DEWAN RAJKUMAR CHARITABLE TRUST,MEERUT vs. C.I.T. (EXEMPTION), LUCKNOW

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ITA 9/LKW/2021Status: DisposedITAT Lucknow29 November 20224 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found it unclear if the assessee was given a reasonable opportunity to be heard and if sufficient evidence was produced. Therefore, the matter was remanded back to the CIT for fresh adjudication.

What were the facts?

The assessee-trust applied for approval under section 80G(5) of the Income Tax Act. The CIT (Exemption) rejected the application, citing non-compliance with questionnaires and substantial rent payments.

What were the issues?

Whether the assessee was provided a reasonable opportunity of hearing and whether sufficient evidence was submitted to justify approval under Section 80G(5).

Which sections of the Income-tax Act were involved?

Section 80G(5),Section 13(1)(c),Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW

Before: SHRI. MAHAVIR SINGH & SHRI GIRISH AGRAWAL

For Respondent: Shri S. H. Usmani, CIT (DR)

This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Exemption), Lucknow, rejecting the application filed by the assessee for approval under section 80G(5) of the Income Tax Act, 1961 (hereinafter, ‘the Act’), vide application dated 2.12.2019.

2.

The only issue raised by the assessee in its appeal is against the order of the CIT (Exemption), rejecting the application for approval under section 80G(5) of the I.T. Act by erroneously holding that it is not a fit case for granting of approval for the reason that the assessee could not file evidence and also the assessee-trust is paying substantial amount of rent in violation of the provisions of section 13(1) (c) of the I.T. Act.

3.

None is present from the assessee’s side, but going through the appeal folder, we decided to hear the appeal ex-parte qua the assessee. On behalf of the Revenue, the CIT (DR), Shri S. H. Usmani was present.

4.

The brief facts are that the assessee-trust was created on 25.6.2010 and registration under section 12AA of the I.T. Act was granted under the Income Tax Act on 15.9.2019 under the category ‘Relief to the Poor’. The assessee moved an application for approval under section 80G(5) of the I.T. Act on 2.12.2019 with the CIT (Exemption), but it is apparent from his order dated 10.12.2020 that he has taken a decision that assessee has not complied the questionnaires issued by him and he has given this finding in paras 7 & 8 of his order as under: “7. In response to the point no. 24 of the questionnaire, the applicant has not submitted any document / evidence regarding its educational activities other than list of students having stamp of Deewan Global School instead of charitable trust nor it is certified by shri Ajay Diwan as in case of other documents. The applicant has also not provided details of fee concession offered to the needy student nor any list of RTE students with respect to point number 24 of the questionnaire. 8. The applicant was required to furnish the copies of approvals/permissions received from the Competent Authorities with respect to point number 25 of the said notice but the applicant did not submit any written submission to this office in this regard.”

5.

The CIT (Exemption) by passing reference also noted that the assessee-trust is paying substantial amount of rent and hence it is not a fit case for granting of approval under section 80G(5) of the I.T. Act. For this, he noted the facts in para 9 of his order as under: “9. The applicant trust is paying substantial amount of rent (30% of total receipt approximately) since FY 2014-15. But in the absence of any rent agreement / lease deed the declaration submitted by the applicant u/s. 13(1)(c) of the Income Tax Act could not be ascertained.”

6.

Accordingly, the CIT (Exemption) rejected the application filed by the assessee for approval under section 80G(5) of the I.T. Act. Aggrieved, the assessee is in appeal before this Tribunal.

7.

After going through the order of the CIT (Exemption) dated 10.12.2020 and the arguments of the CIT (DR), we feel that it is not clear whether reasonable opportunity of hearing has been allowed to the assessee or not. Even otherwise, the assessee could not produce the relevant documentary evidences to prove that it is engaged in educational activity or is falling under the category ‘Relief to the Poor’. This needs examination at the level of CIT (Exemption). In order to provide reasonable opportunity of being heard to the assessee, in the interest of natural justice, we set aside the order of CIT (Exemption) and remand the matter back to his file for fresh adjudication. Needless to say, the CIT (Exemption) will allow reasonable opportunity of being heard to the assessee and the assessee will file details as called for by the CIT (Exemption) during the course of hearing. In terms of the above, the assessee’s appeal is allowed for statistical purposes. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 29/11/2022.

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