Registration Under Local Public Trust Act Not Required for Section 12AB Registration;

By | May 20, 2025
0 Comment

Registration Under Local Public Trust Act Not Required for Section 12AB Registration; Incomplete Application to be Reconsidered After Opportunity of Hearing.

Issue:

  1. Whether registration under the Rajasthan Public Trust Act, 1959, is an essential requirement for obtaining registration under section 12AB of the Income-tax Act, 1961.
  2. Whether an application for registration under section 12AB can be rejected due to an incomplete Form 10AB and unproven genuineness of activities, especially when the assessee failed to respond to show-cause notices.

Facts:

  1. Case 1 (Rajasthan Public Trust Act): The assessee applied for registration under section 12AB of the Income-tax Act, 1961. The Commissioner (Exemption) rejected the application solely on the ground that the assessee was not registered under the Rajasthan Public Trust Act, 1959.
  2. Case 2 (Incomplete Form & Genuineness): The assessee applied for registration under section 12AB. The Commissioner (Exemption) rejected the application citing an incomplete Form 10AB and concerns about the genuineness of the assessee’s activities. It was noted that the assessee did not furnish details in reply to the show-cause notices issued by the Commissioner (Exemption), leaving the Commissioner with no option but to dispose of the application based on available information.

Decision:

  1. In favor of the assessee (Matter remanded): For the purposes of registration of institutions under section 12AB, registration under the Rajasthan Public Trust Act, 1959, was not one of the essential requirements. Therefore, the ground for rejection was invalid, and the matter was restored to the Commissioner (Exemption) with a direction for a fresh decision.
  2. In favor of the assessee (Matter remanded): Despite the assessee’s failure to respond to show-cause notices, the application under section 12AB was to be restored to the Commissioner (Exemption). The Commissioner was directed to make a fresh decision after affording a reasonable opportunity of being heard to the assessee, in accordance with the law.

Key Takeaways:

  • No Prerequisite of State Trust Act Registration for 12AB: Registration under state-specific public trust acts (like the Rajasthan Public Trust Act) is not a mandatory prerequisite for obtaining registration under section 12AB of the Income-tax Act, 1961. The requirements for 12AB registration are distinct and primarily governed by the Income-tax Act.
  • Importance of Opportunity of Hearing in Registration Procedures: Even if an applicant fails to respond to initial inquiries or notices, the principle of natural justice generally requires that a reasonable opportunity of being heard be provided before a final decision on registration is made. This allows the assessee to present their case, provide missing information, or clarify any ambiguities.
  • Remand for Fresh Consideration: When a rejection is based on invalid grounds or if due process (like providing sufficient opportunity to be heard) is not fully followed, higher authorities may remand the matter back to the original authority for a fresh decision, ensuring proper legal procedure and consideration of all facts.
IN THE ITAT JAIPUR BENCH ‘B’
Dhapi Devi Tormal Seva Samiti Dhandhan
v.
CIT Exemption
Narinder Kumar, Judicial member
and Gagan Goyal, Accountant member
IT Appeal No. 165 (JPR) of 2025
APRIL  8, 2025
Sarwan Kumar Gupta, Adv. for the Appellant. Mrs. Alka Gautam, CIT-DR for the Respondent.
ORDER
Narinder Kumar, Judicial Member- This order is to dispose of appeal filed by the appellant-which claims it to be a charitable institution. Appeal has been preferred feeling aggrieved with the order dated 17.03.2024, passed by Learned CIT(Exemption).
2. Vide impugned order, Learned CIT(E) has rejected application filed by the applicant Institution under section 12 AB of the Income Tax Act, 1961 (in short “the Act”). Following three grounds have led to rejection thereof:-
■Incomplete Form 10AB.
■Non Registration of under Rajsthan Public Trust Act, 1959.
■Genuineness of Activities.
3. It may be mentioned here that present appeal came to be presented after 250 days of the prescribed period of limitation.
In order to seek condonation of delay, an application was presented with the appeal.
4. Ld. AR for the appellant-applicant has submitted that delay occurred in filing of the appeal as the counsel engaged by the appellant-applicant to pursue the application submitted before Learned CIT(E) advised the representative of the applicant that first of all the applicant should seek registration under RPT Act, 1959 and then file fresh application u/s 12AB of the Act before the CIT(E), whereas the proper remedy was to file an appeal against the impugned order, and as such, delay in filing of the appeal may be condoned.
5. The application seeking a condonation of delay is under the signatures of Smt. Suresh Jhabarmal Sharma, President of the applicant Institution.
It may be mentioned here that with the application, affidavit of the President was also submitted, but, no reliance can be placed on the affidavit as the same is defective, firstly, because at the space meant for signatures of the deponent, it does not bear signatures of the deponent, and secondly, because in the verification clause it has not been verified by the deponent that the contents of para 1 to 6 in the affidavit are true and correct to the “belief” of the deponent, as well.
6. In the given situation, the applicant could file affidavit of the concerned Advocate engaged by the applicant to pursue the proceedings on application u/s 12AB of the Act, but, no such affidavit of the concerned Advocate has been filed.
7. Case of the applicant is that it came to be incorporated on 26.06.2014 vide a registered trust deed, with the object of providing facility of education to children suffering from poverty; to help the helpless persons; to aid educational institutions, and for protection of cows.
Keeping in view the date of incorporation of the trust, and the issues involved in the application seeking registration under section 12 AB of the Act, without going into technicalities, we deem it a fit case to condone the delay in filing of the appeal, subject to costs, due to the deficiencies, notice above. The applicant is burdened with cost of Rs. 1000/- for delay in filing of the appeal. Costs to be deposited by the applicant with “Prime Minister’s National Relief Fund”.
8. As is available from the impugned order rejecting the application u/s 12AB of the Act, three grounds were raised. Same are taken up one by one.
Non registration of the applicant under RPT Act, 1959
9. As noticed above, this is one of the grounds of rejection of the application. In this regard, it may be mentioned here that Co-ordinate Bench ITAT, Jaipur has held in APJ Abdul Kalam Education and Welfare Trust v. CIT(E) decided on 15.01.2025 that for the purposes of registration of such institutions, u/s 12AB of the Act, registration under RPT Act, 1959 is not one of the essential requirements.
So, this ground of rejection of the application does not survive any more.
Incomplete Form 10AB & non genuineness of the activities
10. These are other two grounds of rejection of the application.
In the impugned order dealing with application u/s 12AB of the Act, Learned CIT(E) has described as to in what manner the said application uploaded in Form 10AB was incomplete and also that the applicant did not remove the said deficiencies despite notices.
Ld. AR for the appellant does not dispute that the applicant did not furnish details in reply to the show cause notices.
11. The impugned order is dated 17.03.2024. As noticed above, the applicant did not reply the show cause notices. In absence of compliance by the applicant or for want of requisite details or information or documents, learned CIT(E) had no option but to proceed to dispose of the application.
12. Ld. AR for the appellant submits that the matter may be remanded to Learned CIT(E) for decision of the application afresh, after affording of opportunity to the applicant of being heard.
13. Ld. DR for the department does not oppose the above said submission for remand of the matter to Learned CIT(E) for decision of the application afresh.
Result
14. As a result, this appeal is disposed of for statistical purpose, and while setting aside the impugned order dated 17.03.2024, application u/s 12AB of the Act is restored to the files of Learned CIT(E) with direction for decision afresh, after affording reasonable opportunity of being heard to the applicant, in accordance with law.
Receipt in proof of deposit of costs, to be submitted before Learned CIT(E) before commencement of the proceedings on remand.
File be consigned to the record room after the needful is done by the office.