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Facts
The assessee, Snehbandh Foundation, applied for regular registration under Section 12AB and approval under Section 80G(5) of the Income Tax Act. The CIT(E) rejected both applications, citing dissatisfaction with the genuineness of activities and lack of Charity Commissioner sanction for a loan taken from a trustee.
Held
The Tribunal noted that the assessee was not given a proper opportunity to clarify the issue of the loan. Relying on a coordinate bench decision, the Tribunal held that rejection solely based on the lack of sanction for a temporary loan from a trustee might be incorrect.
Key Issues
Whether the rejection of registration and approval solely on the grounds of lack of Charity Commissioner's sanction for a temporary loan from a trustee, without affording adequate opportunity to the assessee, is justified?
Sections Cited
12AB, 80G(5), 12A
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & MS. ASTHA CHANDRA
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeals at the instance of assessee as per the grounds of appeal raised in the instant appeals and 2501/PUN/2024 are against the rejection of applications for regular registration u/s.12AB(1)((b)(ii) and approval u/s.80G(5) of the Act respectively framed by ld.CIT(E) evenly dated 30.09.2024.
2. At the outset, Ld. Counsel for the appellant requested for affording one more opportunity to file the requisite details so as to prove the genuineness of the activities carried out by the appellant and also to file the details regarding sanction of the Charity Commissioner in respect of loans taken from the trustee Mrs. Neena Pandurana Joshi. Reference was also made to the decision of Coordinate Bench, Nagpur in the case of Prerana Samajik Sanskrutik Bahuddeshiya Shikshan Sanstha Vs. CIT(E) in order dated 09.07.2024 in support of the contention that if the appellant works for a noble cause then small borrowings made as a temporary arrangement which are not availed from banks or financial institutions does not violate any provisions of Maharashtra Public Trust Act, 1960 or any provisions of Income-tax Act, 1961.
On the other hand, ld. Departmental Representative supported the impugned orders passed by the authorities.
We have heard the rival contentions and perused the record placed before us. We notice that the appellant is a Public Trust located at Sangli with the object to formulate plan, promote, undertake, expand follow up on family welfare and medical relief including running of operating clinics/hospitals, healing and care centres etc. Appellant trust applied for regular registration u/s.12A r.w.s.12AB of the Act on Form No.10AB on 25.03.2024 and also applied for approval u/s.80G(5) of the Act on the same date. However, ld.CIT(E) rejected both the applications on being not satisfied with the genuineness of the activities of the appellant trust and also for not having the sanction of the Charity Commissioner for the loans taken from the trustee during the year. We also notice that proper opportunity of hearing was not afforded to the appellant for furnishing any clarification on the issue of loan taken by it. It has been argued by the ld. Counsel for the appellant that unsecured loan is taken from the trustee of the appellant trust and is a temporary loan and placing reliance on the decision of Coordinate Bench in the case of Prerana Samajik Sanskrutik Bahuddeshiya Shikshan Sanstha (supra) it is claimed that the appellant’s application u/s.12AB should not have been rejected merely for not receiving the sanction of the Charity Commissioner for the temporary loan taken during the year.
We therefore considering the facts and circumstances of the case deem it proper to remit the issue of regular registration u/s.12AB as well as approval u/s.80G(5) of the Act for denovo adjudication by ld.CIT(E) who shall afford reasonable opportunity to the appellant to prove the genuineness of the activities and ld.CIT(E) shall also deal with the issue on temporary loan taken from the trustee in light of the decision of Coordinate Bench in the case of Prerana Samajik Sanskrutik Bahuddeshiya Shikshan Sanstha (supra) and decide in accordance with law. Effective grounds raised by the appellant in both the appeals are allowed for statistical purposes.
In the result, both the appeals of the appellant are allowed for statistical purposes.
Order pronounced on this 02nd day of May, 2025.