BHARTIYA MAHILA EVAM GRAMIN UTHAN SANSTHAN,BASTI V. COMMISSIONER OF INCOME TAX (EXEMPTION), LUCKNOW

ITA 668/LKW/2024

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The case involves Bhartiya Mahila Evam Gramin Utthan Sansthan, a charitable society, which appealed against the decision of the Commissioner of Income Tax (Exemption), Lucknow, rejecting their application for renewal of registration under section 12AB of the Income Tax Act, 1961. The Commissioner had initially granted provisional registration but later rejected the renewal application citing lack of documentary evidence to support the charitable activities claimed by the society. The Tribunal found that the Commissioner had not adequately considered the submissions and documents provided by the assessee and restored the matter for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712575 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2023-2024
• Other Referred Cases: CIT vs. Red Rose School, CIT vs. Babu Ram Education Society, Bhartiya Kisan Sangh Seva Niketan vs. CIT (Exemption)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.K. AGARWAL
• Assessee Lawyers: B. P. YADAV
• Keywords: Principle of natural justice; Charitable institution; Benefit of exemption
• Section: 12AA

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW ‘A’ BENCH, LUCKNOW BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.668/LKW/2024 A.Y. 2023-24 Bhartiya Mahila Evam Gramin Utthan Sansthan, Vill- Jakhni, Post- Labnapar, Dist- Basti vs. Commissioner of Income Tax (Exemption) PAN:AADTB5654L (Appellant) (Respondent) Assessee by: Sh. B.P. Yadav, Advocate Revenue by: Sh. R.K. Agarwal, CIT DR Date of hearing: 09.06.2025 Date of pronouncement: 31.07.2025 O R D E R PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(Exemption), Lucknow, passed under section 12AB(1)(b)(ii)(B) of the Income Tax Act, 1961, rejecting the application of the assessee for registration. The grounds of appeal are as under:- “1. The Learned Commissioner of Income Tax (Exemption), Lucknow [ hereinafter referred to as the Ld. CIT(E)] has erred on facts and in law in rejecting the application of the assessee filed in Form 10AB for seeking renewal of registration stood already granted u/s 12AB of the I.T. Act, 1961 by passing an ex-parte order and without looking into the merit of the case of the assessee. 2. The Ld. CIT(E) has erred on facts and in law in holding that the activities being carried out by the assessee are not charitable in nature. 3. The Ld. A.O. erred on facts and in law in not providing the appellant any such opportunity to have his say and to make compliance of the reasons being relied upon by him while creating tax demand against the assessee. 4. The appellant reserves his right to advance such other grounds before or at the time of hearing which he may consider fit and appropriate, for which he Printed from counselvise.com ITA No.668/LKW/2024 Bhartiya Mahila Evam Gramin Uthan Sansthan A.Y. 2023-24 2 craves leaves to amend, alter or otherwise modify the grounds appearing hereinabove with kind permission of the office of CIT-Appeal.” 2. The facts of the case are that assessee filed an application for the registration of the trust under section 12AB of the Income Tax Act, 1961 on 10.03.2024 in Form No.10AB under Rule 17A of the Income Tax Rules, 1962. The ld. CIT(Exemption) issued a notice to the assessee requiring the assessee to submit a note on activities conducted since inception / during the last three years, and also a note specifying the main area of charitable / religious activity, as also a projection / plan, for the main charitable / religious activities to be undertaken in the next three years. The assessee was also required to furnish documentary evidences to substantiate the charitable activities by it in the recent past. The ld. CIT(Exemption) records that the assessee submitted a part reply, a perusal of which showed that the Sansthan was focused on activities of general public utility, but he added that no supporting documentary evidences had been filed relating to charitable activities carried out as per the objects mentioned in the trust deed. He perused the income and expenditure account filed for the year ending 31.03.2023 and observed that supporting documentary evidences had not been filed in support of the claim of expenditure. Bills and vouchers had not been filed before him and evidences had not been filed with regard to the carrying out of activities as per the objects of the trust deed. Therefore, he was handicapped in making any verification of the objects of the trust deed and he was not able to satisfy himself about the genuineness of the activities of the trust or institution or that these activities were in consonance with the object of the trust or institution. He, therefore, rejected the application of the assessee and initiated proceedings for cancelation of the provisional registration granted under section 12AB dated 24.09.2021. 