Abhinav Bharat Vs ITO (ITAT Mumbai)
Mumbai ITAT: Absence of Expenditure Alone Cannot Be a Ground to Deny Renewal of Registration Under Section 12AB
The Mumbai ITAT held that renewal of registration under section 12AB cannot be rejected merely because the trust’s financial statements do not reflect expenditure towards its charitable objects. The CIT (Exemptions) had concluded that since no expenditure was incurred, the genuineness of the trust’s activities was not established and, on that basis, rejected the applications for renewal under section 12AB and the consequential approval under section 80G. The Tribunal, however, noted that the trust had specifically explained that it continued to pursue its charitable objectives through academic and public awareness initiatives, maintenance of its website, support to public causes and other activities, with the related expenses being personally borne by the settlors and trustees rather than being routed through the trust’s accounts.
The Tribunal observed that the absence of expenditure in the trust’s accounts does not, by itself, establish absence of charitable activities, and that the explanations and supporting material furnished by the trust required proper verification. Since the CIT (Exemptions) had not comprehensively examined these aspects, the Tribunal set aside the orders rejecting registration under section 12AB and approval under section 80G and restored the matter for fresh adjudication. The CIT (Exemptions) was directed to examine all explanations, documents and evidence, provide an effective opportunity of hearing, and pass a reasoned speaking order in accordance with law. Both appeals were allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
