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Facts
The assessee applied for approval under Section 80G of the Income Tax Act. The CIT(Exemption) rejected the application and cancelled the provisional approval due to the assessee's failure to respond to notices requesting information and clarification regarding discrepancies in its activities.
Held
The Tribunal, in the interest of justice, restored the issue to the file of the CIT(Exemption). It directed the CIT(E) to grant the assessee one final opportunity to submit the requisite details and substantiate its case, with the CIT(E) then deciding the issue as per fact and law. The appeal was allowed for statistical purposes.
Key Issues
Whether the CIT(Exemption) was justified in rejecting the Section 80G approval application due to the assessee's non-compliance, or if the assessee should be afforded another chance to present its case.
Sections Cited
80G, 80G(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
This appeal filed by the assessee is directed against the order dated 03.02.2025 of the Ld. CIT(Exemption), Pune rejecting the application for 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 19.09.2024 for approval under clause (iii) 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 fulfillment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act, a notice was issued through ITBA portal on 05.11.2024 requesting the assessee to upload certain information / clarification.
On verification of the details submitted by the assessee, the Ld. CIT(E) noted various discrepancies for which another notice was issued to the assessee asking the assessee to explain on account of those discrepancies. However, there was no response from the side of the assessee for which the Ld. CIT(E) rejected the application for grant of approval u/s 80G of the Act and also cancelled the provisional approval granted earlier by observing as under: “6. Since, the assessee has not furnished any explanation to the discrepancies communicated to it, it is presumed that the assessee has nothing to say in the matter.
7. Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of sub- clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 as well as the provisions of Rule 11AA(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is unable to draw any satisfactory conclusion about the genuineness of activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act.
In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 18/10/2022 under clause (iv) for first proviso to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.”
Aggrieved with such order of Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds:
1. The Id CIT Exemption erred in law and on facts in rejection of application for Approval u/s 80G without considering the facts and circumstances of the case.
2. The appellant prays for opportunity so as to explain its case.
3. The appellant craves leave to add alter modify or substitute any ground of appeal the time of hearing.
The Ld. Counsel for the assessee at the outset submitted that due to non compliance to the second notice issued by the Ld. CIT(E), he rejected the application for approval u/s 80G of the Act and also cancelled the provisional approval granted earlier. She submitted that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Ld. CIT(E). She accordingly submitted that in the interest of justice, the assessee should be given an opportunity to substantiate its case by filing the requisite details before the Ld. CIT(E).
The Ld. DR on the other hand heavily relied on the order of Ld. CIT(E).
We have heard the rival arguments made by both the sides and perused the order of the Ld. CIT(E). It is an admitted fact that despite sufficient opportunities granted by the Ld. CIT(E), the assessee did not respond to the 2nd notice for which he rejected the application for grant of approval u/s 80G of the Act, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that due to the mistake of the accountant of the trust, those details could not be filed. It is also her submission that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Ld. CIT(E) to his satisfaction. 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(Exemption) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details to his satisfaction and decide the issue as per fact and law. The assessee is also hereby directed to submit the details as called for by the Ld. CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(Exemption) is at liberty to pass appropriate order as per law. 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 24th April, 2025.