Lions Club of Khammam Charitable Trust Vs ITO (Exemptions) (ITAT Hyderabad)
This summary addresses the appeal by the Lions Club of Khammam Charitable Trust against the Income-tax authorities regarding the denial of its application for permanent registration under Section 12AB of the Income-tax Act, 1961. The core issue before the Income Tax Appellate Tribunal (ITAT), Hyderabad, was whether the order passed by the Commissioner of Income-Tax (Exemptions) was legally sustainable, given the trust’s claims of a procedural and factual miscarriage of justice.
Background of the Case
The Lions Club of Khammam Charitable Trust was established on April 21, 2012, with a clear set of charitable objectives. These included providing relief to the poor and fostering good governance and citizenship. The trust was initially granted provisional registration, a temporary status under Section 12A(1)(ac)(iii) of the Act, which allows new trusts to operate with tax-exempt status while they demonstrate their charitable activities. Following this, the trust submitted a formal application for permanent registration, a crucial step for maintaining its tax-exempt status over the long term.
In the course of its review, the Commissioner of Income-Tax (Exemptions) in Hyderabad issued two notices on December 3, 2024, and February 7, 2025, requesting additional information and details from the trust. In a timely response, the trust provided the requested documents and explanations on February 17, 2025. However, on March 19, 2025, the Commissioner issued an order in “Form 10AD,” rejecting the trust’s application for permanent registration. The rejection was based on two primary, yet unspecified, conclusions: that the trust had provided only “partial information” and that its activities were “not commensurate” with the stated objectives of the trust deed. Critically, the rejection order failed to provide any specific details or examples to substantiate these findings.
