Failure to substantiate genuineness of activities of Assessee Trust for getting Registration u/s 12A of Income Tax Act: ITAT remits matter back to CIT(E) for De-Novo Consideration [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench remitted the file of the assessee back to CIT(E) for de novo consideration due to the failure to substantiate the genuineness of the activities of the assessee trust for obtaining registration under Section 12A of the Income Tax Act, 1961.

The assessee, Kai Vaijanath Channappa Darde Vaidyakiya Research Centre, filed an application before the CIT(E) for Section 12AB of the Income Tax Act.

When the application was considered before the CIT(E), they rejected the application due to the failure to arrive at a positive satisfaction about the genuineness of the activities of the assessee in the absence of evidence.

The tribunal observed that the appellant’s failure to annex the required documents as contemplated under Rule 17A(2) of Income Tax Rules. Also, the CIT(E) issued notice two times following the principles of natural justice.

Before the bench, the counsel for the assessee submitted that the first notice was issued on 24/6/2023, which fell on a Saturday, being a non-working day.

The bench observed that the purpose of the provisions for registration of trust under Section 12A/12AB of the Income Tax Act and granting of recognition under Section 80G of the Income Tax Act derives its spirit from the Directive Principles of State Policy enshrined in the Constitution of India.

Thus, in view thereof, the registration for public charitable trusts is given to ensure that through these charitable trusts, benefits flow to the entire society. Also, these provisions of registration under Section 12A/12AB of the Income Tax Act and granting of recognition under Section 80G of the Income Tax Act enhance the socio-economic welfare of the society.

After reviewing the facts and records, the two-member bench of G. D. Padmahshali (Accountant Member) and Partha Sarathi Choudhury (Judicial Member) has remitted the matter back to the CIT(E) for de novo consideration.

M. K. Kulkarni appeared as counsel for the assessee, and Keyur Patel appeared as counsel for the revenue.

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