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Facts
The assessee, a trust, applied for registration under Section 80G(5) of the Income Tax Act, 1961. The CIT(Exemption) rejected the application, citing a lack of supporting documentary evidence for charitable activities and expenses. The assessee argued that they had filed all necessary documents and that the rejection order was passed in back date, violating principles of natural justice.
Held
The Tribunal held that the assessee should be given an opportunity to explain its case before the CIT(E) to uphold the principles of natural justice. Therefore, the impugned order was set aside, and the application was restored to the CIT(E) for reconsideration.
Key Issues
Whether the CIT(Exemption) erred in rejecting the application for registration without providing a proper opportunity for the assessee to present supporting evidence and explain its activities, thus violating the principles of natural justice.
Sections Cited
80G(5), 12AB, 17A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee is directed against the order of the Learned Commissioner of Income-tax (Exemptions), Lucknow dated 18.12.2024. The assessee has raised the following grounds of appeal: -
“That the Assessee is not agreed with the order of worthy Pr. CIT Exemption on the following grounds: -
1. The Ld. CIT exemption has passed a rejection order on 31-12-2024 in back date digitally signed and communicated to us on 31-12-2024. The assessee filed all the necessary documents on 20-11-2024 vide Ack. No. 718836021201124, when the online portal window was open. However, in spite of filing of all the requisite documents on the online portal, the Ld. CIT exemption did not consider all the documents and passed an erroneous order having DIN: TBA/EXM/F/EXM45/2024-25/1071341789 (1) on 31-12-2024 by rejecting the application in back date i.e. 18-12-2024.
2. The Ld. CIT(Exemption) has mentioned “in the income expenditure account filed for FY 2023-24 it is noted that gross receipt is at Rs 6,13,485/- and expenses shown to have incurred at Rs 3,02,255/-. On different head but no supporting documentary evidences have been filed in support of the claim". The assessee has uploaded all the invoices related to the above expenses which was ignored by the officer. And even if there was some discrepancy, the assessee was not given the opportunity of heard.
Page 2 of 4 Therefore, the assessment/order is bad in Law as the Ld. CIT exemption has made it flagrantly violating the Principle of Natural Justice. That the appellant craves leave to amend any of the GROUNDS OF APPEAL on or before the final hearing. PRAYER: - In View of the foregoing facts, it is respectfully prayed that the Hon’ble Tribunal may be pleased to: a) Quash the order dated 18-12-2024 passed by the Worthy CIT exemption Lucknow. b) Pass such other order or orders as may be deemed fit and proper in the facts and circumstances of the case.”
2. The facts giving rise to the present appeal are that the assessee is a trust had filed an application for registration u/s 80G(5) of the Income Tax Act, 1961 (“the Act”, for short) on 15.06.2024 along with in Form No. 10AB under Rule 17A of the Income Tax Rules, 1962 (“the Rules”, for short). The said application has been dismissed by the Ld. CIT(E) on the basis that he was not satisfied about the nature of activity being carried out by the assessee. Therefore, the application of the assessee was rejected. Aggrieved against this, the assessee is in appeal before this Tribunal.
The Ld. Counsel for the assessee vehemently argued that the action of the Ld. CIT(E) is arbitrary and against the facts of the case. Ld. Counsel further reiterated the submissions as made in the written submissions. He further contended that the Ld. CIT(E) failed to consider the supporting evidences filed by the assessee. Ld. Counsel submitted that had Ld. CIT(A) considered the evidences regarding activities carried out by the assessee trust he would have allowed the application. Therefore, he prayed that the order of the Ld. CIT(E) may be set aside and the Ld. CIT(E) be directed to grant registration u/s 80G(5) of the Act.
Page 3 of 4 4. On the other hand, the Ld. CIT-DR opposed the submissions and supported the order of lower authorities and submitted that there is no infirmity in the order of the Ld. CIT(E).
We have heard rival submissions and perused the material available on record. We find that the Ld. CIT(E) in para no. 5 & 6 of his impugned order and decided the issue by observing as under: - “5. As per trust deed above are object. A perusal of part reply, it is noticed that no expenditure incurred on charitable activities, as per object mentioned in the trust deed. In the income expenditure account filed for FY 2023-24 it is noted that gross receipt is at Rs 6,13,485/- and expenses shown to have incurred at Rs.3,02,255/- on different head but no supporting documentary evidences have been filed in support of the claim. Vide questionnaire assessee was required to furnish supporting documentary evidences in support of the charitable activity carried out if any, but assessee failed to file the same. In absence of above details genuineness of charitable activity could not get established. As discussed above assessee failed to furnish documentary evidences, viz. bills, vouchers, photos, affiliation, license, fire NOC and news coverage by media etc., to substantiate the charitable activities claimed to have been carried out by the Trust/Society Non Profit Company in the recent past/last three years for which expenditure has been booked in the Income and Expenditure accounts of the relevant years as onus to prove the genuineness of the activities and charitable purpose lies on the Trust/Society/Non Profit Company. In the absence of sufficient evidence with regards to the genuineness of activities claimed to have been carried out for charitable purposes as per the objects of the trust, it is considered activities claimed to have been carried out by the Trust/Society/Non Profit Company are not genuine. A Perusal of material available on record, it is noticed that assessee failed to file bill and vouchers of expenditure incurred on charitable activities, if any, & details of evidences regarding activities as per object mentioned in the trust deed/memorandum of association, therefore assessee failed to file any supporting documentary evidences with regard to incurred expenses on charitable activity, and also failed to file Supporting documentary evidences with regard to commencement of charitable activities as per object of the trust, Therefore no verification of the object as per the trust deed with the activities carried out, if any, could be made. Thus the genuineness of the activities, as per object of the trust deed, does not get established. Section 12AB makes it very clear that before granting registration under this section, the Commissioner has to satisfy himself about the genuineness of the Activities of the trust or institution and also he has to verify that these activities are in Consonance with the object of the trust or institution.
7. As discussed above, the applicant has failed to file documentary evidences to enable me to satisfy about the genuineness & commencement of its charitable\activities and failed to verify these activities are in consonance with its objects.”
Before us, the Ld. Counsel for the assessee has drawn our attention towards the evidences filed before the Ld. CIT(E) in Page 4 of 4 support of the activities carried out by the assessee. Having considered the nature of activity being carried out and the evidences filed in form of invoices etc. We are of the considered view that the assessee should be given an opportunity to explain its case before the Ld. CIT(E) to sub-serve the principles of natural justice. Therefore, the impugned order is hereby set aside the order of the Ld. CIT(E) and restore the application filed by the assessee to the Ld. CIT(E) for considering the same. Needless to say that the Ld. CIT(E) would afford reasonable opportunity of being heard to the assessee to explain its case. Grounds of appeal of the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 20/05/2025.