C. J. Mangaliwala Dharmarth Trust Vs ld. CIT (Exemptions) (ITAT Chandigarh)
Registration Can’t Be Denied on Suspicion & Surplus: 12AB Is Not Mini-Assessment—ITAT Delhi Restores Trust Registration
Assessee-Trust, established in February 2005 & already enjoying registration u/s 12AA since 28.09.2016, applied for renewal / permanent registration u/s 12AB pursuant to amended law. CIT(E) rejected the application alleging that Trust was generating surplus year after year, expenditure on charity was nominal, some land was sold at profit, cash deposits could not be co-related with income, and a loan of ₹21 lakh was advanced to another trust, concluding that activities were not genuine.
ITAT Delhi condoned delay of 313 days & allowed Assessee’s appeal. Tribunal noted that objects of the Trust are purely charitable, income streams such as agricultural income, Dharamshala receipts, rent & bank interest are not prohibited, and mere generation of surplus does not negate charitable character. ITAT held that all issues raised by CIT(E)—surplus, cash deposits, land sale, inter-trust loan or alleged unverifiable expenses—are pure matters of assessment, which can be examined during scrutiny, not at the stage of grant of registration.
Tribunal emphasised that once registration was earlier granted u/s 12AA after examining genuineness of activities, CIT(E) cannot sit in judgment again by conducting a roving enquiry while processing application u/s 12AB. Registration proceedings are not meant to be converted into assessment proceedings.
Accordingly, ITAT directed CIT(E) to grant registration u/s 12AB to Assessee-Trust. Appeal allowed.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
