SHRI CHETAN DASS GOSANVARDHAN SANSTHAN SANGEL UJINA,GURGAON vs. CIT EXEMPTIONS CHANDIGARH, CHANDIGARH

Briefly stated, the facts emerging from the record are that the assessee trust had filed an application in Form No.10AB under section 12A(1)(ac)(ii) of the Act before the learned CIT(Exemption), Chandigarh seeking registration under section 12AB of the Act. During the course of proceedings before the learned CIT(Exemption), a detailed questionnaire dated 11.04.2025 was issued requiring the assessee to furnish various details and documents relating to the commencement of activities, audited accounts, income tax returns, details of charitable activities, bank statements, nature of receipts, compliance with the provisions of section 2(15) and other connected matters.

The learned CIT(Exemption) observed that though certain replies were filed by the assessee on different dates, certain concerns still remained unresolved. Accordingly, another show cause notice dated 15.09.2025 was issued to the assessee. In the said notice, the learned CIT(Exemption) observed that there were conflicting claims with regard to the objectives of the trust and that the assessee had received substantial receipts from Municipal Corporation Gurgaon amounting to Rs.5,75,14,100/- during Assessment Year 2023-24 and Rs.4,82,18,975/- during Assessment Year 2024-25. The learned CIT(Exemption) further observed that TDS had been deducted on such receipts and, therefore, according to him, the assessee appeared to be engaged in certain business activities which had not been properly disclosed.

The learned CIT(Exemption) further observed that despite sufficient opportunities having been granted, the assessee failed to furnish complete and

Aggrieved against the aforesaid order, the assessee is in appeal before the Tribunal.

During the course of hearing, the learned Authorised Representative for the assessee submitted that the learned CIT(Exemption) had rejected the application without properly appreciating the nature of activities undertaken by the assessee. It was contended that the receipts received from the Municipal Corporation of Gurgaon were not business receipts but amounts received towards the execution, maintenance, and implementation of various welfare and public utility activities entrusted to the assessee by the Municipal Corporation. It was submitted that the assessee was carrying out charitable activities in furtherance of its stated objects and the mere fact that certain receipts were received from the Municipal Corporation could not automatically lead to the conclusion that the assessee was carrying on business activities.

The learned Authorised Representative further submitted that the learned CIT(Exemption) had not properly examined the agreements, nature of work entrusted, obligations imposed upon the assessee and the actual

Per contra, the learned Departmental Representative strongly relied upon the findings recorded in the impugned order. It was submitted that despite repeated opportunities granted by the learned CIT(Exemption), the assessee failed to furnish complete and satisfactory details regarding its activities. The learned DR submitted that substantial receipts had been received from Municipal Corporation Gurgaon against which TDS had also been deducted and, therefore, the learned CIT(Exemption) was justified in entertaining doubts regarding the genuineness of the activities and applicability of the proviso to section 2(15) of the Act.

We have heard the rival submissions and have carefully perused the material available on record including the impugned order passed by the learned CIT(Exemption). From the record, it is noticed that one of the principal reasons which weighed with the learned CIT(Exemption) while rejecting the application of the assessee was the substantial receipts received by the assessee from Municipal Corporation Gurgaon and the consequent doubt entertained by the learned CIT(Exemption) that the assessee may be carrying

We further notice that the assessee has consistently contended that the amounts received from Municipal Corporation Gurgaon were towards maintenance and execution of activities entrusted to it in furtherance of public welfare and charitable purposes. Whether such receipts were merely incidental to carrying out charitable obligations or whether the assessee was independently engaged in commercial/business activities requires proper

Considering the entirety of the facts and circumstances of the case, we are of the considered view that the matter deserves to be restored back to the file of the learned CIT(Exemption) for fresh adjudication. Accordingly, we set aside the impugned order passed by the learned CIT(Exemption) and remand the matter back to his file with the direction to examine afresh the nature of activities carried out by the assessee and the character of receipts received from the Municipal Corporation Gurgaon. The learned CIT(Exemption) shall call for the relevant records, agreements and supporting documents from the Municipal Corporation Gurgaon and ascertain whether the services rendered by the assessee were in the nature of commercial/business activities or were activities entrusted to the assessee in discharge of its charitable obligations and objects.

The learned CIT(Exemption) shall also examine whether the amounts received by the assessee from the Municipal Corporation Gurgaon were towards reimbursement/maintenance of various welfare and public utility activities entrusted to the assessee or represented consideration arising from independent business/contractual operations. The learned CIT(Exemption) shall thereafter adjudicate the issue afresh in accordance with law after affording an adequate and effective opportunity of hearing to the assessee. The

In the result, the appeal of the assessee is allowed for statistical purposes.