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Facts
The assessee Trust applied for registration under Section 80G(5)(iii) of the Income Tax Act. The CIT(E) issued a show-cause notice alleging the Trust's objects were for a particular community and not the public at large, which contradicted Section 80G(5)(iii). The assessee sought an adjournment, but later the CIT(E) rejected the application ex-parte.
Held
The Tribunal held that while the assessee did not comply with the show cause notice, in the interest of natural justice, an opportunity should have been provided. Therefore, the matter was set aside.
Key Issues
Whether the CIT(E) erred by rejecting the application without providing sufficient opportunity for hearing and clarification, and if the Trust's objects benefit the public at large.
Sections Cited
80G(5)(iii), 80G(5)(iv)
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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD
O R D E R
PER SHRI NARENDRA PRASAD SINHA, AM:
This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Exemption), Ahmedabad (in short “the CIT(E)”) dated 19.12.2024 in the proceeding under Section 80G(5)(iii) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the assessee had filed an application in Form No.10AB on 27.06.2024 for registration of the Trust under Section 80G(5)(iii) of the Act. Earlier the assessee was allowed provisional registration under Section 80G(5)(iv) of the Act from A.Y. 2023-24 onwards. The Ld. CIT(E) noticed that the object of the Trust was Shri Adtalish Gam Kadava Patidar Samaj vs. CIT (Exemption) Page 2 of 4 confined towards benefit of a particular religious community or caste i.e. Shri Adtalish Gam Kadava Patidar Samaj only and not for the benefit of public at large. This, according to the Ld. CIT(E), contradicted the provisions of Section 80G(5)(iii) of the Act. Accordingly, a show cause notice was issued to the assessee, in response to which the assessee has sought adjournment. Thereafter, no compliance was made by the assessee and the Ld. CIT(E) had rejected the application of the assessee vide the impugned order.
Now the assessee is in appeal before us. The following grounds have been taken in this appeal: -
1. That on facts, and in the law, the learned CIT (Exemption) has grievously erred in not providing reasonable and sufficient opportunity of hearing and in rejecting the application for approval u/s.80G(5)(iii) of the Act vide ex-parte order.
2. That on facts, and in law, the learned CIT (Exemption) has grievously erred in holding that the appellant is not entitled to approval u/s.80G as it is not for the benefit of public at large, but only for benefit of particular caste/religion. The appellant craves liberty to add, alter, amend any ground of appeal.” 3.
Shri Mehul K. Patel, Ld. AR of the assessee, submitted that the assessee was not allowed any reasonable and sufficient opportunity by the Ld. CIT(E). He explained that vide show cause notice dated 29.11.2024 only four days’ time was given for compliance and accordingly, the assessee had requested for further time. However, considerable time was taken to consult the Counsel and prepare the reply to the show cause notice. In the meanwhile, the Ld. CIT(E) vide the impugned order had rejected the application of the assessee without waiting for the clarification of the assessee. He further submitted that the Shri Adtalish Gam Kadava Patidar Samaj vs. CIT (Exemption) Page 3 of 4 Ld. CIT(E) was not correct in rejecting the application only on the basis of one of the clauses of the object as reproduced in his order. The Ld. AR, therefore, requested that the assessee may be allowed another opportunity to explain the objects by setting aside the matter to the file of the Ld. CIT(E).
Per contra, Shri Rignesh Das, Ld. CIT-DR, had no objection if the matter was set aside to the Ld. CIT(E) for allowing one more opportunity to the assessee.
We have considered the rival submissions. It is found that the Ld. CIT(E) had allowed only one opportunity to the assessee vide show cause notice dated 29.11.2024 to which the assessee had sought adjournment. It is true that the assessee did not make any compliance before the Ld. CIT(E). However, in the interest of natural justice, another opportunity should have been allowed by the Ld. CIT(E) to the assessee to explain the objects of the Trust. Therefore, we deem it proper to set aside the matter to the file of Ld. CIT(E) with a direction to allow one more opportunity to the assessee to explain the objects of the trust and also about the satisfaction of the conditions as stipulated under Section 80G(5) of the Act.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open Court on this 27th November, 2025.