Facts of the Case

The assessee, Maa Saraswati Shikshan Sansthan, filed an application in Form No. 10AB seeking registration under Section 12AB of the Income-tax Act. The CIT (Exemption), Jaipur rejected the application on three grounds: first, that the assessee was not registered under the Rajasthan Public Trust Act, 1959; second, that the assessee failed to establish the genuineness of its activities; and third, that the audit report was not filed along with the return of income for Assessment Year 2024-25. Subsequently, the assessee obtained registration under the Rajasthan Public Trust Act, 1959 and filed the audit report. The assessee filed appeals before the ITAT and also moved an application under Rule 29 of the ITAT Rules for admission of additional evidence.

Issues Involved

Whether rejection of registration under Section 12AB was justified when the assessee subsequently obtained registration under the Rajasthan Public Trust Act and filed the audit report, whether additional evidence going to the root of the matter could be admitted at the appellate stage, and whether the matter deserved restoration for fresh adjudication in compliance with principles of natural justice.

Petitioner’s Arguments

The assessee contended that the rejection was premature and hyper-technical, as registration under the Rajasthan Public Trust Act was pending at the time of application and was granted shortly thereafter. It was submitted that the audit report and affidavit establishing genuineness of activities could not be filed earlier due to reasons beyond control. The assessee argued that these documents go to the root of the matter and ought to be considered, and that registration under Section 12AB should not be denied merely on procedural lapses.

Respondent’s Arguments

The Revenue opposed admission of additional evidence and supported the order of the CIT (Exemption), contending that the assessee failed to comply with statutory requirements at the time of filing the application and therefore the rejection was valid.

Court Order / Findings

The ITAT Jodhpur admitted the additional evidence filed by the assessee under Rule 29, holding that the documents, including registration certificate under the Rajasthan Public Trust Act, affidavit regarding genuineness of activities, and audit report, go to the root of the issue of grant of registration under Section 12AB. The Tribunal observed that the phrase “genuineness of activities” has been interpreted liberally by judicial forums to mean that the trust should be carrying on charitable activities in consonance with its objects. The Tribunal held that in the interest of justice and in compliance with principles of natural justice, the assessee deserved one more opportunity. Accordingly, the impugned order was set aside and the matter was restored to the file of the CIT (Exemption) for fresh adjudication in accordance with law after granting adequate opportunity of hearing.

Important Clarification

The Tribunal clarified that applications for registration under Section 12AB should be examined substantively and not rejected on technical or curable procedural defects. Where subsequent compliance and additional evidence establish charitable nature and genuineness of activities, the authority must consider the same before arriving at a final decision.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The rejection of registration under Section 12AB was set aside and the matter was restored to the file of the CIT (Exemption), Jaipur for fresh adjudication de novo after considering the additional evidence and granting adequate opportunity of being heard to the assessee.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1768993755_MAASARASWATISHIKSHANSANSTHANJODHPURVS.CITEXEMPTIONJAIPURJAIPUR.pdf

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