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Facts
The Assessee, a trust, was granted provisional approval under Section 80G. The CIT (Exemptions) rejected the application for regular approval, citing that certain expenses, including payments for a portal named 'Pratidhwani' and other purchases, did not align with the trust's charitable objects and that GST numbers on some invoices did not match.
Held
The Tribunal held that the CIT (Exemptions) rejected the application without providing a fair opportunity for the Assessee to explain the expenditures and that the CIT failed to issue a show cause notice for discrepancies found. The Tribunal noted that the Assessee already enjoys exemption under Section 12AA of the Act.
Key Issues
Whether the CIT erred in rejecting the Section 80G approval without affording a proper opportunity to the Assessee to explain its expenditures and whether the mentioned expenses were for the objects of the trust.
Sections Cited
80G, 80G(5), 7, 12AA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI, VICE – & SHRI SOUNDARARAJAN K.
ORDER PER PRASHANT MAHARISHI, VICE – PRESIDENT 1. is filed by Truth Pro Foundation India (the Assessee/Applicant/Trust) against the order passed by CIT (Exemptions), Bangalore in form no. 10AD on 28.03.2025 rejecting the application of the trust in form no. 10AB filed on 30.09.2024 for approval u/s. 80G of the Act.
The Assessee is aggrieved with the same and is in appeal before us.
The brief facts of the case show that the Assessee is a trust incorporated as a company u/s. 7 of the Companies Act, 2013 on Page 2 of 5 23.03.2018. The Assessee was granted an approval u/s. 80G of the provisionally as per order dated 06.10.2021. Subsequently, it applied in form no. 10AB on 30.09.2024 for regular approval u/s. 80G(5) of the Act. The Ld. CIT (Exemptions) on examination of the details noted that Assessee is engaged in payment of school fees, distribution of educational material and provision of sports kits as well as organizing educational awareness programs. On enquiry, he found that Assessee is also running a content platform under the name “Pratidhwani”, which is a portal not found in sync with the activities of the Assessee. Further, he analyzed the bank statements wherein he found that payments are made to M/s. Eterno Infotech Private Limited which is running a vernacular content platform under the name “Daily Hunt”. There he found that the above payment does not appear to be for the objects of the Assessee. He also found that Assessee has made payment towards camera of Rs. 1,50,000/-. He found that a payment of Rs. 5,00,000/- made twice and further payment of Rs. 8,00,000/- was found for purchase of property as an advance. However, same was not found in fixed assets schedule. For this expense also there was no evidence that it is incorporated for charitable activities and objects of the Assessee. Further, he questioned some of the invoices and found that the GST number mentioned therein does not match. Therefore, he held that donations received are not utilized for the charitable objects of the company and rejected the application of the Assessee as well as cancelled provisional registration which was granted by order dated 28.03.2025.
The Ld. Authorized Representative vehemently submitted that Assessee is carrying on the educational activities and further the online portal Pratidhwani is also for the purposes of education only and therefore the conclusion drawn by the Ld. CIT (Exemptions) is devoid of merit. She further submitted that the observation made by him in paragraph no. 3.6 were not all put forth to the Assessee.
Page 3 of 5 Therefore, same could not have been used against the Assessee without furnishing it. She further stated that Assessee is carrying on the activities as per its object. She further submitted that in paragraph no. 3.5 the CIT (Exemptions) has categorically held that these are incidental expenses. She submitted that those are not incidental expenses but the expenses for the object of the trust. Accordingly, the trust should have been granted registration u/s. 80G of the Act.
The Ld. Departmental Representative vehemently supported the order of the Ld. CIT (Exemptions).
We have carefully considered the rival contentions and perused the orders of the Ld. lower authorities. We found that the Ld. CIT (Exemptions) has extracted part of the information about Pratidhwani portal. It is the claim of the Assessee that, that portal is a local vernacular language portal providing the information about the objects of the trust. It was stated that, that portal does not have anything which is not the object of the trust. The payments are also made to run particular portal. It may be a content portal which are aligned to the object of the trust or may not be aligned to the object of the trust. However, if a view is to be taken against the Assessee that the above portal does not conform to the objects of the trust, at least, the Assessee should have been given a show cause notice or should have been put to the question before it. Similar are the other observation of the Ld. CIT (Exemptions) on appraisal of the details furnished. It would have been appropriate if the Ld. CIT (Exemptions) asked the Assessee and asked to furnish about his observation made in paragraph no. 3.1 to 3.5 before rejecting the approval. It is also true that if he finds that the expenses are not for the object of the trust, the trust is also enjoying the exemption registration u/s. 12AA of the Act.
Page 4 of 5 7. Therefore, we find that the observation of the Ld. CIT (Exemptions) for rejecting the application are without giving a fair opportunity of hearing to the Assessee and giving a chance to explain about the objects of the trust and the relevant transactions. There is no finding in the order of the Ld. CIT (Exemptions) that, that the provisions of Section 80G(5) does not apply to the facts of the case of the Assessee, but still it continues to enjoy exemption u/s. 12 of the Act.
In view of the above facts, we restore the whole issue back to the file of CIT (Exemptions) with a direction to the Assessee to substantiate before him that these expenses which are listed by him at paragraph 3.1 to 3.5 are for the objects of the trust. The Ld. CIT (Exemptions) may consider them and may raise further enquiry in accordance with the law and then decide the issue whether the Assessee can be granted approval u/s. 80G of the Act or not
In view of the above, the grounds no. 1-6 of the Appeal are allowed as indicated above.
Order pronounced in the open court on 05th December 2025.