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Facts
The assessee, Dwaravathi Foundation, appealed against the Commissioner of Income Tax (Exemptions) order dated 27.12.2024, which rejected its application for regular approval under Section 80G(5) of the Income Tax Act. The rejection was based on the CIT(E)'s observation that no substantial charitable activities were being carried out by the assessee, despite the assessee submitting financial statements and activity reports to demonstrate its charitable work.
Held
The Income Tax Appellate Tribunal (ITAT) found that the CIT(E)'s order was passed mechanically without proper consideration of the evidence submitted. Noticing a pattern of similar rejections by the CIT(E) in other cases, the ITAT set aside the impugned order and remanded the matter back to the CIT(E) for re-consideration, directing that the assessee be given a fair opportunity of hearing and the application be decided within three months.
Key Issues
Whether the Commissioner of Income Tax (Exemptions) was justified in rejecting the assessee's application for regular approval under Section 80G(5) without properly considering the evidence of charitable activities and applying its mind.
Sections Cited
80G, 80G(5), 2(15), 12AB
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Income Tax Appellate Tribunal, HYDERABAD “B” BENCH, HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the assessee is directed against the order dated 27.12.2024 of the learned Commissioner of Income Tax (Exemptions), Hyderabad, whereby, the application filed by the assessee for approval u/sec.80G(5) of the Income Tax Act, 1961 [in short "the Act"], has been rejected.
2 ITA.No.338/Hyd./2025 2. The assessee has raised the following grounds of appeal :
“The order of the CIT (Exemptions), Hyderabad, dated 27.12.2024, rejecting the 80G registration, is erroneous in law and on facts.
The appellant is a registered charitable trust with objectives falling within the ambit of Section 2(15) of the Income Tax Act, making it eligible for registration under Section 80G.
The rejection is based on the observation that the no substantial activities which are charitable in nature are being carried out by the assessee, which is in violation of the provisions of the section 80G of the IT Act, 1961, despite substantial compliance and prior submission of essential documents. 4. The order fails to appreciate that the appellant has been conducting charitable activities and has submitted necessary financial records, audit reports, and expenditure details, justifying its eligibility for 80G registration. 5. The rejection is solely based on procedural lapses and should not override the substantive compliance demonstrated by the trust. 6. In light of the above, the appellant prays that the Hon'ble ITAT, Visakhapatnam, be pleased to: Grant registration under Section 80G(5) OR Remand the matter back to CIT (Exemptions), Hyderabad, for reconsideration with a fair opportunity to submit additional documents.”
3 ITA.No.338/Hyd./2025 3. CA, PV Raghavendra Kumar, Learned Counsel for the Assessee submitted that, in response to notice issued by the learned CIT(E), the assessee filed all the relevant records and details to show that, the assessee has been actively involved in carrying-out the charitable activities. He has referred to the documents filed by the assessee before the learned CIT(E), as placed in the paper book, which contains the audited financial statements of the assessee as well as the income tax return for the last 07 years. The Learned AR further submitted that, the assessee has also filed activity report before the learned CIT(E) to show that, the assessee is carrying-out the charitable activities along with list of donors and the expenditure incurred by the assessee on charitable activities. Thus, he submitted that, once the assessee has produced all the relevant record in support of the charitable activities carried-out by the assessee, then, rejecting the application filed by the assessee, merely giving the reasons that, no substantial activity, which are charitable in nature are being carried-out by the assessee, is highly arbitrary and unjustified and contrary to the record. Thus, he pleaded that, the impugned order of the learned CIT(E) be set-aside and the assessee be granted approval u/sec.80G of the Income Tax Act, 1961.
4 ITA.No.338/Hyd./2025 4. Shri Narender Kumar Naik, Learned CIT-DR on the other hand, submitted that, the learned CIT(E) has duly recorded his findings of fact that, from the submissions of the assessee no substantial activities, which are charitable in nature are found and, therefore, in view of provisions of sec.80G of the Act, the learned CIT(E) has rightly rejected the application of the assessee. He has relied upon the order of the learned CIT(E).
We have heard the rival submissions of both the parties and perused the material available on record. We find that, the assessee trust was initially granted provisional registration u/sec.80G(5) of the Act vide order dated 23.09.2021 up-to assessment year 2024-2025. Thereafter, the assessee has filed an application for regular approval u/sec.80G of the Act in Form 10AB which has been rejected by the learned CIT(E) by giving the reasons in para-3 as under :
3. On perusal of the submissions made by the assessee, it is observed that no substantial activities which are charitable in nature are being carried out by the assessee, which is in violation of the provisions of the section 80G of the IT Act, 1961. In view of the above, the present application in form 10AB for registration u/s 80G is herewith rejected 5 ITA.No.338/Hyd./2025 6. It is manifest from the reasons given by the learned CIT(E) for rejecting the application that, the order is passed mechanically without even considering and analyzing the relevant details and evidences filed by the assessee. Thus, the impugned order of the learned CIT(E) is prima facie contrary to the facts emerging from the record filed by the assessee. This Bench has taken a judicial note of the fact that, the learned CIT(E) has passed hundreds of orders in a stereotype manner giving identical reasons in para-3 of each of the order, which suggest that, there is no application of mind on behalf of the learned CIT(E) while rejecting the application filed by the Trust seeking approval u/sec.80G as well as Registration u/sec.12AB of the Act. Accordingly, in the facts and circumstances of the case, the impugned order of the learned CIT(E) is set-aside and matter is remanded to the record of the learned CIT(E) for re- consideration of the application of the assessee in light of the details and evidences filed by the assessee as well as any further requisite details or documents to be filed by the assessee. The learned CIT(E) is directed to decide the application within a period of three months from the receipt of this order, after giving proper opportunity of hearing to the assessee.
6 ITA.No.338/Hyd./2025 7. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on the conclusion of the hearing i.e. on 14th July, 2025.
Sd/- Sd/- (MADHUSUDAN SAWDIA) (VIJAY PAL RAO) ACCOUNTANT MEMBER VICE-PRESIDENT Hyderabad, Dated 14th July, 2025 VBP Copy to : S.No Addresses Dwaravathi Foundation, 6-3-19, R C M School Road, Tailorpet, Chitti Nagar, VIJAYAWADA – 520012 1 Andhra Pradesh The Commissioner of Income Tax (Exemptions), Aayakar Bhavan, Opp. LB Stadium, Basheerbagh, Hyderabad – 2 500 004. 3 Pr. CIT – Hyderabad 4 DR, ITAT Hyderabad “B’ Bench, Hyderabad 5 Guard File //By Order// //True Copy//
Sr. Private Secretary : ITAT : Hyderabad.