Facts of the Case

Krishna Shiksha Sewa Sansthan, Allahabad, is a society established for educational purposes. The assessee applied for registration under Section 12AA of the Income-tax Act, 1961 to avail tax exemptions available to charitable institutions.

The Commissioner of Income Tax (Exemption), Lucknow rejected the application on the ground that the assessee failed to satisfactorily establish the genuineness of its activities and compliance with relevant legal requirements.

Aggrieved by the refusal, the assessee preferred an appeal before the Income Tax Appellate Tribunal, Agra Bench.

Issues Involved

  1. Whether the Commissioner was justified in rejecting registration under Section 12AA.
  2. Whether the assessee’s activities qualified as charitable, particularly under “education.”
  3. Whether the rejection was made after proper inquiry into the objects and activities of the society. 

Petitioner’s Arguments (Assessee)

  • The society was formed exclusively for educational purposes and was engaged in running educational activities.
  • Education is explicitly recognized as a charitable purpose under Section 2(15).
  • Relevant documents and details of activities were furnished before the Commissioner.
  • The rejection was based on presumptions and not on concrete evidence.
  • At the stage of registration, only the objects of the institution and genuineness of activities are required to be examined, not the application of income in detail.

Respondent’s Arguments (Department)

  • The assessee allegedly failed to demonstrate the genuineness of its activities to the satisfaction of the Commissioner.
  • Certain procedural and compliance deficiencies were cited.
  • The Commissioner exercised statutory discretion to refuse registration.

Court Order / FINDINGS (ITAT)

  • While considering an application under Section 12AA, the Commissioner’s inquiry must be limited to:
    • The objects of the trust or society
    • The genuineness of its activities
  • Education is a recognized charitable purpose under the Act.
  • Registration cannot be denied merely on suspicion or minor deficiencies.
  • The assessee had provided sufficient material to establish its charitable nature.
  • Refusal of registration without proper evaluation of the material on record was not justified.

Important Clarification by the Tribunal

  • At the stage of granting registration, authorities should not conduct a detailed examination of income application or future compliance.
  • Such issues are relevant during assessment proceedings, not during registration.
  • The primary focus should remain on the charitable objects and genuineness of activities.

Link to download the order –

https://itat.gov.in/public/files/upload/1616751837-ITA%20%20%2033%20of%202020%20Krishna%20Siksha%20Seva%20Sansthan.pdf

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