Devan Ramachandran, J.

1. This appeal assails the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, in ITA.No.271/COCH/2024, for the assessment year 2023-24.

2. Compendiously, the appellant obtained registration under Section 12AB of the Income Tax Act, 1961 (“Act” for short), for a period of three years; and they then preferred an application in Form 10AB, under the provisions of Section 12A(1)(ac)(iii) of the “Act”, which was rejected by the Commissioner of Income Tax (Exemption), for the reason that their own disclosure showed that they had spent their income derived from the Trust for purposes other than those authorised.

3. The appellant moved the ITAT, but which Authority has also now confirmed the order of the Commissioner of Income Tax; consequently, constraining them to approach this Court.

4. The following substantial questions of law have been framed in this appeal:

                  “i. In the facts and circumstances of the case, ought note the Tribunal have allowed the appeal filed by the appellant, more so when the grounds of rejection was never a subject of show cause at the time of adjudication:

                  ii. In the facts and circumstances of the case, ought not the Tribunal have allowed the appeal as no violations specified under Section 2(15) of the Act has been set out in the impugned order;

                  iii. In the facts and circumstances of the case, ought not the Tribunal have held that the impugned order was wrong for want of specified violations in terms of the explanation to Section 12AB (4) has been proved against the appellant.”

5. Sri.Anil D. Nair, learned Senior Counsel, instructed by Sri.Aravind Rajagopalan Menon - appearing for the appellant, took us through Annexure B - which is the Memorandum of Association of the appellant - particularly paragraph “iii” thereof, to show us that, one of the objects, of the Society – which is admittedly registered under the provisions of Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act – is: “to work in tandem with the Government and other agencies for the economic and social development of the city and for providing improved quality of life for the residents of Thriuvananthapuram” (sic).

6. The learned Senior Counsel argued that, keeping within the sweep of the objectives, as available in the Memorandum, his client filed Annexure D - Disclosure of Activities, before the Commissioner, in which, it was admitted that they had extended support to an entity called “Thiruvananthapuram Vikasana Munnettam” (TVM), and had used their resources for the election campaign of candidates promoted by it. He argued that the support given to the “TVM” by his client, was within the ambit of their declared objectives because, their intent was to obtain economic and social development for the Thiruvananthapuram city and to provide improved quality of life for its residents, by being able to have worthy representatives for them in the Corporation Council. He contended that this rhymes and travels fully with the Memorandum of Association of his client; and hence that the impugned order of the ITAT is in error.

7. Sri.Jose Joseph – learned Senior Standing Counsel for the respondent, in response, argued that, from any perspective, the use of their resources by the appellant for the election campaign of candidates in the Local Body Elections of the year 2020 go contrary and in gross violation of their approved objectives. He predicated that this can only be construed as a political activity and hence that their statement that, “TVM” is an “apolitical group”, would have no bearing since the conceded purpose for which they used their resources was to promote candidates in elections; which is manifest from the fact that, in Annexure D, they have unequivocally declared that they utilized the major share of their funds, namely Rs.21,42,330/-, for “election campaign and other expenses” (sic). He concluded arguing that, therefore, the ITAT cannot be found in error.

8. The rival contentions being so recorded, it is ineluctable that Section 12AB of the Act provides for the procedure for fresh registration; and Sub Clause 4 thereof empowers the Principal Commissioner or Commissioner to call for documents or information from any Trust or institution, or to make such enquiry as he deems fit, to satisfy himself about the occurrence or otherwise of any specified violation, which would then lead to other consequences as are stipulated.

9. It is admitted that the Commissioner issued Annexure C notice to the appellant, asking them to furnish certain details, which, inter alia, included the “Notes of Activities” carried out by them for the last three years / since inception. It is in response to this, that the appellant filed Annexure D, disclosing, among others, that they had provided “requisite resources for the election campaign, including arranging Promotional materials, Vehicle Announcement services etc”. They further declared that their purpose was “to support TVM and spread the message to the residents of Trivandrum to select Councillors who can think apolitical and contribute to the overall development of the Trivandrum city” (sic).

10. Pertinently, it is without contest - as is admitted - that the appellant also disclosed in their balance sheet that they have spent Rs.21,42,330/-, under the head “election campaign and other expenses” (sic); and all these aspects had been noticed by the Commissioner, whose order was then assailed before the ITAT.

11. Sri.Anil D. Nair, learned Senior Counsel, as said above, argues that the intent of his client was to better Thiruvananthapuram and to ensure that its residents obtain the best councillors in the city council.

12. There can be no offence in any entity or person supporting any candidate in a democratic election; but the acme question here as whether the resources of the appellate could have been used for this purpose, and if they can hold it out to be within the objectives declared in their Memorandum of Association.

