Another Opportunity granted by ITAT in Section 12A Registration Case

 

In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, set aside the Commissioner of Income Tax (Exemptions)’ order rejecting the application of a trust for registration under Section 12A of the Income Tax Act, 1961.

Case Details:
Assessee: M/s Swaminarayan Mandir Vishwabharati Education Trust

CIT (Exemptions) rejected the trust’s application under Section 12AA (now 12AB) citing lack of evidence to establish the genuineness of its activities.

The rejection was based on the failure to furnish sufficient supporting documents during the assessment process.

Tribunal’s Observations:
The ITAT bench comprising Shri Waseem Ahmed (Accountant Member) and Shri T.R. Senthil Kumar (Judicial Member) noted that the trust had furnished key documents such as:
Trust Deed
Audited financials
Details of activities carried out
However, the CIT (Exemptions) did not properly consider these documents nor provide an adequate opportunity to the trust for clarification.

Key Takeaways:
The Tribunal emphasized that the principle of natural justice was not adhered to in this case.

ITAT directed the CIT (Exemptions) to reconsider the application afresh, giving the trust a fair opportunity to present all necessary information and documents.

This decision provides relief to many new or smaller trusts facing rejections due to minor procedural lapses.

Section 12A/12AB Registration is crucial for charitable trusts to claim income tax exemption and receive donations with tax benefit under Section 80G.

Conclusion:
This case serves as a reminder to both tax authorities and charitable entities:

Authorities must ensure fairness and proper hearing before rejecting applications.

Trusts must ensure complete documentation and transparency in their objectives and operations.