INCOME TAX ACT, 1961

Section 12AA

Charitable trust - Registration under section 12AA - Diversion of funds in violation of section 13(1)(c) -

Assessee applied for grant of registration under section 12AA. CIT(E) relied on the survey operation under section 133A, conducted at the premises of assessee-association along with search and seizure operation under section 132 at the residential premises of the honorary secretary and thus refused to grant registration on the ground that funds of assessee were diverted for personal benefits of executives of society, in violation of section 13(1)(c). Further more, receipts from the Board of Control for Cricket in India (BCCI) were shown as corpus fund instead of treating them as revenue receipts. Held: Prior to the amendment (by the Finance Act, 2019 with effect from 1-9-2019), the requirement for obtaining satisfaction was only about genuineness of activities of the trust or institution. By the amendment satisfaction on the objects was also included. Hence, no error was committed by CIT(E) in scrutinizing genuineness of activities of the institution in obtaining satisfaction to grant registration. When CIT(E) was confronted by the activities requiring survey, search and seizure, there was conclusion that satisfaction had not been obtained for purpose of granting registration. This, the authority did as required and empowered by the provision existing prior to the said amendment. Accordingly, refusal of registration was justified.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2011-12

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