13. First, a glance through the objects of the appellant, as available in their Memorandum of Association, will require to be read; for which purpose, we extract them as under:

                  “3. Objects

                  The objects of the Society are:

                  i) to take initiative for the implementation of development projects in and around Thiruvananthapuram and to act as a facilitator for positive changes for the development and benefit of Thiruvananthapuram.

                  ii) to plan and translate that into action for the overall development of Thiruvananthapuram and its outskirts lying areas in terms of infrastructural facilities, creating an environment conducive for the development of industry, trade and service sector.

                  iii) to work in tandem with the Government and other agencies for the economic and social development of the city and for providing improved quality of life for the residents of Thiruvananthapuram.

                  iv) to secure for Thiruvananthapuram its true status as the Capital City.

                  v) to interface with Central and State Governments and other authorities on issues concerning infrastructure development of Thiruvananthapuram.

                  vi) to erect and maintain buildings and other structures or to take on lease building for conducting activities of the society.

                  vii) to purchase, sell, lease, hire, exchange or otherwise acquire or dispose any movable or immovable property in Kerala for all or any of the above objects.

                  ix) to solicit and receive subscriptions, donations, endowments and gifts, movable or immovable and to borrow or raise funds for all or any of the objects for which the Society is established.

                  x) to do all other things as are incidental and conducive to the attainment of the above objects or any one of them.”

14. The case of the appellant, as argued by their learned Senior Counsel - Sri.Anil D. Nair, is that the third object afore, fully authorize them to support independent candidates in local elections because, through such, the end result would be to provide improved quality of life to the residents of Thiruvananthapuram. Interestingly, they say that such activity is only ‘apolitical’, but without explaining what they mean by this. Going by the submissions made at the Bar, we get the impression that the word ‘apolitical’ has been employed by the appellant in contradistinction to activities of political parties; and thus to assert that the “independent candidates” they supported, and whose campaign they funded, were acting in the best interests of the city.

15. In a vibrant democracy, electoral exercises are part of vibrant political edifice; and candidates can either be independent, or sponsored and supported by registered political parties. One can, hence, not fathom how the appellant maintains that the finding they offered to independent candidates, or the campaign support they give to them, are ‘apolitical’ activities; consequently falling within the third clause of their objects.

16. It is unreservedly admitted that the appellant promoted candidates in elections and supported their campaigns, employing their resources. The learned ITAT has found this activity to be part of the political process; and we have no doubt that it has understood the position correctly.

17. It is not the manner of interpretation of the word ‘political’ or ‘apolitical’ by the appellant which is relevant, but the real nature of their activities. When they limpidly concede that they have promoted candidates in the elections to the Local Self Government Institutions and had financed their campaigns, the only deduction possible is that they had participated in the electoral process, which is essentially a political one.

18. That said, the corollary question is whether the above conceded activity can be construed to provide improved quality of life to the residents of Thiruvananthapuram, as available in the third objective extracted above. The reasoning of the learned Senior Counsel - Sri. Anil D. Nair, is that when good candidates get elected, the quality of life of the residents of Thiruvananthapuram gets better. This is highly speculative and conjectural from several angles, including as to who ‘good candidates’ are; and how their election by itself would improve the quality of life of the residents of the city. True, having worthy candidates may improve the processes of governance, but to then enter an axiomatic deductive assumption that this will lead to an improved quality of life of the residents of the city, would be to push limits too far. It is not the intent of the Assessee, but the actual purposes for which the resources are used, which is vital and paramount; particularly when tax statutes are to be dealt with strictly.

19. In the backdrop of our afore opinion, we will now answer the substantial questions framed.

20. As regards question (i) above, the appellant contends that the grounds of rejection were never a subject of show cause at the time of adjudication. We find no favour with this, for the singular reason that it was the declaration of activities undertaken by the appellant - made by them pursuant to the notice issued by the Commissioner - which alone lead to the finding that their activities were not in tandem with their declared objectives in the Memorandum of Association. We, therefore, answer this, holding that no further show cause notice was necessary, when the entire proceedings were pursued by the competent Authorities based on the declaration of the appellant themselves, since they would have had nothing more to answer, or act upon, than what they had already voluntarily disclosed.

21. Quad Hoc questions (ii) and (iii), it is apposite that we answer them together, because the argument of the appellant is that the violations found against them are not “violations” as specified under Section 12AB (4) of the Act.

22. It is interesting that, explanation “a” to Section 12AB (4) of the Act, stipulates that specified violations will fall within its compass, in a situation “where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution”. We have found above that the use of the resources of the appellant - and that too, a substantial portion of it - in promoting a particular candidate - whether he / she is affiliated to a political party or otherwise – in an electoral process, would certainly be not for the purposes as declared in the Memorandum of Settlement. When explanation (a) to Section 12AB (4) of the Act is luculent that the use of the income of a Trust other than for its objects would amount to a specified violation, it is rendered apodictic that, in the case at hand, the use of such income by the appellant for the purpose of electoral activities surely would fall within its purlieus.

                  In the afore circumstances, we dismiss this appeal, answering all the framed questions of substantial law against the assessee and in favour of the Revenue.