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Facts
The assessee trust filed an application in Form No. 10AB for approval under Section 80G(5)(iii) of the Income-tax Act, 1961. The CIT(E) rejected the application, holding that the trust's objects were religious and not solely charitable, and that the assessee had not filed a proper submission in response to a show-cause notice. The assessee appealed this order.
Held
The Tribunal noted that the assessee's detailed submission was filed on the same day the CIT(E) passed an ex-parte order without considering it. Emphasizing the principles of natural justice, the Tribunal decided to provide the assessee another opportunity to present its case.
Key Issues
Whether the CIT(E) erred in rejecting the application for approval under Section 80G without considering the assessee's submission, thereby violating principles of natural justice.
Sections Cited
80G(5)(iii), 80G(5), 80G(5)(ii), 2(15), 80G(5B), Rule 11AA(1), Rule 11AA(2), Rule 34 of ITAT Rules, 1963
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Before: MS SUCHITRA RAGHUNATH KAMBLE & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R PER BIJAYANANDA PRUSETH: This appeal by assessee emanates from the order dated 17.12.2024, passed by the Commissioner of Income-tax (Exemption), Ahmedabad [in short, ‘CIT(E)’], wherein the CIT(E) rejected the application filed in Form No.10AB for approval u/s 80G(5)(iii) of the Income-tax Act (in short, ‘the Act’). 2. The grounds of appeal raised by assessee are as under: “(1) On the facts and in the circumstances of the case and in law, the Ld. CIT, EXEMPTION, AHMEDABAD has erred in overlooking entire online submission dated 17/12/2024 filed towards SCN and issuing a premeditated order declining application for the approval u/s. 80G(5) of the Act. (2) On the facts and in the circumstances of the case and in law, the Ld. CIT, EXEMPTION, AHMEDABAD has erred in concluding that the objects of the trust are in religious nature and thereby declining approval u/s.80G(5) of the Act. (3) The Appellant reserves the right to add, amend, replace or delete any grounds of appeal on or before conclusion of the appeal.
Brief facts of the case are that the assessee filed application in Form No.10AB under sub-clause (B) of clause (iii) of first proviso to sub-section (5) of section 80G of the Act. The CIT(E) had issued notices of hearing on 17.09.2024 and 25.11.2024. He has discussed legal background of Rule 11AA(1), 11AA(2) along with section 80G(5) of the Act. He noted that the date of application for registration for approval in Form No.10AB was 28.06.2024 and the date of provisional approval was 29.01.2024 for the period from AY.2024-25 to 2026- 27. Thereafter, the CIT(E) examined the objects of the trust, which is at page 8 of the order and held that the objects of the trust are religious in nature and not only charitable in nature as per section 80G(5) of the Act. In response to the show cause notice dated 25.11.2024, the appellant had neither filed any submission nor sought any adjournment. Hence, the application was decided based on material available on record. The CIT(E) observed that Object of the trust was religious in nature involving “religious functions”, which clearly contravenes main conditions u/s 80G(5) of the Act. He referred the provisions of section 80G of the Act and held that appellant was not established only for charitable purposes and there should not be transfer or application of funds for any purposes other than a charitable purpose, subject to concession granted u/s 80G(5) of the Act. The CIT(E) relied on the decisions of various Tribunals in cases of (i) Yug Chetna Parmarth Trust, 44 taxmann.com 446 (Agra – Trib.) and (ii) OM Tapovan Charitable Trust vs. CIT(E), 2 Dhatri Ekta Charitable Trust (Ahd – Trib.). He discussed the provisions of section 2(15), 80G(5) and 80G(5B) and 80G(5)(ii) of the Act and referred the decision of Hon’ble Supreme Court in case of Director of Secondary Education vs. Pushpendra Kumar, AIR 1998 SC 2230. It was observed that the appellant had violated existing main condition of sub-section (5) of section 80G, being a religious-cum-charitable trust and violated the conditions of section 80G(5)(ii) of the Act. Hence, the appellant was not entitled to get approval u/s 80G(5) of the Act. Therefore, application in Form No.10AB for approval under clause (iii) of first proviso to section 80G(5) of the Act was rejected and he also cancelled the provisional registration grated earlier.
Aggrieved by the order of CIT(E), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed a written submission containing 93 pages, which includes order of registration u/s 12AB in From No.10AD, application u/s 80G(5)(iii) in Form No.10AB and its acknowledgement and copy of trust deed in English translation. He also submitted that the documents were also provided before the CIT(E). The ld. AR further contended that the word of “religious” of object clause No.4 has been deleted by conducting an extraordinary general meeting of its members. He also submitted that assessee-trust had filed reply on 17.12.2024, but CIT(E) passed order on the same day, i.e., 17.12.2024 without going through the submission of the appellant-trust. Therefore, ld. AR requested that one more Dhatri Ekta Charitable Trust opportunity may be granted to the assessee to plead his case before the CIT(E) in the interests of justice and fair play.
On the other hand, learned Commissioner of Income-tax – Departmental Representative (ld. CIT-DR) for the revenue did not have any objection if the matter is remitted to the file of the CIT(E) for fresh adjudication.
We have heard both the parties and perused the materials available on record. We note that assessee-trust could not plead its case before the CIT(E) by submitting explanation and other details/documents as requisitioned by the CIT(E). Before us, ld. AR submitted that the CIT(E) issued only two notices on 17.09.2024 and 25.11.2024. The assessee filed its detailed submission on 17.12.2024 before the CIT(E), however, on the very same day, the CIT(E) passed an ex parte order without considering the submission of the assessee made before him. Considering all these facts, we are of the view that one more opportunity should be given to the assessee to plead its case before the CIT(E). It is settled law that principles of natural justice require that the affected party is granted sufficient opportunity of being heard to present his case. Therefore, without delving deeper into the merits of the case, in the interests of justice, we restore the matter to the file of CIT(E) for fresh adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee. The assessee is directed to furnish its submission and the relevant Dhatri Ekta Charitable Trust details/documents before the CIT(E). For statistical purposes, the appeal of the assessee is treated as allowed.
In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 21/07/2025.