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Facts
The assessee trust applied for approval under section 80G of the Income Tax Act. The CIT(E) rejected the application, finding that the assessee's expenses on religious activities exceeded 5% of its total income, and thus did not qualify for the exemption.
Held
The Tribunal held that the CIT(E) did not consider all the details submitted by the assessee, particularly those filed on 23.03.2025, before passing the rejection order. Therefore, the matter was restored to the CIT(E) for fresh consideration.
Key Issues
Whether the CIT(E) correctly rejected the application for approval under Section 80G without considering all submitted details, and whether the assessee's expenses were genuinely for charitable purposes.
Sections Cited
80G
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
This appeal filed by the assessee is directed against the order dated 07.04.2025 of the Ld. CIT(Exemption), Pune refusing grant of approval u/s 80G of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 10.10.2024 for approval of the trust under sub clause (B) of (iv) of first proviso to sub section (5) of section 80G of the Act. With a view to verify the genuineness of the activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G of the Act, a notice was issued through ITBA portal on 28.11.2024 requesting the assessee to upload certain information / clarification. In response to the same the assessee filed the details. The Ld. CIT(E) on verification of the details filed by the assessee noticed various discrepancies for which another notice was issued. The assessee responded to the said notice and filed the details. However, the Ld. CIT(E) was not satisfied about the genuineness of the activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G of the Act for which he rejected the application for grant of approval u/s 80G by observing as under: “6. The assessee responded to the said notice and furnished the compliance on 06/03/2025. After verification of documents it is seen from the financial statements that expenses under the head "Expenditure on object of the Trust" for F. Y. 2021- 22 to 2023-24. On verification of the expenses details it is found that expenses have been made only on establishment and also religious activities. On verification of the financial statement, it is seen that almost all activities are religious in nature like Salary to Pujari, Ashram expenses, Ashram rasoda, Hanuman Jayanti, Pooja expenses, Patotsav Expenses, Bhet Dakshina etc. For instance, in FYs 2021-22 to 2023-24, out of total receipts of Rs. 20.50 Lakhs, Rs. 35.76 Lakhs and Rs 53.27 Lakhs respectively, the applicant has made expenditure on religious activities amounting to Rs. 9.62 Lakhs, Rs. 25.20 Lakhs and Rs 50.26 Lakhs which amounts to 46.93%, 70.46% and 94.31% of the total income of the respective FYs. 6.1 Thus, it is observed that the applicant has made expenditure on religious activities, which is more than 5% of the total income. Therefore, the case is also not covered under the exception provided under the provisions of sub-section (5B) of section 80G of the Income Tax Act, 1961. The provisions of said section are reproduced below: '(5B) Notwithstanding anything contained in clause (ii) of subsection (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not exceeding five percent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply.' 7. Considering the above facts discussed in the show notice and discrepancies noticed, the undersigned is not satisfied about the genuineness of activities of the assessee and fulfillment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act.
In view of the above, the application dated 10/10/2024 filed under sub clause (B) of (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 filed by the assessee is hereby rejected.”
Aggrieved with such rejection of approval u/s 80G by Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds: Ground 1: The Ld. CIT (Exemptions) erred in rejecting the application for registration under section 80G of the I. T. Act on the ground that the expenses more than 5% were incurred for religious purposes. Ground 2: The Ld. CIT (Exemptions) has not considered the reply submitted on 23/03/2025 23/03/2025 wherein it was submitted by the appellant that 97.62% expenses were incurred for charitable purpose only during the financial year 2024-25, therefore, the finding of Ld. CIT(A) is totally one sided and without any basis even without confronting the appellant. Ground 2: The Ld. CIT (Exemptions) erred in deciding percentage of expenses at his own by picking up name of head of expenses and treated all expenses under that head as religious expenses without going into real nature of expenses. Ground 3: The Ld. CIT(Exemption) did not properly appreciate the objectives and activities of the appellant, which qualify for exemption under section 80G of the I. T. Act. Ground 4: The CIT (Exemptions) failed to consider that the appellant has been carrying out genuine charitable activities as defined under the Income Tax Act, 1961, and is entitled to registration under section 80G of the I. T. Act. Ground 4: The CIT (Exemptions) failed to provide the appellant with an adequate and reasonable opportunity to respond to the issues raised in the proceedings. The appellant was not given sufficient time to address the points raised, thereby denying the right to a fair hearing. Ground 5: The CIT (Exemptions) has failed to appreciate the submission and documentation provided by the appellant during the proceedings, and there has been a failure of natural justice in not considering the same adequately.
Ground 6: The Appellant craves leave to add, to alter, amend, or delete all or any of the aforesaid grounds of appeal on or before or at the time of hearing.
The Ld. Counsel for the assessee submitted that subsequent to the earlier details filed the assessee had also filed various other details on 23.03.2025. However, the Ld. CIT(E) has not at all considered the submissions made on 23.03.2025. He accordingly submitted that in the interest of justice, the matter may be restored to the file of the Ld. CIT(E) with a direction to consider the submissions made by the assessee on 23.03.2025 since the order was passed subsequent to the filing of further details on 23.03.2025.
The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(E) rejecting the application for grant of approval u/s 80G of the Act.
We have heard the rival arguments made by both the sides, perused the order of the Ld. CIT(E) and the paper book filed on behalf of the assessee. It is an admitted fact that the assessee has filed a reply to the second notice issued by the Ld. CIT(E). However, it is the submission of the Ld. Counsel for the assessee that the assessee has filed various other details on 23.03.2025 which were not at all considered by the Ld. CIT(E) before rejecting the grant of approval u/s 80G of the Act vide order dated 07.04.2025. It is the submission of the Ld. Counsel for the assessee that the Ld. CIT(E) should have considered the submissions made by the assessee on 23.03.2025 before arriving at his conclusions. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(E) with a direction to go through the various details filed by the assessee on 23.03.2025 and decide the issue as per fact and law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 8th August, 2025.
Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 8th August, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune
S.No. Details Date Initials Designation 1 Draft dictated on 04.08.2025 Sr. PS/PS 2 Draft placed before author 05.08.2025 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order