SHREE GOVARDHAN SEVA TRUST,VADODARA vs. THE CIT(EXEMPTION), AHMEDABAD

Ld. DR though objected to the condonation of delay, but considering the smallness of the delay and further taking note of the fact that the assessee does not benefit by not filing appeal before us but is in fact highly prejudiced by the order passed by Ld.CIT(E) denying grant of approval u/s 80G of the Act, in the interest of justice, we consider it fit to condone the delay. Order was pronounced in the open Court.

The facts of the case reveal that the assessee had filed an application for approval under Clause (3) of the 1st Proviso to Subsection (5) of Section 80G of the Act in Form No.10AB, which was denied by the Ld. CIT(E) noting that the objects of the assessee trust did not fulfill the condition required by law, of the fund or institution being established only for the purpose of carrying out charitable activities. He noted that the assessee was also indulging in certain religious activities and accordingly, noting Explanation (3) to Section 80G of the Act which excluded [Shree Govardhan Seva Trust vs. CIT(E)] - 3 – any purpose wholly or substantially of religious nature from the character of charitable purpose, he rejected assessee’s application seeking approval u/s.80G(5) of the Act.

During the course of hearing before us, Ld. Counsel for the assessee pointed out that in terms of the provisions of Section 80G(5B) of the Act, any fund or institution incurring expenditure of religious nature not exceeding 5% of its total income, shall be deemed to be an institution carrying out charitable activities. He pointed out that the Ld. CIT(E) had also noted this Section introduced in the Statute w.e.f. 01.04.2000 at para 2 of his order. Ld. Counsel for the assessee contended that in the proceedings before the Ld. CIT(E) three notices were issued to the assessee, two of which, were complied with. In response to the 3rd notice dated 24.09.2024, the assessee had stated to the Ld. CIT(E) that none of its activities, identified by the Ld. CIT(E) as being religious in nature, were actually of the said nature. He contended that the trustees had even filed an affidavit to this effect to the Ld. CIT(E) but the same could not be filed before him in time and in the meanwhile, the Ld. CIT(E) passed his order on 29.09.2024. He contended that the assesee on 2nd October, 2024 submitted this response to the last notice issued to it on 24.09.2024, but, the Ld. CIT(E) in the meanwhile had passed his order refusing to grant approval to the assessee u/s.80G(5) of the Act. His contention, therefore, was that the order had been passed without hearing the assessee and that the assessee was capable of demonstrating and [Shree Govardhan Seva Trust vs. CIT(E)] - 4 – establishing with facts, that they were no religious activities being carried out by the assessee and if any they did not exceed 5% of the total income of the assessee trust and hence, therefore, the assessee was to be treated as existing for only charitable purpose in terms of Section 80G(5B) of the Act. In this regard, he filed a screenshot of the view response to the notice issued to the assessee on 24.09.2024 submitting its response on 2nd October, 2024 from its portal, containing the record of the present proceeding. Ld. Counsel for the assessee contended that the matter, therefore, needed to be re-considered by the Ld. CIT(E) and prayed, therefore, for restoration of assesee’s application to the file of the Ld. CIT(E).

Ld. DR, though, vehemently objected to the same, he was however unable to controvert the contention of the Ld. Counsel for the assessee that against the last notice issued to the assessee, the Ld. CIT(E) had passed order before waiting for the response of the assessee and that in any case, the nature of the assessee’s objects and activities being religious in nature had not been examined in terms of the provisions of Section 80G(5B) of the Act by the Ld. CIT(E).

In view of the above, therefore, we agree with the Ld. Counsel for the assessee that the assessee’s application seeking approval u/s.80G(5) of the Act needs to be re-considered by the Ld. CIT(E). The Ld. CIT(E) is directed to give due opportunity of [Shree Govardhan Seva Trust vs. CIT(E)] - 5 – hearing to the assessee before arriving at his conclusion that the assessee’s objects and activities were partly religious in nature more particularly in the light of the provisions of Section 80G(5B) of the Act and its interpretation by various judicial authorities.

In the result, appeal filed by the assessee is allowed for statistical purposes.