Cancellation of Registration of Trust u/s 12 AB of Income Tax Act due to Failure of Assessee to Furnish Genuiness of Activities: ITAT orders Re-Adjudication [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) held that the cancellation of registration of Trust under Section 12 AB of Income Tax Act, 1961 due to failure of assessee to respond to the notices of the Commissioner of Income Tax (Exemption) [CIT(E)] regarding genuiness of activities is not in the interest of justice, thus ordered for de novo consideration.

The appellant assessee Vishranti Gruh is a trust which has vide Form No.10AB made an application to the respondent under clause (iii) of Section 12(1)(ac) of the Income Tax Act thereby seeking regular/final registration under Section 12AB of the Income Tax Act. After perusal of said application the CIT (E) vide solitary notice called upon the assessee to produce certain key information  to enable him to verify the genuineness of its activities.

This notice however remained unattended by the assessee. For the reasons, the application by the impugned order is rejected by the registering authority  CIT(E) for his failure to arrive at positive satisfaction about the genuineness of activities of the appellant trust in the absence of persuasive evidences.

The Two member Bench comprising of S. S. Viswanethra Ravi, Judicial Member and G. D. Padmahshali, Accountant Member observed that It has to be appreciated that the purpose of the provisions for registration of trust under Section 12AB and granting of recognition under Section 80G of the Income Tax Act, derives their spirit from the Directive Principles of State Policy enshrined in the Constitution of India.

Further in view thereof the registration for public charitable trusts are given in order to ensure that through these charitable trusts benefits flows to entire society, thus the Directive Principles of State Policy are achieved. These provisions for the trust registration under Section 12AB and granting of recognition under Section 80G of the  Income Tax Act enhance the socio economic welfare in the society.

Therefore, in the interest of justice and considering all the afore-stated observations, we are of the considered view that, the appellant deserves reasonable one more opportunity to make good the defects/shortcomings.

Therefore, in the interest of justice and considering all the afore-stated observations, the Bench was of the considered view that, the appellant deserves reasonable one more opportunity to make good the defects/shortcomings and thus set aside the impugned order and remitted the matter back to the file of CIT(E) for de-novo consideration.

And further ordered the appellant trust to not seek any unreasoned adjournment and to co-operate with the CIT(E) in the remand proceedings. Thus, the appeal is allowed for statistical purpose.

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