By TIOL News Service

CHANDIGARH, APRIL 11, 2017: THE ISSUE IS - Whether non-filing of I-T return by the charitable trust for previous years, can be a valid ground to deny registration u/s 12AA. NO is the verdict.

Facts of the case:

The assessee, a trust, filed an application for registration u/s 12AA. The CIT (Exemptions) denied registration to the assessee on the ground that it had not filed any return for the A.Ys 2012-13 to 2014-15. The assessee’s receipt for these years was Rs. 5,52,369/-, Rs. 15,15,442/- and Rs. 10,47,415/- respectively. It was further recorded that the accounts were not got audited by the assessee. Thus, the CIT (E) held that the accounts of the assessee were not reliable/genuine. On appeal, the Tribunal directed the CIT (E) to grant it registration. It was held that non-filing of the return was not a valid ground to deny registration as the CIT (E) had only to satisfy himself about the charitable nature of the objects and genuineness of the activities of the trust. It was further recorded that provisions of Section 13 were to be looked into by the AO at the time of assessment proceedings and not at the time of granting registration u/s 12AA.

On appeal, the HC held that,

++ it has been categorically recorded by the Tribunal that the CIT (E) has to satisfy two conditions while granting registration u/s 12AA. Firstly, whether the objects of the assessee are charitable in nature and thus, the activities are genuine. It cannot be concluded on the basis that the assessee has not filed its income tax returns in earlier years that the activities of the assessee are not genuine. It has been further recorded that Section 13 comes into play at the time of granting exemption u/s 11 and not at the time of granting registration u/s 12AA. No adverse remarks have been recorded by the CIT (E) with regard to the objects contained in the memorandum of the assessee-trust to come to the conclusion that its activities are not genuine. Thus, it has been rightly directed by the Tribunal to the CIT (E) to grant registration u/s 12AA. The counsel for Revenue has not been able to show that the findings recorded by the Tribunal are in any way illegal or perverse warranting interference by this Court. Consequently, no substantial question of law arises.

(See 2017-TIOL-691-HC-P&H-IT)