SRI VARDHAMAN STHANAKVASI JAIN SHRAVAK SANGH,BANGALORE V. COMMISSIONER OF INCOME TAX(EXEMPTIONS), BANGALORE

ITA 853/BANG/2025

AI Insights

The case involves Sri Vardhaman Sthanak Vasi Jain Shravak Sangh, a registered trust, which appealed against the decision of the Commissioner of Income Tax (Exemptions), Bengaluru, rejecting their application for registration under section 12AB of the Income-tax Act, 1961. The CIT (Exemptions) had rejected the application based on two main grounds: an unexplained debit of \\u20b930,000 from the trust's bank account and unsupported claims of \\u20b983,160 towards food expenses. The Tribunal found that the explanations provided by the assessee regarding these issues were sufficient to warrant a re-examination of the application for registration under section 12AB.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705536 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: misc
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MURALI MOHAN
• Assessee Lawyers: SUMAN LUNKAR
• Keywords: Set aside; Charitable institution

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No. 853/Bang/2025 Assessment Year: --- Sri Vardhaman Sthanak Vasi Jain Shravak Sangh, 24/25 MP Lane, Chickpet Cross, Bangalore – 560 053. PAN – AAFAS 4791 Q Vs. The Commissioner of Income Tax (Exemptions), Bengaluru . APPELLANT RESPONDENT Assessee by : Smt. Suman Lunkar, CA Revenue by : Shri Murali Mohan, CIT (DR) Date of hearing : 19.06.2025 Date of Pronouncement : 02.07.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Exemptions), Bangalore [hereinafter referred to as \"CIT (Exemptions)\"] dated 22.03.2025, rejecting the application for registration under section 12AB of the Income-tax Act, 1961 (hereinafter referred to as \"the Act\"). ITA No.853/Bang/2025 Page 2 of 5 . 2. The assessee, a registered trust named Sri Vardhman Sthanak Vasi Jain Shravak Sangh, filed an application in Form No. 10AB on 27.09.2024 seeking registration under section 12AB of the Act. The case was assigned to the Jurisdictional Assessing Officer (JAO) for necessary verification. Based on the report received from the JAO, the ld. CIT (Exemptions) rejected the application for registration on the following grounds: 1. That a sum of ₹3,25,000 was debited from the assessee’s bank account, but the financial statements did not disclose any corresponding explanation for this transaction. 2. That the assessee had shown ₹83,160 towards food expenses, but did not submit any bills or vouchers to support the claim. 3. Based on these two points, the Learned CIT (Exemptions) held that the application was not fit for registration under section 12AB of the Act and rejected it accordingly. 4. Being aggrieved by the order of the learned CIT exemption, the assessee is in appeal before us. 5. The Learned Authorized Representative (AR) appeared before us and filed a paper book running from pages 10 to 83. He submitted the following: • The amount of ₹3.25 lakhs debited from the bank account was actually invested in Fixed Deposits and this is clearly shown in the financial statements, which are placed at pages 47 to 53 of the paper book. ITA No.853/Bang/2025 Page 3 of 5 . • As regards the food expenses of ₹83,160, it was submitted that these were duly accounted for in the books of accounts. There was no adverse remark by the ld. CIT (Exemptions) regarding this transaction being accounted for. • The Learned AR further submitted that the assessee is willing to furnish all necessary supporting documents and requested that, in the interest of justice, the matter be restored to the file of the CIT (Exemptions) for fresh adjudication. 6. The Learned Departmental Representative (DR) did not object to the request of the assessee for restoring the matter to the file of the ld. CIT (Exemptions) for fresh consideration in accordance with the law. 7. We have carefully considered the submissions made by both sides and have also gone through the documents placed on record. From the preceding discussion, we note that the rejection of registration under section 12AB has been made only on two grounds — (i) the alleged unexplained bank debit of ₹3.25 lakhs, and (ii) the food expenses of ₹83,160 not being supported by vouchers/ bills. 7. Regarding the debit of Rs. 3.25 lakhs, we note that the assessee has explained the bank debit of ₹3.25 lakhs as an investment in fixed deposits, which is a legitimate application or holding of funds and can be verified from the financial statements. 8. Regarding the food expenses like ₹83,160, we note that there is no allegation for any misuse of funds or deviation from the charitable objects. As such, the only allegation is this that there is no supporting ITA No.853/Bang/2025 Page 4 of 5 . bills or vouchers. It is also important to remember that the purpose of granting registration under Section 12AB is to verify whether the institution or trust is genuinely existing for charitable purposes and carrying out activities in accordance with its stated objects. Minor accounting deficiencies or absence of a few supporting bills should not be the sole basis to deny registration when the overall conduct and financials support the genuineness of the trust and its activities. Further, the assessee has expressed willingness to fully cooperate and furnish all necessary explanations and supporting documents. The Department also has no objection to restoring the matter. 9. In view of the above facts and in the interest of justice and fair play, we are of the considered opinion that the matter needs to be examined in the light of the above stated discussion by the ld. CIT (Exemptions) and adjudicate the same as per the provisions of law. Accordingly, we set aside the order dated 22.03.2025 passed by the ld. CIT (Exemptions), and restore the matter to his file for adjudication in the light of the above stated discussion and in accordance with law after giving proper opportunity to the assessee to present its case and supporting documents. 9.1 We also direct the assessee to cooperate fully with the proceedings and furnish all documents as may be required by the ld. CIT (Exemptions) to verify its claim. Hence the ground of appeal of the assessee is allowed for statistical purposes. ITA No.853/Bang/2025 Page 5 of 5 . 10. In the result, the appeal filed by the assessee is hereby allowed for statistical purposes. Order pronounced in court on 2nd day of July, 2025 Sd/- Sd/- (KESHAV DUBEY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 2nd July, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "