Case Law Details
Janata Gram Vikas Pratisthan Vs CIT (Exemption) (ITAT Pune)
Introduction: In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Pune bench addressed the appeal of Janata Gram Vikas Pratisthan against the decision of the Commissioner of Income Tax [Exemption], Pune (CIT(E)), which had rejected the trust’s application for registration under Section 12AB of the Income Tax Act. The case highlights the critical aspects of verifying the genuineness of a trust’s objectives and its compliance with applicable laws while seeking registration for tax exemptions.
Detailed Analysis
The core issue in this appeal was the CIT(E)’s rejection of the trust’s application for registration under Section 12AB due to insufficient evidence regarding the trust’s charitable activities and compliance with relevant laws. The ITAT noted that despite multiple opportunities provided by the Department, the trust failed to furnish adequate documentation to support its claims of charitable activities, particularly concerning the nature and source of cash deposits, as well as the utilization of withdrawn funds.
The ITAT underscored the welfare-oriented nature of the Income Tax laws, which are designed to facilitate the flow of benefits to society through charitable trusts. Such provisions are in line with the Directive Principles of State Policy enshrined in the Constitution of India, aiming to enhance socio-economic welfare. The tribunal emphasized that the laws governing trust registration and tax exemptions are not punitive but are intended to support the government’s welfare objectives.
Given the welfare legislation’s spirit and the trust’s failure to provide necessary evidence, the ITAT deemed it appropriate to grant the trust one final opportunity to present its case comprehensively. The tribunal directed the matter back to the CIT(E) for re-adjudication, ensuring the principles of natural justice are upheld. This decision reflects the tribunal’s balanced approach, recognizing the importance of due diligence in verifying a trust’s compliance with the law while also adhering to the broader objectives of social welfare and justice.
Conclusion: The ITAT Pune’s decision to remand the matter back to the CIT(E) for further review marks a critical juncture in the case of Janata Gram Vikas Pratisthan. It reinforces the importance of thorough documentation and compliance with the law for trusts seeking registration under Section 12AB. Moreover, the ruling highlights the judiciary’s role in ensuring that tax laws, grounded in the principles of welfare legislation, are applied fairly and justly. This case serves as a reminder to charitable trusts of the necessity to maintain transparent records and comply with legal requirements to benefit from tax exemptions aimed at facilitating societal welfare.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal preferred by the assessee emanates from the order of Commissioner of Income Tax [Exemption], Pune (for short, “CIT(E)”) dated 20.09.2023 as per the grounds of appeal on record.
2. The only grievance of the assessee in this appeal is the rejection of registration to the assessee-trust u/sec. 12AB of the Act by the CIT(E).
2.1 At the time of hearing, none appeared on behalf of the assessee.
The submissions of the ld. DR and the documents on record were considered and the case was heard on merits.
2.2 That, on perusal of the order of CIT(E), certain details were called for from the assessee to verify the genuineness of the objects of the assessee-trust and to ascertain the genuineness of the charitable activities done by the applicant-trust and also whether compliance made regarding the applicable laws in force while achieving the charitable objects of the trust. There were opportunities given by the Department to the assessee for submission of supporting evidences to demonstrate the aforestated and the charitable activities performed by the trust. However, at para 8, the ld. CIT(E) mentions that the assessee has failed to explain with supporting documentary evidences about the nature and source of cash deposits and also the reasons for cash withdrawals from bank and subsequent utilization of the withdrawn amounts. Therefore, at para 9, ld. CIT(E) held that assessee has failed to prove the genuineness of the activities and compliance to requirements of any other law for the time being in force by the trust as are material for the purpose of achieving its objects, hence, the application of the assessee was rejected.
3. We are of the considered view that it is a case where the application for registration of a trust was filed by the assessee, and for want of supporting evidences, the matter was rejected by the It has to be appreciated that the purpose of the provisions for registration of trust u/sec. 12AA and granting of exemption u/sec. 80G, all these sections derives their spirit from the Directive Principles of State Policy enshrined in the Constitution of India. Since, the Govt. of India makes endeavor to provide welfare to one and all in the society at large and in view thereof the registration for public charitable trusts are given in order to ensure that through these charitable trusts benefits should flow to the entire society wherefrom various charitable activities, the entire society is benefited and the objectives of the Govt. of India in furtherance to the Directive Principles of State Policy are achieved. These provisions for the trust registration u/sec. 12AA and granting of exemption u/sec. 80G enhance the socio economic welfare in the society. Furthermore, the Income Tax laws are welfare legislations and not penal in nature. Therefore, in the interest of justice and considering all the afore-stated observations, we are of the considered view that one final opportunity should be provided to the assessee to file the relevant details before the ld.CIT(E) and present their case on merits. That, after all the power always remains with the ld.CIT(E) as per the Act to either grant or reject the application regarding the concerned issue but that decision should come after examining and verifying all documentary evidences furnished by the applicant-assessee. In view thereof, we set aside the order of the ld. CIT(E) and remit the matter back to his file with the aforesaid direction and the ld. CIT(E) shall re-adjudicate as per law complying with the principles of natural justice. Grounds of appeal of the assessee are allowed for statistical purpose.
4. In the result, appeal of the assessee stands allowed for statistical purpose.
Order pronounced in open Court on 11th December, 2023.
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