No Evidence to Prove Non-Genuine Activities or Community Bias: ITAT Grants S.12 AB & S. 80G Registration [Read Order]

In absence of certain documents or minor discrepancies in records cannot lead to the conclusion that the activities are non-genuine, particularly when primary evidence substantiating charitable activities is on record.

The Income Tax Appellate Tribunal ( ITAT ), Nagpur Bench, set aside the rejection of the trust's registration on the ground that mere technical non-compliance or unsubstantiated allegations cannot be grounds to deny registration.

The Tribunal directed the Commissioner of Income Tax (Exemptions) to grant registration under Section 12AB and approval under Section 80G of the Income Tax Act, 1961.

The assessee, Social Educational and Welfare Association, is a trust involved in educational and welfare activities. It had applied for registration under Section 12AB and approval under Section 80G(5) of the Income Tax Act.

The Commissioner of Income Tax (Exemptions) [CIT(E)] issued a notice seeking various details regarding the trust's charitable activities. In response, the assessee furnished documents including photographs, bills, financial statements and details of expenses incurred towards its charitable objects.

However, the CIT(E) observed certain deficiencies, including incomplete documentation, and expressed doubts regarding the genuineness of activities. It was also alleged that the activities of the trust benefited a particular religious community. In view of the above, the applications were rejected and the provisional registration was cancelled.

The assessee, challenging the rejection filed, an appeal before the Tribunal. The assessee submitted that it had furnished sufficient material to demonstrate the charitable nature of its activities and that absence of certain documents such as beneficiary lists and their identity or testimonials could not be a ground to doubt genuineness.

It was further submitted that the activities were not restricted exclusively to any religious community or caste, and the benefits were extended to all eligible persons. It was further urged that no evidence has been brought on record by the CIT (E) to establish that the trust’s activities were confined to any specific community.

The Revenue supported the order of the CIT(E), contending that the assessee had failed to demonstrate compliance with the statutory requirements under Sections 12AB and Section 80G(5) and that the activities appeared to benefit a specific community.

The two-member bench comprising Pawan Singh (Judicial Member) and Khettra Mohan Roy (Accountant Member) observed that at the stage of granting registration under Section 12AB and approval under Section 80G, the scope of enquiry is limited to examining the objects of the trust and the genuineness of its activities on a prima facie basis.

It held that the law does not require a conclusive or exhaustive verification of each activity or beneficiary at this stage.

The bench further held that absence of certain documents or minor discrepancies in records cannot lead to the conclusion that the activities are non-genuine, particularly when primary evidence substantiating charitable activities is on record. It also noted that in case of mere technical or incomplete compliance, adequate opportunity must be given to cure such defects.

It was also observed that no material had been brought on record to conclusively establish that the trust was created or operated for the benefit of a particular religious community.

Thus, the tribunal held that in the absence of evidence of non-genuine activities or community bias, mere technical defects or unsubstantiated allegations cannot be an infallible ground to deny registration.