The Income Tax Appellate Tribunal ( ITAT ), Chandigarh Bench, has recently in an appeal filed before it, held that an order by the CIT(E) accepting or refusing registration under section 12 AA shall be made in writing.
The aforesaid observation was made by the ITAT, when an appeal was filed before it by the assesse Shyama Sharma Charitable Trust, as against the order of the Commissioner of Income Tax (Exemptions), Chandigarh, passed u/s 12AA(1)(b)(ii) of the Income Tax Act, dated 12/03/2021, wherein the assessee had challenged the denial of registration under section 12AA(1)(b)(ii) of the Income Tax Act, 1961.
The facts of the case were that an application in the requisite form was filed by the assessee for seeking approval under section 12AA, on 25/07/2020. And thereafter, in order to examine the activity to see as to whether the same was in consonance with the said objective of the assessee society, a questionnaire was issued by the CIT(E) on 28/08/2020.
Thereafter considering the submissions of the assessee but not finding the same acceptable, the application filed by the assessee seeking registration under section 12AA was rejected by the Ld CIT(E). And it is against the said order and the findings of the Ld. CIT(E), that the assesse has filed the instant appeal before the Chandigarh ITAT.
With Shri Vishal Mohan, the Advocate for the assesse submitting that the objective of the assessee society was to assist the construction of religious institutions, help the economically weaker sections of the society, give financial assistance to the educational institutions, and grant scholarships to the meritorious and economically weaker students studying in the Government schools etc., it was further contented by the assessee’s advocate that the necessary information and documents so called for by the CIT(E) were duly filed.
Per contra, Shri Sarabjeet Singh, the CIT DR, drew the attention of the ITAT Tribunal to the findings of the CIT(E) at para 7 of the impugned order, wherein it has been stated by him that the applicant trust was formed way back in year 2018 and that it had not filed its return of income for the F.Y. 2018-19 relevant to A.Y. 2019-20.
With the DR for the Revenue further submitting thatit was in the absence of the books of accounts that the CIT(E) had raised doubts regarding the genuineness of the activities being undertaken by the assessee trust, since its inception on 10/10/2018 till 31/03/2019, and further that the contention of the AR that there was no findings recorded by theCIT(E) regarding the genuineness of the activities is hence not correct, the ITAT Bench consisting of Aakash Deep Jain,the vice president, along with Vikram Singh Yadav, the Accountant Member, observed as follows :
“The provisions of section 12AA provides that the CIT(E) after receipt of application and calling for such documents and information as he thinks necessary and after making such enquiries as he may deem necessary andafter satisfying himself about the objects of the assessee society and the genuineness of its activities, shall pass an order in writing registering such society and where he is not so satisfied, shall again pass an order in writing refusing to register the assessee society.”
“In light of the same, we find that there is a clear mandate of the legislation to pass an order in writing accepting or rejecting the application seeking registration by the assessee society”, the ITAT Bench added.
“The Ld CIT(E) therefore has to speak through his order reflecting his satisfaction or otherwise about the objects and the activities of the assessee society and basis of arriving at such a satisfaction, which in turn will allow the assessee to claim and the AO to examine the claim of exemption u/s 11 and 12 in the respective assessment years and in an event of an adverse order, allow the assessee to challenge such an order before the higher appellate authority”, they added.
“Therefore, we are unable to accede to the contention of the Ld AR and agree with the contention of the Ld CIT DR that in absence of any specific finding recorded by the Ld CIT(E), there cannot be any presumption regarding the findings of the Ld CIT(E) regarding the objects and activities of the assessee society”, the ITAT Bench further observed.
Thus, finally giving its ruling while allowing the assessee’s appeal, the Chandigarh ITAT held:
“Taking into consideration the entirety of facts and circumstances of the case, we deem it appropriate that the matter be set-aside to the file of the Ld CIT(E) to examine the matter a fresh after calling for books of accounts and other documents as so desired and pass a speaking order recording his satisfaction or otherwise regarding the objects and genuineness of the activities of the assessee society after providing reasonable opportunity to the assessee society.”
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