessee. It can only be denied, if the ld. CIT (Exemptions) has brought something on record to establish that the assessee was engaged in activities other than charitable ones.
The Tribunal stated that this aspect was examined by this Bench of the Tribunal in various cases, wherein, the it was held that while granting registration under section 12A of the Act, the CIT (Exemptions) is required to examine, as to whether the objects of the applicant are of charitable nature or not.
Accordingly, the Tribunal e set aside the order of the CIT (Exemptions) and restored the matter to his file with a direction to re-adjudicate the issue of grant of registration under section 12A of the Act in the light of the objects of the assessee-society, after affording due opportunity of hearing to the assessee.
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