CIT has No Power to Assess Objectives of Charitable Entities u/s 11A: Chhattisgarh High Court [Read Judgment]

The Bilaspur Bench of the Chhattisgarh High Court in the case of CIT v Rishabh Foundation Trust holding in favor of the assessee upholding registration under Sections 12A refused to interfere with the order of the ITAT held that Section 12A of the Income Tax Act does not empower the CIT to assess the objects vis-a-vis the donation received in the first year of establishment of the Trust.

The present appeal has been preferred by the revenue seeking legality and validity of the order passed by the ITAT, Raipur, whereby the respondent has been allowed and directed to be registered under Section 12A of the 1961 Act for the applicability of Sections 11 and 12.

The appellant submitted that the Trust failed to submit the documents sought for by the CIT, who eventually rejected the application under Section 12A of the Act for the reason that the Trust has not submitted the details as called for under the notice. The Appellate Tribunal allowed the appeal on the ground that it was not open to the CIT to demand the details of donations and details of charitable activities because at the stage of Section 12A the CIT is not required to examine the application of income or donation or carrying on any charitable activity by the Trust.

The bench constituting of Justice P.K. Mishra and Justice R.P. Sharma refusing to interfere with the order of the Tribunal held that the order passed by the Tribunal has discussed the matter in detail and has assigned justifiable reason as to how the CIT has failed to exercise jurisdiction vested in it at the stage of examining the application under Section 12A. The Court is satisfied that the Appellate Tribunal rightly interfered with the order passed by the CIT since Section 12A nowhere empowers the CIT to assess the objects vis-a-vis the donation received in the first year of its establishment.