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Facts
The assessee-trust filed an application for approval under section 80G(5)(iii) of the Income-tax Act, 1961. The CIT(E) rejected the application, stating that the trust's objects were for the benefit of a specific community and not the public at large. The assessee appealed, claiming they were not given adequate opportunity to be heard and that the CIT(E) only considered some of the trust's objects.
Held
The Tribunal noted that the assessee could not present its case before the CIT(E) due to not receiving notices and consequently not filing documents. The Tribunal found that the CIT(E) passed an order based on available materials. Upholding the principles of natural justice, the Tribunal decided to give the assessee another opportunity.
Key Issues
Whether the CIT(E) erred in rejecting the application for approval under Section 80G(5)(iii) without granting adequate opportunity to the assessee? Whether the trust's objects are for the benefit of a specific community or the public at large?
Sections Cited
80G(5)(iii), 80G(5)(m), 80G(5)
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Before: MS. SUCHITRA RAGHUNATH KAMBLE & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by assessee emanates from the order dated 28.12.2024, 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’).
The grounds of appeal
raised by assessee are as under: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Exemption), Ahmedabad has erred in rejecting Application file in form 10AB for registration u/s. 80G(5)(iii) of the Income Tax Act, 1961 and the provisional approval u/s.80G(5)(iii) granted earlier has also been cancelled.
2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Exemption), Ahmedabad /AY.2025-26 Samast Vaishnav Vanik Parivar Surat has erred in not granting adequate opportunity to hear and passed the order, hence, the principal of natural justice is not Abide.
3. On the facts and in the circumstances of the case as well as the law on the subject, the appellant Trust is qualifying for registration u/s. 80G(5)(m) of the Income Tax Act, 1961.
4. It is therefore prayed that the CIT (Exemption) should be directed passed u/s. 80G(5)(iii) of the Income Tax Act, may please be set aside to the file of the CIT (Exemption) with appropriate direction.
5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.”
3. The brief facts of the case are that the assessee-trust filed an application for approval under clause (iii) of first proviso to sub-section (5) of section 80G of the Act in Form no.10AB electronically. The CIT(E) issued notices on 05.10.2024 and 13.12.2024. 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 27.06.2024 and the date of provisional approval was 07.04.2022 for the period from 07.04.2022 to AY.2024- 25. Thereafter, the CIT(E) examined the objects of the trust and held that the objects of the trust are to uplift Pushtimargiya Vaishnav Vanik people socially, economically, educationally and to carry on activities of public welfare and other activities for members and Vaishnav Vanik people, which contravenes main condition of clause (iii) of sub-section (5) of section 80G(5) of the Act. He held that objects of assessee trust are confined for the benefit of the particular religious community or caste not for the benefit of public at large. Hence, the applicant is not entitled to get approval u/s 80G(5) of the Act and therefore, /AY.2025-26 Samast Vaishnav Vanik Parivar Surat application in Form No.10AB for approval under clause (iii) of sub-section (5) of section 80G(5) of the Act was cancelled.
4. Aggrieved by the order of CIT(E), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted that the assessee had not received the notices issued by the CIT(E) on 05.10.2024 and 13.12.2024 and hence, the assessee could not file the documents. He submitted that CIT(E) has seen only object No.1 and 2 and did not discuss object No.3 and other objects. The CIT(E) is required to see the total objects of the assessee-trust and not restrict himself to only one or two objects. The assessee is engaged in carrying out various charitable activities such as educational, medical, socially beneficial activities and activities of human welfare without any discrimination of race and caste. He referred to pages 1 to 13 of the paper books and submitted that it could be ascertained from a total reading of objects that it is not restricted to any religious community or caste. The ld. AR relied on the decisions in cases of SVNIT Alumni Association Surat Chapter vs. CIT(E), & 1077/SRT/2024, Navsari Bazar and Sagrampura Surati Modh Ganchi Vanik Punch vs. CIT(E), Shree Surat Rana Samaj vs. CIT(E), ITA No.1141 & 1142/SRT/2024, Saurashtra Kadva Patidar Seva Samaj vs. CIT(E), ITA No.912/SRT/2024, Shah Gulabchand Mulchand Shree Parshwanath Trust vs. CIT(E), 165 taxmann.com 731 (Surat – Trib.), Shree Bhandari Gnyati Mandal vs. CIT(E), ITA No.1503/AHD/2024, Parul /AY.2025-26 Samast Vaishnav Vanik Parivar Surat University Alumni Association vs. CIT(E), and Life Line United Foundation vs. CIT(E), ITA No.51 & 50/SRT/2025.
On the other hand, learned Commissioner of Income-tax - Departmental Representative (ld. CIT-DR) for the revenue supported the order of CIT(E). He would, however, have no 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) vide his notices dated 05.10.2024 and 13.12.2024. The CIT(E) passed an order based on materials available in the application for registration of the trust u/s 80G(5) of the Act. The reasons for not filing further details have been properly explained by the ld. AR. The ld. CIT-DR has also no objection, if matter is remitted to the CIT(E). 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 set aside the order of CIT(E) and 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 /AY.2025-26 Samast Vaishnav Vanik Parivar Surat its submission and the relevant 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 04/06/2025.