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Facts
An assessee applied for Section 80G registration, but the Ld. CIT(E) rejected the application due to non-compliance with information requests and a finding that the assessee's activities were not commensurate with its objectives or the provisions of Section 80G. The assessee appealed this rejection.
Held
The Income Tax Appellate Tribunal held that the Ld. CIT(E)'s rejection order lacked specificity, as it did not clearly state which activities of the Trust were not in line with its objectives. The Tribunal decided to remit the matter back to the Ld. CIT(E) for a fresh decision after allowing the assessee a proper opportunity to be heard.
Key Issues
Whether the rejection of the application for Section 80G registration by the CIT(E) without a speaking order specifying non-commensurate activities was valid, and if the case should be remitted for fresh consideration.
Sections Cited
80G, 80G(5)(iii)
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Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVN” BENCH, VISAKHAPATNAM
Before: SHRI VIJAY PAL RAO, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
This appeal is filed by the assessee against rejection order passed by the Learned Commissioner of Income Tax (Exemption), Hyderabad [hereinafter in short “Ld.CIT(E)”] vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-25/1073235398(1) dated 13/02/2025.
Briefly stated facts of the case are, assessee has filed an e- application in Form No. 10AB seeking registration under section 80G of the Income-Tax act, 1961 (in short “Act”). Ld.CIT(E) issued Notices to the assessee in respect of proceedings under section 80G(5)(iii) of the Act, to produce the copy of Memorandum of Association/Trust deed for verification and to furnish a detailed reply on the specific information called for in the said notice. In response, assessee has submitted partial information only. Subsequently, another notice dated 26/12/2024 was issued to the assessee to submit the information including relevant documentary evidences. However, there is no compliance to the notice issued by the Ld. CIT(E). Therefore, Ld. CIT(E) by observing that the activities are not in commensurate with the activities as per objectives of the registered Deed/MOA/AOA, which is not as per the provisions of section 80G of the Act and rejected the application filed for registration U/s. 80G of the Act.
Aggrieved by the rejection order of the Ld. CIT(E), assessee filed an appeal before us by raising following grounds of appeal: -
“1. The order of the Ld. CIT(E), Hyderabad is contrary to the facts and also the law applicable to the facts of the case.
2. The Ld. CIT(E) is not justified in rejecting the application filed by appellant in Form-10AB for Registration U/s. 80G of the Act. Any other ground that may be urged at the time of haring.” 3. 4. The only issue contested by the assessee is rejection of the Registration u/s 80G, by the Ld.CIT (E). On this issue, Ld. Authorized Representative [hereinafter “Ld.AR”] submitted that the Ld. CIT(E) has denied the registration U/s. 80G of the Act because of low scale operations of the assessee during the relevant assessment year. He further vehemently argued that the scale of operations does not determine the charitable nature whereas it has to be examined whether the activities of the institution are charitable nature for granting registration U/s. 80G of the Act. Therefore, he prayed for remitting the matter back to the Ld. CIT(E) to decide the issue afresh.
Per contra, the Learned Departmental Representative (“Ld. DR”) heavily relied on the order of the Ld. CIT(E).
We have heard both the sides and perused the material available on record. We observe that Ld. CIT(E) rejected the application for grant of registration u/s 80G, of the assessee by observing as under:
“3. On perusal of the submissions made by the assessee, it is observed that activities are not commensurate with the activities as per objectives of the registered Deed/MOA/AOA, which is not as per the provisions of the section 80G of the IT Act, 1961. In view of the above, the present application in Form 10AB for registration U/s. 80G is herewith rejected.”
The Ld. CIT (E) rejected the application filed in Form-10AB for registration U/s. 80G of the Act by holding that the activities of the assessee Trust does not commensurate with the activities as per the objects of the registered Trust Deed / MOA/AOA. Before us, as argued by the Ld. AR, we are of the considered view that the Ld.CIT(E) has not categorically stated which activity of the Trust does not commensurate with the objects of the Trust Deed by passing a speaking order. The Ld.CIT(E) has casually observed without stating which of the objects does not commensurate with the objectives of the Trust Deed. After considering the objects of the Trust cited by Ld AR, we consider deem it fit to remit the issue to the file of the Ld. CIT(E) for fresh consideration after providing reasonable opportunity to the assessee. Accordingly, appeal of the assessee is allowed for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the open Court on 20th May, 2025.