Missing PAN Details of Donors No Ground to Treat Nominal Donations as Non-Voluntary Contributions: ITAT Directs Final S. 12AB Registration [Read Order]

The Income Tax AppellateTribunal (ITAT), Nagpur Bench, has held that nominal donations received cannot be treated as non-voluntary contributions merely on account of missing PAN and address details of some donors and directed final registration under Section12AB of the Income Tax Act, 1961.

The assessee, Gajanan Maharaj Shikshan Sanstha, a charitable trust registered under the Bombay Public Trusts Act, 1915, operating three educational institutions, filed an application in Form 10AB under Section 12A(1)(ac)(ii) seeking regular registration under Section 12AB. The trust held provisional registration, valid for assessment years 2022-23 to 2024-25.

The Commissioner of Income Tax (Exemptions) (CIT(E)), Pune, rejected the application and cancelled the provisional registration on three grounds: non-compliance with Section 36A of the Maharashtra Public Trusts Act (MPT Act) for accepting loans without prior Charity Commissioner approval, doubt over the genuineness of donations, and failure to establish the genuineness of activities, which has led to the present appeal.

The appellant contended that loans aggregating ₹9,45,734 were received from employees and associates to meet contingencies and were not interest-bearing loans attracting Section 36A of the MPT Act. On donations, it was submitted that ₹4,30,500 was received from 236 donors in amounts ranging between ₹1,000 and ₹2,500.

It was also argued that provisional registration cannot be cancelled without specifying a particular violation under Section 12AB(4) and that the trust's activities were fully substantiated by evidence, including government grant receipts.

The Revenue relied upon the order of the CIT(E) and submitted that the non-grant of registration and cancellation of provisional registration were for valid reasons and that the appeal deserved to be dismissed.

The bench, comprising Pawan Singh (Judicial Member) and Khettra Mohan Roy (Accountant Member), observed that, considering gross receipts exceeding ₹3 crore, comprising government grants, nominal donations could not be said to be non-voluntary contributions merely because donor details lacked full PAN and address details, particularly in the absence of any adverse evidence brought on record by the CIT (E).

On the Section 36A issue, the Tribunal followed its coordinate bench decision in Shri Vyankanath Maharaj Shikshan Sanstha, Murtizapur v. ITO, holding that prior sanction of the Charity Commissioner is not material for achieving the charitable objects of the trust and that a procedural breach of this nature is venial and curable.

The Tribunal held that cancellation of provisional registration without identifying a specified violation under Section 12AB(4) and without such non-compliance having attained finality under clause (f) of the Explanation was unsustainable.

Accordingly, the Tribunal allowed the appeal.

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