GREEN ENVIRONMENT CHARITABLE TRUST,VADODARA vs. CIT (EXEMPTION), AHMEDABAD

This appeal is filed by the assessee against the order passed by the Commissioner of Income Tax (Exemption) Ahmedabad, (in short “the CIT(E)”) dated 25.10.2022, in the proceedings u/s.80G(5) of the Act.

There was a delay of 793 days in filing of this appeal. A condonation application has been filed along with affidavit of Shri Patel Kamleshbhai 2 Jayantibhai, trustee of the assessee-trust. It has been explained that the assessee was granted provisional registration for the period from AYs 2022- 23 to 2026-27. Thereafter, it had filed an application in Form No.10AB for the Act for approval u/s. 80G(5) of the Act. It has been explained that the notices were sent by the Ld. CIT(E) on the email Id of the assessee which was not regularly accessed. As a result, neither any compliance could be made nor the assessee was aware of rejection of application by the Ld. CIT(E). It was only when the intimation u/s.143(1) of the Act for AY 2024-25 was received with an adjustment, that the assessee came to know that its application u/s.80G(5) of the Act was rejected. The assessee has explained that it is carrying on genuine charitable activities and the delay in filing the present appeal was unintentional. After going through the explanation of the assessee, the delay in filing the appeal is condoned.

The brief facts of the case are that the assessee is a trust carrying on charitable activities like supporting under privileged community, educational support and social welfare activities etc. The assessee had made an application for registration u/s. 80G(5) of the Act, by filing Form No.10AB on 04.04.2022. The said application was rejected by the Ld. CIT(E) vide the impugned order for the reason that the assessee had incurred religious expenditure in excess of threshold limit of 5% and, therefore, it was no eligible for approval u/s.80G(5) of the Act.

Aggrieved with the Order of the Ld. CIT(E), the assessee is in appeal before us.

Shri Sarju Mehta, Ld. AR appearing for the assessee submitted that there was an inadvertent error in Form No.10AB filed by the assessee, wherein a classification was shown as religious expenditure due to the mistake of the clerk. He explained that no such religious expenditures were incurred and neither any religious expenditure was appearing in the assessee’s audited Financial Statement. The erroneous classification was due to the clerical mistake and that the assessee could not comply before the Ld. CIT(E) for the reason that the notices were received on the email Id which was not accessed. He, therefore, requested that the assessee may be allowed another opportunity to rectify the error in the application and explain the matter before the Ld. CIT(E).

Per Contra Shri Alpesh Parmar, CIT. DR submitted that he had no objection if the matter was set-aside to the file of the Ld. CIT(E).

We have carefully considered the submissions of the assessee. We do not find the explanation of the assessee for non-compliance before the Ld. CIT(E) as reasonable. When the assessee had filed its application online, it was incumbent upon it to keep on checking its email account for the notices received from the Ld. CIT(E). The assessee has shown laxity in not complying before the Ld. CIT(E), with a lame excuse for the same. We therefore, deem it proper to impose a cost of Rs.5,000/- upon the assessee which should be deposited into “Prime Minister National Relief Fund” within a period of 15 days from the receipt of this order.

A copy of Form No.10AB filed by the assessee has been brought on record in the paper book filed. It is found from there that at Sr.No.27a. the assessee has stated ‘NO’ to the query “Whether the fund or the institution has incurred any expenditure of religious nature?”. While denying any expenditure of religious nature, the assessee at Sr. No.27b. had provided the following details for three previous years’ expenditure as under: Sr.No Financial Total Expenditure of Percentage to Year Income Religious Total Nature Income(%) 1. 2020 Rs.25,500 Rs.25,450 99.8 2. 2019 Rs.9,711 Rs. 9,679/- 99.67 3. 2018 Rs.8,445 Rs.8,375 99.17

It is thus found that while the assessee had categorically stated that no expenditure of religious nature was incurred, it had provided details of expenditure of religious nature in the Form itself. On the basis of this information the Ld. CIT(E) had concluded that the assessee had incurred expenditure of religious nature in excess of prescribed limit of 5% and had Asst. Year NA

The assessee has now submitted that the information as provided at Sr. No.27b in Form No.10AB was due to the clerical mistake. The mistake is apparent from the details as furnished by the assessee in Sr. Nos. 27a & 27b, which are self-contradictory. In the interest of justice, we, therefore, deem it proper to set-aside the matter to the file of the Ld. CIT(E) with a direction to allow one more opportunity to the assessee to rectify the mistake in Form No. 10AB and to provide the documents and details as required, subject to payment of cost as directed earlier. At the same time, the assessee is also directed to co-operate fully and respond to the notices issued by the Ld. CIT(E) and provide the necessary clarification/details as requisitioned by him. In case, the assessee fails to comply before the Ld. CIT(E), he will be at liberty to decide the matter on merits on the basis of materials available on record.

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