Inder Parstah Charitable Trust vs CIT (E), Chandigarh: Registration Denial Under Section 12AA and 80G

Inder Parstah Charitable Trust vs CIT (E), Chandigarh: Registration Denial Under Section 12AA and 80G

Case Number: ITA 5992/DEL/2019

Appellant: Inder Parstah Charitable Trust, Rohtak

Respondent: CIT (E), Chandigarh

Assessment Year: –

Result: –

Case Filed on: 2019-07-11

Order Type: Final Tribunal Order

Date of Order: 2021-07-20

Pronounced on: 2021-07-20

Background of the Case

This case involves the appellant, Inder Parstah Charitable Trust, Rohtak, which filed an appeal against the order of the CIT(E), Chandigarh, dated 04.06.2019. The appellant sought registration under Section 12AA of the Income Tax Act, 1961, which grants tax exemption to charitable trusts, and under Section 80G, which allows donors to claim deductions for donations made to such trusts. The CIT(E) rejected the applications filed by the trust in Form 10A for both registrations.

Grounds of Appeal

The appellant raised the following grounds of appeal:

1. The rejection of the application for registration under Section 12AA by CIT(E) was unjustified and based on inadequate consideration of the facts and merits of the case.
2. The denial of approval under Section 80G was arbitrary and without proper examination of the trust’s objectives and activities.
3. The appellant contended that the CIT(E) failed to provide sufficient opportunity for the trust to present its case, leading to a decision made in limine, without a fair hearing.
4. The trust argued that it fulfilled all the criteria necessary for the grant of registration under Section 12AA and approval under Section 80G and that the denial was based on a narrow interpretation of the provisions.

Proceedings and Arguments

The appeal was heard by the Income Tax Appellate Tribunal, Delhi Bench ‘C’, New Delhi, through video conferencing. The appellant was represented by Sh. Vivek Bansal, Advocate, while the respondent was represented by Ms. Sunita Singh, CIT DR.

The appellant’s counsel argued that the CIT(E) had summarily rejected the applications without adequately considering the merits of the trust’s case. The counsel emphasized that the trust had been engaged in genuine charitable activities and met all the conditions required for registration under Section 12AA and approval under Section 80G. The counsel further argued that the rejection was made without giving the trust a fair opportunity to be heard, which was a violation of the principles of natural justice.

On the other hand, the respondent’s counsel defended the CIT(E)’s decision, stating that the applications were rejected due to non-compliance with certain procedural requirements and due to the lack of sufficient evidence to support the trust’s claim for registration and approval.

Tribunal’s Findings

The Tribunal, comprising Shri N. K. Billaiya, Accountant Member, and Shri K. Narasimha Chary, Judicial Member, carefully reviewed the submissions made by both parties. The Tribunal observed the following key points:

• The CIT(E) had rejected the applications in limine, meaning that the applications were dismissed at the preliminary stage without a detailed examination of the merits of the case.
• The Tribunal noted that the principles of natural justice require that a fair opportunity be given to the appellant to present its case before any adverse decision is made.
• The Tribunal emphasized that in matters concerning charitable trusts, it is essential to ensure that the trust’s objectives and activities are thoroughly examined before making a decision on registration and approval.

Judgment

The Tribunal concluded that the rejection of the applications by the CIT(E) without providing a fair hearing to the appellant was not justified. In the interest of natural justice and fair play, the Tribunal restored both the appeals to the files of the CIT(E), Chandigarh, with a direction to consider the applications afresh after giving a reasonable and sufficient opportunity to the appellant to be heard.

The Tribunal allowed the appeals for statistical purposes, meaning that the matter was sent back to the CIT(E) for re-evaluation, without making a final decision on the merits of the case.

Final Judgment:

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘C’, NEW DELHI

BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER

AND

SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER

(THROUGH VIDEO CONFERENCING)

ITA No. 5992 & 5993/Del/2019

Assessment Year: —

Inder Parstah Charitable Trust

5, Sector-14, Rohtak

Haryana -124001

PAN No. AAATI6283R

Vs

CIT (E)

Chandigarh

RESPONDENT

Appellant by Sh. Vivek Bansal, Advocate

Respondent by Ms. Sunita Singh, CIT DR

Date of hearing: 20/07/2021

Date of Pronouncement: 20/07/2021

ORDER

PER N. K. BILLAIYA, AM:

These two separate appeals by the assessee are preferred against the order of the CIT(E), Chandigarh dated 04.06.2019, by which the CIT(E), Chandigarh rejected the application in Form 10A filed by the assessee for claiming registration under Section 12AA of the Act and also under Section 80G of the Act.

A perusal of the two orders of the CIT(E) shows that the CIT(E) has rejected the applications in limine.

In the interest of natural justice and fair play, we restore both the appeals to the files of the CIT(E), Chandigarh, with a direction to consider the applications afresh after giving a reasonable and sufficient opportunity of being heard to the assessee.

Both the appeals are treated as allowed for statistical purposes.

Decision announced in the open court in the presence of both the representatives on 20.07.2021.

Sd/- Sd/-

(K. NARASIMHA CHARY) (N. K. BILLAIYA)

JUDICIAL MEMBER ACCOUNTANT MEMBER

Date: 20.07.2021

Copy forwarded to:

1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT

ASSISTANT REGISTRAR

ITAT, NEW DELHI

Date of dictation: 20.07.2021

Date on which the typed draft is placed before the dictating Member: 20.07.2021

Date on which the typed draft is placed before the other Member: 20.07.2021

Date on which the approved draft comes to the Sr. PS/PS: 20.07.2021

Date on which the fair order is placed before the Dictating Member for Pronouncement: 20.07.2021

Date on which the fair order comes back to the Sr. PS/PS: 20.07.2021

Date on which the final order is uploaded on the website of ITAT: 20.07.2021

Date on which the file goes to the Bench Clerk: —

Date on which file goes to the Head Clerk: —

The date on which file goes to the Assistant Registrar for signature on the order: —

Date of dispatch of the Order: —

Inder Parstah Charitable Trust vs CIT (E), Chandigarh: Registration Denial Under Section 12AA and 80G