Registration of Trust u/s 12B of Income Tax Act cannot be Rejected Merely due to non-submission of Certain Documents: ITAT directs Fresh Adjudication [Read Order]

The Bangalore bench of Income Tax Appellate Tribunal (ITAT) remitted the case back to CIT(E) to decide the final registration of a trust under section 12AB of income tax Act, 1961 holding that registration cannot be rejected merely due to non submission of certain documents.

In this case the Samskruthi Educational Trust, the appellant assessee is an entity established by a trust deed on 17th June 2022 with the object of establishing and running a play home, nursery, LKG, UKG, Primary & High Schools, PUC, Graduation and Post Graduation colleges, Technical Institutions, Adult Education, Commerce Education, Computer Education Institutions and Job Oriented Course Institutions and to establish libraries, hostels, boarding houses free or otherwise to facilitate the promotion of the student community.

Your Ultimate Guide to GST in the Real Estate Sector! Click here

The trust had obtained provisional registration by the PCIT/CIT on 8th April 2024 and they applied for final registration on 25th may 2024 , they were sent for verification purposes by CIT(E) to a jurisdictional assessing officer (JAO). However the assessee had failed to respond to any of the letter, notices,reminder letters and failed to submit the required details . Therefore the application was rejected and registration was cancelled.

The assessee filed an appeal before the Tribunal and also referred various cases , In CIT vs. Shree Gajanan Maharaj Sansthan (2021) the court emphasis that mere non-submission of certain documents should not automatically result in the rejection of the application for registration under Section 12AA.The court also stated that the refusal to grant registration should be based on substantial grounds related to the genuineness of the trust or its activities, not merely procedural lapses.

In Pr. CIT vs. Shri R.V. Doshi Charitable Trust (2019), the Gujarat High court emphasized that procedural issues, like missing documents, should not override the substance of the application. In Rural Development Charitable Trust vs. CIT (2022) and in CIT vs. Rajasthan State Cricket Association (2014) emphasized that missing documents alone shouldn't automatically lead to rejection of the registration.

During the initial proceedings before the tribunal no one appeared on behalf of the assessee . The tax department stated that the assessee was very careless in pursuing its case and requested the dismissal of the appeal due to non prosecution.

The CIT(E) stated that the assessee failed to present its case before the judicial assessing officer (JAO). However the assessee later submitted a written statement claiming the trust had never received the notice dates either through email or post and also mentioned that they only became aware after checking their income tax portal.

The trust immediately replied by attaching various documents to the commissioner's office. The commissioner’s order failed to consider the assessee’s detailed reply and the assessee remitted the case to the commissioner for a fresh decision.

The tribunal after considering both the sides held that the commissioners order rejecting the trust’s final registration because the assessee failed to consider a detailed reply and supporting documents .

The tribunal observed that the trust’s did not receive prior notices and had acted immediately once they were aware of the required submissions through an online portal . The assessee was directed to submit necessary details,documents,records,financial,reports etc in support of its claim or as may be required by the CIT(E) for granting registration under section 12AB of the Act.

The bench comprising Keshav Dubey (Judicial Member) and Waseem Ahmed (Accountant Member) remitted the issue back to the commissioner for a fresh decision and a reasonable opportunity for the assessee to be heard and to present all the necessary documents .

The tribunal also mentioned that no further leniency would be granted to the assessee in the event of any further non- compliance.

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