THE SULTANKHAN EDUCATIONAL TRUST,THANE vs. CIT EXEMPTION, THANE

Facts of the case in brief, are that the assessee filed an application in Form No.10AB on 16.02.2024 for approval 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 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 01.05.2024 requesting the assessee to upload certain information / clarification. In response to the same, the assessee filed certain details. 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. The assessee responded to the said notice. However, the Ld. CIT(E) noticed that the assessee failed to submit the required documents such as intent letter to prove the genuineness of the corpus donation. Further, the assessee did not file any document to justify and prove the genuineness of huge work-in-progress shown in his books of account but only submitted a copy of completion certificate issued by Mira Bhayendar Municipal Corporation for partial completion of the school. The Ld. CIT(E) therefore, issued another notice to the assessee to submit a detailed explanation on “Advance fees– UAHM & UAB” of Rs.1.90 crores shown in the books of account. The assessee in response to the same filed certain details stating that it has been received from the students for academic year 2023-14. Since no supporting documents to justify its claim were filed, the Ld. CIT(E) issued another notice to the assessee. Despite reasonable opportunity of being heard was provided by the Ld. CIT(E), the assessee failed to furnish the requisite details to his satisfaction for which he rejected the approval u/s 80G by observing as under: “6. Since, the assessee didn't furnish sought details, in the absence of such documents/details, the justification of impugned activity could not be derived. Reasonable opportunities have already been provided, to the assessee to submit the relevant documents in its support. Thus, the assessee has failed to justify the genuineness of the claimed activities.

Considering the above, and since the assessee's activities were already commenced at the time of filing the present application and it has claimed deduction under section 11 for previous year before the date of the present application, the assessee trust is not eligible to file application under clause (B) of (iv) first proviso to sub-section (5) of section 80G of the Income-tax Act, 1961.

In view of the above, the application 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 order of Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds:

The Ld. Counsel for the assessee submitted that the assessee has filed the requisite details before the Ld. CIT(E) to substantiate its case for approval u/s 80G of the Act. However, the Ld. CIT(E) was not satisfied with the submissions made by the assessee for which he issued another notice for clarification of those details. However, unfortunately, the last notice issued by the Ld. CIT(E) could not be complied with. He 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 strongly opposed the submissions made by the Ld. Counsel for the assessee.

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 on the basis of submissions made by the assessee the Ld. CIT(E) noticed certain discrepancies for which he issued notices to the assessee on various dates. Although the assessee has clarified certain issues, however, the last notice issued by the Ld. CIT(E) was not properly complied with and the documents were not submitted to the satisfaction of the Ld. CIT(E) for which he rejected the application filed for approval of deduction u/s 80G. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details. 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 grant one more 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(E) 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.