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Facts
The assessee, a charitable organization, applied for registration under Section 80G(5) of the Income Tax Act. The Commissioner rejected the application citing that the trust deed's object clause 3(23) related to religious activities, which violated statutory provisions, and the application lacked required documents.
Held
The Tribunal held that the Commissioner ought to have given the assessee a reasonable opportunity to amend the object clause or delete the offending part, which was not done. The application was also found to be incomplete.
Key Issues
Whether the rejection of the application for registration under Section 80G(5) by the Commissioner was justified without providing a reasonable opportunity to the assessee to rectify defects or amend the trust deed.
Sections Cited
12A, 80G, 12AB, 80G(5), 80G(5)(ii)
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Income Tax Appellate Tribunal, MUMBAI “C” BENCH, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR
आदेश / O R D E R
PER NARENDER KUMAR CHOUDHRY, JM:
This appeal has been preferred by the assessee against the order dated 29.11.2024, impugned herein, passed by the ld. Commissioner of Income Tax (Exemptions), Mumbai (in short ‘Ld.
Commissioner’).
In the instant case, the assessee being a charitable organization was provisionally registered u/s.12A & 80G of the Act and, therefore, was required to be regularized and consequently made an application for regular/permanent registration u/s.12AB of the Act, which was also granted.
Subsequently the assessee by filing an application 21.05.2024 u/s.80G(5) of the Act, has sought for registration u/s.80G(5) of the Act. The ld. Commissioner considering the said application, observed that the application is not complete and all the documents required to be accompanied, were not furnished and the applicant intend to indulge in religious activity, which is in violation of provisions of Section 80G(5)(ii) of the Act. Though the show cause notice, was issued to the assessee, however, no response received from the assessee, and, therefore, a final showcause notice dated 13.11.2024 was issued to the assessee, in response to which, the Assessee vide letter dated 08.11.2024 claimed that the assessee has not carried out any religious activity and all activities are of charitable activities.
The ld. Commissioner though considered the submission of the Assessee, but could not find sufficient and necessary compliance, as per the provisions of the Act and thus ultimately held the object no. 3(23) as enumerated in the trust deed, is in violation of statutory provisions as reproduced below: -
"3(23)"-To form and manage, look after religious prayer centre, to support to create religious affection".
4.1 The Ld. Commissioner at last, rejected the application mainly on the following reason:
“The use of such words in the object of the assessee- trust clearly conveys its intention to utilize the funds for religious activities, thereby leaving open the possibility for future endeavors, which may involve expenditure on religious activities. The assessee-trust ought to have amended these clauses to align with the provisions of the Income Tax Act. However, it has failed to do so”.
The Assessee being aggrieved challenged the impugned order and submitted that the assessee had replied the final show cause notice on 08.11.2024 and, therefore, construed that its case for approval u/s.80G(5) of the Act has been ascertained. However, the ld. Commissioner without raising any specific objection qua violation of statutory provisions and/or giving any further opportunity of being heard, rejected the application, vide impugned order and therefore, the impugned order is liable to be set aside. The assessee further submitted that it has carried out the charitable activities as from the details filed, it is clear that the assessee has not incurred even a single paisa for the religious activities, therefore, presumption of the ld. Commissioner that the intention of the assessee to utilize the funds for religious activities and thereby leaving open the possibility for future endeavors, which may involve expenditure on religious activities.
On the contrary, ld. CIT-DR refuted the claim of the assessee by submitting that the impugned order does not suffers from any perversity, impropriety and/or illegality. Hence, the appeal of the assessee may be dismissed.
Heard the parties and perused the material available on record. The Assessee though not complied with the show cause notice dated 13.11.2024, however, by filing its reply on 18.11.2024 submitted a letter dated 17.11.2024 before the Ld. Commissioner and claimed that it has not carried out any religious activities and all activities carried out are of charitable activities.
7.1 We have given thoughtful consideration to the observation of ld. Commissioner and claim made by the Assessee. Whatsoever it may be, the fact goes to show that the assessee neither amended the object clause i.e. 3(23) as objected to by the ld. Commissioner nor replied the final show cause notice dated 13.11.2024 in its right prospective and proper manner. Even otherwise the Ld. Commissioner before holding the clause 3(23) of the object is in violation of the statutory provisions and/or rejecting the application filed by the Assessee, has not given any reasonable opportunity of being heard to the Assessee.
7.2 Thus considering the aforesaid facts in totality, as the application filed by the assessee in Form No.10AB was neither complete nor accompanied by the relevant documents, as observed by the ld. Commissioner in para No.3 and the Assessee has not been any opportunity to amend the memorandum of association/objects and/or to delete the object clause no.3(23), as objected to by the ld. Commissioner, we are inclined to set aside the impugned order and consequently remanding the instant case to the file of the ld. Commissioner for decision afresh, suffice to say by affording reasonable opportunity of being heard to the Assessee.
In the result, appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open court on 28/02/2025.