ITAT grants Trust Second chance to Prove Genuineness of Activities, remands Registration Application to CIT(E) [Read Order]

The Jaipur Bench of Income Tax Appellate Tribunal ( ITAT )  granted  Trust a second chance to prove the genuineness of its activities and remanded the registration application under Section 12AB of Income Tax Act,1961,back to the Commissioner of Income Tax (Exemption) (CIT(E)).

Aacharya Shri Hira Laxmi Guru Jain, the appellant-assessee, had filed an online application on 30.09.2023 for registration under Section 12AB of the act. After notices dated 14.12.2023 and 26.12.2023, the assessee responded on 10.01.2024.However, the CIT(E) found discrepancies and rejected the registration.

The CIT(E) submitted that the assessee did not provide required documents for government grants and misrepresented the gifted land in financial records. Additionally, they were not registered under the Rajasthan Gopalan Act, 1960.

Get a Copy of Income Tax Rules with FREE e-book access, Click here

Due to unverifiable activities and failure to prove genuineness, the registration under Section 12AB was rejected, and the provisional registration granted on 22.03.2022 was also canceled.

The assessee submitted that gaushala was registered under the Rajasthan Societies Registration Act, 1958 on 31.05.2005, aimed to protect cows. It received provisional registration under section 12A(1)(ac)(vi) of the Act on 22.03.2022, valid for AY 2022-23 to 2024-25, along with provisional approval under section 80G(5) of the Act for the same period.

The assessee applied for permanent registration under section 12AB and approval under section 80G on 30.09.2023. The CIT(E) rejected both, citing the assessee's lack of registration under the Rajasthan Public Trust Act, 1959, and unverifiable activities.

Get a Copy of Income Tax Rules with FREE e-book access, Click here

In response, the assessee argued that it was governed by the Rajasthan Gaushala Act, 1960, and therefore, registration under the Rajasthan Public Trust Act, 1959, was not required. The assessee had been receiving grants from the Joint Commissioner of the Animal Husbandry Department, Ajmer, which indicated its recognition under the Rajasthan Gaushala Act, 1960. Therefore, the refusal of registration by the CIT(E) was considered unjustified and contrary to the law.

The assessee also submitted the grant sanction letter dated 14.12.2023 for Rs. 10.03 lakhs and other documents verifying the grant's utilization, including details of cows, expenses on animal fodder, and salary payments. The land received as a gift on 22.06.2010 was consistently reflected in the balance sheets for financial year (FY) 2020-21, FY 2021-22, and FY 2022-23.

Get a Copy of Income Tax Rules with FREE e-book access, Click here

The tribunal noted that the assessee's application for registration under section 12AB was rejected due to the objection that the assessee was not registered under the Rajasthan Public Trust Act, 1959.

The bench observed that the assessee had made an application for this registration and that the issues regarding the genuineness of its activities, as raised by the CIT(E), were curable in nature.

Get a Copy of Income Tax Rules with FREE e-book access, Click here

The two-member bench comprising Sandeep Gosain (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant) set aside the order rejecting the trust's registration under section 12AB of the act and  giving the assessee another chance to address the issues before the CIT(E).

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates