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Facts
The assessee, a charitable trust, sought renewal of its approval under Section 80G. The CIT(E) rejected the application and cancelled the existing approval, stating that the trust's activities did not match its objects. The assessee contended that the CIT(E) did not issue a show-cause notice and did not specify which activities were mismatched.
Held
The Tribunal held that the CIT(E) erred in rejecting the application without issuing a show-cause notice or specifying the mismatched activities. The Tribunal found that the assessee's activities, including relief to the poor, education, medical relief, and public utility, were in accordance with its objects.
Key Issues
Whether the CIT(E) correctly rejected the renewal of approval under Section 80G without issuing a show-cause notice and specifying the discrepancies in the trust's activities against its objects.
Sections Cited
80G, 2(15), 12AB
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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee trust challenging the order of the Ld.CIT(E), Bangalore dated 23/09/2024 in which the Ld.CIT(E) had rejected the application filed in form 10AB for granting the approval u/s. 80G of the Act and raised the following grounds: “1. The CIT ( Exemptions ) erred in rejecting the application of the appellant for renewal of approval under section 80G and cancellation of the approval.
2. The reason for rejecting the application and cancellation of the approval is stated in the order is stated as :- “According the section, the assessee was mandated to submit necessary documents to prove that the genuineness of the activities of the trust or institution and fulfilment of all the conditions laid down in clauses (t) to (v) of Section 80G. In the present case, the assessee has commenced the activities but the activities does not match with the objects of the trust.” In the rejection order, the CIT ( Exemptions) has not specified which activities of the trust that do not match with the objects of the Trust.
3. Before rejecting the application for approval, the CIT ( Exemption ) should have issued a show cause notice directing the appellant to clarify any matter relating to the activities of the Trust. However, no such notice had been issued to the appellant.
The activities of the trust were as follows :- (i) Relief of the poor such as charities to the sick and poor (ii) Advancement of education such as educational assistance to students hailing from economically backward families. (iii) Medical relief such as medical assistance and support of the poor and sick. (iv) Activity of public utility service such as care of stray animals. 5. Under section 2(15) charitable purpose is defined as follows :- “Charitable purpose includes relief of the poor, education, yoga, medical relief preservation of environment and advancement of any other object of general public utility” 6. The first three activities of the Trust are covered by the first, second and third limbs of the definition of charitable purpose as per Section 2(15) and the fourth activity is covered by the sixth limb of the definition. 7. The definition of charitable objects as per section 2(15) is inclusive and not an exhaustive. Object clause 5(e )(8) of the trust deed provides for engaging in any other activities of public utility. Caring of stray animals is a public utility service which perfectly covered by the sixth limb of the definition of charitable purpose.
The CIT ( Exemptions ) did not issue a show cause notice before rejecting the application. As per Clause (ii)(b)(B) of the 2'd proviso to the sub-section (5) of Section 80G, before rejecting application. for approval or cancelling approval, the authority concerned should have given a reasonable opportunity to the appellant for being heard.However, no such opportunity had been given by the CIT(Exemptions ) to the appellant. If opportunity had been given to the appellant, proper clarification on the object and activities of the Trust could have been provided.
9. For these grounds and other grounds that may be raised at the time of the hearing of the appeal petition, we request you to kindly grant renewal of the approval under section 80G to the appellant.”
The brief facts of the case are that the assessee is a charitable trust registered u/s. 12AB of the Act and also got provisional approval u/s. 80G of the Act for the period from 13/03/2023 to 31/03/2025. Thereafter, the assessee filed an application for renewal of the approval granted u/s. 80G of the Act. The Ld.CIT(E) had rejected the application and also cancelled the approval granted earlier. As against the said rejection order, the assessee is in appeal before this Tribunal.
At the time of hearing, the Ld.AR field a paper book consisting of the argument notes, copy of the trust deed, copy of the registration certificate in form no. 10AC and the provisional approval u/s. 80G of the Act. The Ld.AR further submitted that the registration u/s. 12AB of the Act was still in existence and the assessee is also doing various charitable activities and therefore without pointing out the activities which does not match with the object of the trust, the order of the Ld.CIT(E) rejecting the same is an illegal one.
4. The Ld.DR relied on the order of the Ld.CIT(E) and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the activities carried on by the assessee which are relief to the poor, advancement of education, medical relief and advancement of any other object of public utility etc. The assessee trust also submitted that during the financial years 2021-22, 2022-23 and 2023- 24, various activities such as medical relief, educational assistance, care of the stray animals were carried out by them and therefore the activities done by them are in accordance with the objects of the trust. We have also perused the trust deed as well as the activities carried on by the assessee trust and also the impugned order and we found that the activities carried out by assessee trust is in accordance with the objects of the trust but unfortunately the Ld.CIT(E) had rejected the said application on the ground that the activities does not match with the objects of the trust.
The Ld.CIT(E) had also not stated how the activities does not match with the objects of the trust and what are all the activities that does not match with the objects of the trust. We also found that the assessee trust appeared before the Ld.CIT(E) and submitted the details in support of their case. In spite of that, the Ld.CIT(E) had rejected the same without pointing out any specific instances or objects which are against the objects of the trust. In such circumstances we are of the view that the above said finding of the Ld.CIT(E) is not in accordance with law and also the same is against the principles of natural justice.
8. In view of the said facts, we are of pleased to set aside the order of the Ld.CIT(E) and remit the issue to the file of Ld.CIT(E) to decide the issue afresh, after hearing the assessee, in accordance with law.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 26th February, 2025.