GAYATRI PARIVAR TRUST BHORANJ,HIMACHAL PRADESH vs. CIT(E), CHANDIGARH, CHANDIGARH

The Ld. Authorised Representative (AR) submitted that the impugned order passed by the Ld. CIT (Exemptions) suffers from

The Ld. AR further submitted that the assessee has already been granted registration under section 12AB of the Act as a religious-cum-charitable entity for the relevant period, which demonstrates that the genuineness of its activities has been accepted by the Department. It was argued that the rejection of approval under section 80G has been made without examining the true scope of the provisions of section 80G and the Explanation appended thereto. It was, therefore, prayed that the matter be restored to the file of the Ld. CIT (Exemptions) for fresh adjudication after granting adequate opportunity of hearing.

The Ld. Departmental Representative (DR), on the other hand, relied upon the findings recorded in the impugned order. It was submitted that sufficient opportunities had been granted to the assessee during the course of proceedings and that the Ld. CIT

We have heard the rival submissions and perused the material available on record. We find merit in the contention of the assessee that the issues involved require a comprehensive examination by the Ld. CIT (Exemptions). From the record, it appears that the assessee could not effectively explain its case before the Ld. CIT (Exemptions), and the impugned order has been passed without affording a sufficient and effective opportunity of hearing to the assessee. In our considered opinion, the principles of natural justice require that the assessee be granted one effective opportunity to substantiate its claim before any adverse decision is taken.

Accordingly, the impugned order passed by the Ld. CIT (Exemptions) in the present appeal is set aside and the matter is restored to his file for adjudication afresh in accordance with law after providing adequate and effective opportunity of hearing to the assessee. The assessee shall also extend full cooperation and furnish all relevant documents and explanations as may be called

So far as the connected appeal being ITA No. 999/Chd/2026 is concerned, we note that the same arises out of the consequential order relating to approval under section 80G of the Act. Since we have restored the principal matter to the file of the Ld. CIT (Exemptions), the consequential appeal also deserves to be remitted back for fresh adjudication.

While deciding the application under section 80G, the Ld. CIT (Exemptions) shall specifically examine the applicability of the relevant provisions of section 80G, including the Explanation appended thereto, which provides that where the expenditure incurred by an institution or trust towards religious activities does not exceed the prescribed limit of five per cent of its total income/expenditure, such limited religious expenditure shall not, by itself, operate as a disqualification for grant of approval under section 80G. The Ld. CIT (Exemptions) shall objectively examine the actual nature of the activities and the quantum of expenditure incurred towards religious purposes and determine the eligibility of the assessee in the light of the statutory provisions and the judicial precedents governing the field. Merely because the assessee carries out certain religious activities would not, ipso facto, disentitle it from approval under section 80G, if the conditions prescribed under the Act are otherwise satisfied.

The Ld. CIT (Exemptions) shall thereafter pass a reasoned and speaking order, dealing with each of the contentions raised by the assessee, in accordance with law.

Accordingly, both the appeals are allowed for statistical purposes.