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Facts
The assessee filed an application for approval under Section 80G(5)(iii) of the Income-tax Act. The CIT(E) rejected the application for non-commencement of charitable activities and failure to submit required documents.
Held
The Tribunal held that rejecting the application solely on the basis of non-availability of information violates the principles of natural justice. The CIT(E) should have provided a reasonable opportunity of being heard.
Key Issues
Whether the rejection of the 80G application without providing a reasonable opportunity of being heard is valid?
Sections Cited
80G, 80G(5), 80G(5)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
(Assessment Year: 2024-25) India Global Chamber of Businesses, vs. CIT (Exemption), D – 191, Okhla Phase 1, New Delhi. Okhla Industrial Area, New Delhi – 110 020. (PAN : AAFCI4158M) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Saif Ali, Advocate Shri Jasmeet Singh, Advocate Shri Sunil Kumar Gupta, CA REVENUE BY : Shri Dayainder Singh Sidhu, CIT DR Date of Hearing : 06.05.2025 Date of Order : 09.07.2025 O R D E R
PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Exemption), Delhi [hereinafter referred to as ‘ld. CIT (E)] dated 09.01.2024 for Assessment Year 2024-25.
Brief facts of the case are, assessee filed an application in Form 10AB for approval under clause (iii) of first proviso to sub-section (5) of section 80G of the Income-tax At, 1961 (in short ‘the Act’) on 26.07.2023. A 07.11.2023 to the assessee to furnish details/documents/clarifications in support of seeking for approval u/s 80G(5)(iii) of the Act. In response, assessee has filed part reply on 01.12.2023. However, ld. CIT (E) observed that assessee was asked to submit following remaining/additional details for consideration :- “1. On the perusal of your reply it is noticed that you have not submitted the copy of AOA. Please furnish the same.
2. On the perusal of your reply it is noticed that you have provisional order of Registration. In view of this, you are show-caused why not your application for approval should not be rejected in absence of Regular Registration.
3. On the perusal of your reply it is noticed that you have not given reply/part reply of Point no. 6 to 14, 15(i), 15(viii), 16 and 17. Please furnish the same.
4. On the perusal of your financials for F. 2020-21 it is noticed that there is no charitable activity was carried out by you. You are hereby show caused why not your application for approval should not be rejected.
On the perusal of your financials for F. Y 2021-22 it is noticed that there is no charitable activity was carried out by you. You are hereby show caused why not your application for approval should not be rejected.
6. On the perusal of your financials for F. Y 2022-23 it is noticed that there is no charitable activity was carried out by you. You are hereby show caused why not your application for approval should not be rejected.
In response to point no. 15(iii) you have not submitted the bank book and cash book. Please furnish the details.
It is evident from the financials that all the expenses are in the nature of administrative expenses. Please justify your claim of approval.”
Further ld. CIT (E) observed that assessee failed to comply with the above said notices and further notices were issued to the assessee and in response, assessee has filed part reply only on 06.01.2024. After considering the submissions of the assessee, ld. CIT (E) observed that on perusal of the FY 2022-23, he noticed that assessee has debited expenses of Rs.3,828/- and the same pertains to audit fees, preliminary expenses and ROC fees. Further, on perusal of financials of FY 2021-22, he noticed that assessee debited an expenses of Rs.83,028/- and the same pertains to audit fees, preliminary expenses and ROC fees. Therefore, he observed that from the above, it is evident that no charitable activity has been carried out by the assessee. He reproduced the financial statements in his order at pages 4 to 6. Therefore, he came to the conclusion that the assessee failed to file the relevant information to verify the genuineness of the activities and compliance of any other law, conditions for grant of approval in this case is not satisfactory, accordingly he rejected the application.
Aggrieved with the above order, assessee filed an appeal before us raising following grounds of appeal :-
1. That the Ld. CIT (E) erred in rejecting the registration u/s 80G of the Income Tax Act, 1961 in an arbitrary manner.
2. That the Ld. CIT (E) erred in rejecting the registration u/s 80G on the sole ground of non-commencement of charitable activities whereas there is no violation of condition specified in Section 80G(5) of the Income Tax Act, 1961 made by the appellant company.
3. That the ld. CIT (E) erred in not giving a reasonable opportunity of being heard while rejecting the application made under Clause (iii) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961.”
5. At the time of hearing, ld. AR of the assessee submitted that ld. CIT (E) rejected the application of the assessee for registration u/s 80G of the Act on the ground of non-commencement of charitable activities. However, he submitted that there is no violation of conditions specified u/s 80G(5) of the Act. Further he submitted that ld. CIT (E) has not given reasonable opportunity of being heard while rejecting the application filed by the assessee. He prayed that suitable direction may be given to the ld. CIT (E) in this regard.
On the other hand, ld. DR of the Revenue objected to the above submissions and submitted that the assessee has not complied to the various notices issued in this regard and he relied on the findings of ld. CIT (E), supported that the application was rightly rejected considering the fact that assessee has not indulged in any charitable activities.
7. Considered the rival submissions and material placed on record. We observe that the ld. CIT (E) issued several notices asking for several details/documents to verify the genuineness of the charitable activities. However, assessee has submitted certain informations before him and we observe that since assessee has not submitted relevant documents, based on the above reasons, application filed by the assessee was rejected. We observed that ld. CIT (E) could have given reasonable opportunity in person to the assessee before rejecting the application filed by the assessee. Merely rejecting the application on the basis of non-availability of certain information is against the principles of natural justice. In our considered view, ld. CIT (A) has to verify the relevance of meeting the condition specified u/s 80G of the Act and assessee should be given one more opportunity of being heard. Therefore, we direct the ld. CIT (E) to give one more opportunity of being heard to the assessee and consider the case of the assessee as per law.