Establishment of trust compliance with procedural requirements under the Income Tax Act is essential for registration and approval, with financial activities needing to align with the trust's stated objects.

ORDER

PER ASTHA CHANDRA, JM :

The above two appeals filed by the assessee are directed against the separate orders both dated 05.12.2023 of the Ld. Commissioner of Income Tax (Exemption), Pune (“CIT(E)”) rejecting the application(s) for grant of registration u/s 12A and approval u/s 80G of the Income Tax Act, 1961 (the “Act”). For the sake of convenience, both these appeals were heard together and are being disposed of by this common order.

2. In ITA No.174/PUN/2024, the assessee has challenged the order of the Ld. CIT (E) in rejecting the application for registration u/s 12A of the Act while No.175/PUN/2024 relates to the order of the Ld. CIT(E) in denying the approval u/s 80G of the Act.

3. Facts of the case in ITA No.174/PUN/2024, in brief, are that the assessee filed an application in Form No.10AB on 09.06.2023 for registration of the trust under clause (iii) of section 12A(1)(ac) of the Act. With a view to verify the genuineness of the activities of the assessee and compliance to requirements of any other law for the time being in force by the trust/institution as are material for the purpose of achieving its objects, a notice was issued through ITBA portal on 21.08.2023 requesting the assessee to upload certain information/clarification contained therein by 01.-09.2023. As the assessee failed to comply, another notice was issued on 16.09.2023 seeking compliance by 25.09.2023. The Ld. CIT(E) while going through the details submitted and documents filed by the assessee found certain discrepancies for which he issued a show cause notice on 19.10.2023 requesting the assessee for necessary compliance. The said discrepancies recorded by the Ld. CIT(E) in para 5 of the impugned order is reproduced below:

"(i) You are requested to furnish the copies of bills/ invoices, receipts, voucher, etc in respect of expenditure shown in your financial statements.

(ii) Addition to bal. sheet of Rs. 3 Lakhs and Rs. 51.75 Lakhs under the head loans has been made for FYs 2020-21 & 2021-22 respectively. However, details of the same via source, purpose and its utilisation for trust objects along with copy of permission under section 36A of the Maharashtra Public Trust Act, 1950 from the Charity Commissioner.

(iii) Trust has given advance for purchase of land. Details of the transaction and purpose has not been submitted with relevant supporting documents."

3.1 The assessee filed its response to the above queries. On perusal of the assessee's reply and the documents, the Ld. CIT(E) further noticed certain discrepancies, listed below, which were communicated to the assessee by issue of one more show cause notice on 16.11.2023 seeking compliance by 22.11.2023:

“(i) Trust has received large corpus/earmarked fund donations. However, copies of specific directions from trustees are not furnished.

(ii) Trust has furnished copy of resolution dt. 14/06/2021 and not the authenticated copy of original resolution. As such genuineness of the same remained unproved.

(iii) Further, resolution to raise was passed in connection with land owned by Shri. Aniket Chougule. However, it is stated that part of loans were utilized to purchase other land. This amounts to diversion of funds for the purpose not specifically provided for.

(iv) As per supporting documents, note etc, land admeasuring 4.25 Hector is purchased for activities like construction of Shiv mandir, Dhyan mandir, tree plantation, sadhak niwas, liabrary, Yoga centre, annachhatra, goshala, talav and gurukul. It is, however, seen from the trust deed that activities of construction of Shiv mandir, Dhyan mandir, sadhak niwas, Yoga centre, goshala, talav and gurukul are not included in the objects of the trust.

(v) There has been further addition to loans in FY