3. The assessee is aggrieved at this rejection of its application and has accordingly filed this appeal. Sh. B.P. Yadav, Advocate appeared on behalf of the assessee argued the matter. It was submitted that the assessee society had already Printed from counselvise.com ITA No.668/LKW/2024 Bhartiya Mahila Evam Gramin Uthan Sansthan A.Y. 2023-24 3 been granted provisional registration under section 12AB of the I.T. Act vide registration dated 24.09.2021 and had applied for renewal of registration vide its application dated 10.03.2024, which was rejected on the grounds that the activities of the assessee society were not charitable in nature. However, it was submitted that the assessee was a charitable society engaged in carrying out activities such as providing nutrition, food, ration kit, clothes and such other help to the children of poor families and that these activities were within the objects of the trust deed. It was further submitted that while holding that the activities being undertaken by the assessee were not charitable activities, the ld. CIT(Exemption) had not provided reasonable opportunity to the assessee to represent its case. Therefore, it was submitted that the order was bad in law because it was passed in violation of the principles of natural justice and fair play and without considering the submissions / documents submitted by the assessee. It was prayed that the assessee was in a position to show that the activities were within the scope of its objects and were charitable in nature and the ld. AR therefore, prayed that the matter could be restored back to the file of the ld. CIT(Exemption) to pass a considered order after considering all the facts. Sh. R.K. Agarwal, ld. CIT DR, did not have any objection if the matter was restored to the file of the ld. CIT(Exemption) for passing a fresh order after considering the materials placed before him. 4. We have duly considered the facts and circumstances of the case. It is seen that the assessee has, after consideration of its objects and activities, already been granted provisional registration on 24.09.2021 which was valid up till assessment year 2024-25. Ongoing through the paper book submitted by the ld. AR, we note that the assessee had submitted details of photographs of activities being undertaken by it towards provision of nutrition to poor children, provision of foodgrains to poor families and provisions of uniforms and shoes to 200 school going children. In addition, the society has submitted that it had provided study materials such as slates, Printed from counselvise.com ITA No.668/LKW/2024 Bhartiya Mahila Evam Gramin Uthan Sansthan A.Y. 2023-24 4 chatai, stationery for children and solar lamps as also furthered the cause of the environment and economy by providing saplings for plantation. As per the submission made by the ld. AR, these documents were submitted to the ld. CIT(Exemption) but there is no discussion in his order as to how these activities fall outside the ambit of charitable activities or the stated objects of the trust. We also note that the jurisdictional High Court in the case of CIT vs. Red Rose School (2007) 212 CTR / (ALL) 394 has held that section 12AA which lays down the procedure for registration, does not speak anywhere that the ld. CIT(Exemption), while considering the application for registration, shall also see that the income derived by the trust or the institution is either not being spent for charitable purposes or that such institution is earning profit. The language used in the section only requires that the activities of the trust or the institution must be genuine, which accordingly would mean that they are in consonance with the objects of the trust / institution, and are not mere camouflage but are real, pure and sincere and not against the proposed objects. Similarly, in the case of CIT vs. Babu Ram Education Society (2018) 96 tamxan.com 606 (All), the Hon’ble High Court held that registration of the trust does not involve inquiry into the actual activities or application of funds at that stage and the only enquiry that is required to be conducted is with regard to the objects of the trust alone. Only if the assessee is found to have been engaged in any non-charitable activities, could the benefit of exemption be denied in the manner provided under the Act. In the case of Bhartiya Kisan Sangh Seva Niketan vs. CIT (Exemption) (2017) 166 ITD 562 (Del), the ITAT Delhi ‘D’ Bench observed, in a case where the CIT(Exemptions) had rejected the registration on the grounds that assessee had not submitted its books of accounts, that at the stage of granting of registration under section 12A, the ld. CIT(E) was required to see the objects of the assessee and not required to examine the application of income, which would have to be undertaken by the ld. AO on an year to year basis after the assessee files return of income claiming exemption under section 11. In view of the aforesaid facts that were available before Printed from counselvise.com ITA No.668/LKW/2024 Bhartiya Mahila Evam Gramin Uthan Sansthan A.Y. 2023-24 5 the ld. CIT(Exemption) and the position of law as laid down by the aforementioned judgments, it appears that the ld. CIT(Exemption) has not dealt with the application of the assessee in accordance with the provisions of law. Accordingly, we restore the matter to the file of the ld. CIT(Exemption), with a direction to the assessee to furnish such evidences as it may desire to the ld. CIT(Exemption) to show that it was performing activities in accordance with the objects of the trust and the ld. CIT(Exemption) may thereafter examine the same in the context of the objects of the trust to determine whether the assessee was entitled for registration under section 12AA. As the matter has been restored to the file of the ld. CIT(Exemption), the appeal of the assessee is held to be allowed for statistical purposes. 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 31.07.2025 in the Open Court. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/07/2025 Sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR , ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S. Printed from counselvise.com "