Rejection of Application of Charitable Trust for Registration by Non- Application of Mind is not Sustainable: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that the reason given by the CIT (E) to reject the application for registration under Section 12AB & 80G of the Income Tax Act, 1961 cannot be sustained for non-application of mind.

The assessee in this case is Surti Modh Vanik Jagruti Mandal filed an application for registration under under Section 12A & 80G of the Income Tax Act. The Commissioner of Income Tax (Exemption) [CIT (E)] observed that The trust deed provided by the applicant assesses does not contain aims and objects or activities of the Trust for the specific community. The Trust Deed contains purposes other than charitable, i.e. religious for specific community which renders the assessee not eligible for approval under Section 80G of the Income Tax Act.

In absence of requisite documents and absence of explanation to the notice the genuineness of the activities of the assessee could not be ascertained hence, the CIT(E) was left with no other option than to reject the application for approval under Section 80G of the Income Tax Act. And held that application in Form 10AB for registration under Section 12AB of the Income Tax Act is not valid hence rejected.

Aggrived by the order the assessee filed an appeal before the tribunal. The Authorised representative of the assessee (AR) Ashok Mehta submitted that the assessee has been enjoying registration under Section 12A of the Income Tax Act from 22.04.2001 onwards and had applied for registration under Section 12AB of the Income Tax Act on 31.03.2022.

Further it was contended that the objective of the assessee are philanthropic in nature and not confined to any specific group but for all sections of people dehors any caste and since the assessee is engaged in charitable activities, it has been enjoying registration under Section 12A and 80G of the Income Tax Act, which should have been allowed.

Dr. Kishore Dhule  appeared as Departmental Representative.

The Bench comprising of ABY T. Varkey, Judicial Magistrate and Amarjit Singh, Accountant Member observed that there is no application of mind while passing the impugned orders andit was noted that the assessee has been enjoying registration under Section 12A of the Income Tax Act in the year 2001 onwards and the CIT(E) while processing the application for registration ought to have given opportunity to the assessee to reply to queries of CIT(E) if any, regarding the aim/objects of the assessee.

Thus the Tribunal held that the reason given by the CIT (E) to reject the application for registration under Section 12AB & 80G of the Income Tax Act cannot be sustained for non-application of mind. Therefore, it set aside the impugned orders of the CIT (E) and restored the application for registration under Section 12AB as well as under Section 80G of the Income Tax Act back to the file of the CIT (E) with a direction to process the same in accordance to law after hearing the assessee.

Hence the appeal filed by the assessee is allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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