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Facts
The assessee's appeal is against the order of the CIT(E) for AY 2022-23. The CIT(E) rejected the assessee's application for exemption under section 80G of the Income Tax Act, 1961, citing various discrepancies and lack of evidence regarding the charitable nature of activities.
Held
The Tribunal set aside the impugned order of the CIT(E) and remitted the matter back for de novo adjudication. The assessee was directed to cooperate with the CIT(E) and provide necessary documents.
Key Issues
Whether the CIT(E) erred in rejecting the application for exemption under section 80G without considering the submissions and providing sufficient opportunity. Whether the activities of the assessee are charitable or religious.
Sections Cited
Section 80G, Section 12AB, Section 12A, Rule 17A(2)(k), Rule 11AA(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 28/01/2025 Date of Order – 17/02/2025
O R D E R PER K.M. ROY, A.M.
This appeal by the assessee is against the impugned order dated 28/09/2024, passed by the learned Commissioner of Income Tax (Exemption), Pune, [“learned CIT(E)”], for the assessment year 2022–23.
In its appeal, the assessee has raised following grounds:– “1. That on facts and circumstances of the case, Ld. CIT Exemption erred in not considering the details/submissions provided by the assessee and rejecting the application for exemption u/s 80G.
2. That on facts and circumstances of the case, Ld. CIT Exemption ought to have seen that assessee is carrying on charitable activity and not religious activity.
That on facts and circumstances of the case, the rejection is unjustified as enough opportunity of being heard were not given to the Assessee.
Any other ground that may be raised during hearing of appeal.”
2 Aacharya Shri Rushirajbaba Pratishahan ITA no.592/Nag./2024
The relevant operating portion of the findings of the learned CIT(E) recorded in its impugned order from Para–4 to 11, are reproduced below for reference:– “4. On verification of the details submitted by the assessee in response to the said notice and the documents submitted along with the application, various discrepancies were noticed. Another notice was then issued to the assessee on 05/08/2024 and the discrepancies were duly communicated to it as reproduced below: "(i) It is seen that you have obtained regular registration under section 12AB of the Act under clause (i) of section 12A(1)(ac) of the Act but it seems that you were not registered under section 12A / 12AA of the Act prior to 01/04/2021 since the copy of such registration is neither attached with the original application while applying for such registration nor during the present proceedings. Therefore, it seems that you have obtained the said registration by mis-representation of facts and the said registration is not a valid registration. Therefore, the condition under clause (i) of section 80G(5) of the Income Tax Act, 1961 is not fulfilled. (ii) As per the provisions of Rule 17A(2)(k) of the Income Tax Rules, 1962, the application in Form No. 10AB shall be accompanied by note on activities giving details of activities actually carried out but you have failed to comply with those provisions. You ought to be submit the details of actual activities carried out in the last 3 years or since inception, whichever is later. Further, the supporting evidence of the activities in the form bills and photographs are also not submitted by you. In absence of any such tangible material in respect of details and proof of activities being carried out, it is not possible to ascertain as to whether the activities are charitable and in line with the objects of the trust/institution. (iii) You were specifically requested to furnish year-wise list of all donations received (including corpus donations etc.) during the last 3 years / since inception, whichever is later viz. name of donor, address of donor, amount of donation, mode of donation / receipts etc. vide initial notice. You have not furnished the details as required in above format. Please furnish the same. (iv) Kindly furnish evidences claiming expenses on charitable activities such as bills/vouchers/invoices alongwith photographs of activities carried out by your trust."
The assessee was requested to show cause as to why the application should not be rejected and why the approval granted under section 80G(5) of the Income Tax Act, 1961 should not be cancelled. The assessee was also given opportunity of being heard vide the said notice. The assessee was specifically informed that in the event of failure to comply by the due date, the application shall be liable to be rejected and the approval shall also be liable to be cancelled. The compliance to the said notice was due on 12/08/2024. The notice was duly served on the assessee through e-portal and email.
The assessee responded to the said notice on 16/08/2024 and requested for an adjournment. An adjournment was granted upto 30/08/2024 vide notice 3 Aacharya Shri Rushirajbaba Pratishahan ITA no.592/Nag./2024 dated 24/08/2024. The notice was duly served on the assessee through e- portal and email. The assessee has responded to the said notice on 26/08/204.
On verification of the details submitted by the assessee in response to the said notice, various discrepancies were noticed. Hence, another notice was then issued to the assessee on 22/09/2024 and the discrepancies were duly communicated to it as reproduced below: "(i) It is seen from your submission that you have furnish the copies of bills/invoices that are related to constructions and as per the photographs it seems that your trust has constructed a temple. This activity is purely religious in nature and not treated as charitable activity. Thus, it is seen that you have made substantial expenditure on religious activities and has violated the conditions laid down u/s. 80G(5)(ii) read with section 80G(5B) of the Act. (ii) Further, the expenditure made for the above purpose is not reflecting in your financial statements i.e. neither in Income & Expenditure Account nor in Balance Sheet. Thus, the activities carried out are not synchronized with your financial statements. This raises serious concern about the genuineness of activities. Please explain with the supporting documents. "
The assessee was requested to show cause as to why the application should not be rejected and why the approval granted under section 80G(5) of the Income Tax Act, 1961 should not be cancelled. The assessee was also given opportunity of being heard vide the said notice. The assessee was specifically informed that in the event of failure to comply by the due date, the application shall be liable to be rejected and the approval shall also be liable to be cancelled. The compliance to the said notice was due on 26/09/2024. The notice was duly served on the assessee through e-portal and email. However, the assessee neither submitted explanation to the show cause notice till date nor availed the opportunity of being heard.
Since, the assessee has not furnished any explanation to the discrepancies communicated to it, it is presumed that the assessee has nothing to say in the matter.
Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of sub-clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 as well as the provisions of Rule 11AA(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is unable to draw any satisfactory conclusion about the genuineness of activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act.
In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 20/10/2021 under clause (iv) for first proviso, to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.”
The learned Authorised Representative humbly requested that one more opportunity may be afforded to her for furnishing of necessary documents, as 4 Aacharya Shri Rushirajbaba Pratishahan ITA no.592/Nag./2024 she pleaded that she had a strong case. Accordingly, we set aside the impugned order passed by the learned CIT(E) and remit the matter back to his file for denovo adjudication on merit after providing reasonable opportunity of being heard. The assessee is also directed to co–operative the learned CIT(E) and adhere to the notices to be issued by the learned CIT(E) promptly.
In the result, assessee’s appeal stands allowed for statistical purposed. Order pronounced in the open Court on 17/02/2025