M/S. MANAV SEVA SAMITI,FARIDABAD vs. CIT, FARIDABAD

Briefly the facts as noted in the impugned order are that the assessee filed application under section 80G(5)(vi) of the Income Tax Act for grant of approval under this provision before the learned Commissioner of Income Tax, Faridabad. The assessee was asked to file certain informations / details / copies of the documents. The assessee attended the proceedings before the learned Commissioner of Income Tax and produced two registers regarding proceedings / meetings i.e. ‘Sangam’ register and ‘Lotus’ register regarding the proceedings of the assessee society for certain period, but the learned CIT wanted the assessee to produce the proceedings registers since beginning i.e. from the date of the registration. The learned CIT also noted that assessee’s counsel submitted that he would not be having all the Registers, but would produce whatever records are available. The learned CIT also noted that assessee society has not provided object- wise details of activities carried out by the assessee society in the last three years. It was also noticed that assessee has got conducted ‘Ram Katha Gyan Yagh’ from 8th September, 2013 to 15th September, 2013 and there was also ‘Yagh / Havan / Bhandara’. The assessee was asked as to how it is not hit by provisions of clause (iii) under section 80G(5) of the Income Tax Act. The assessee explained that assessee society has not 3 I. T. Appeal No. 6363/Del/2014 Assessment Year : 2014–15. incurred any expenses in this programme whereas said programme was got conducted by ‘Sanatan Dharm Mandir’ and the assessee society has only taken donation by doing donation appeal through the said programme. The assessee was asked to produce the books of accounts for last three years and copies of the proceeding registers, object-wise details of activities and details of education provided to poor children under Right to Free & Compulsory Education Act, 2009 with fee receipts and expenses. The assessee society furnished Xerox of proceeding register from year 2011 only and stated that earlier proceeding register is not available. Regarding the production of books of accounts, it was stated that accountant has gone to his home-town on occasion of Navratri and would come back on 03rd October, 2014. The assessee, therefore, sought time to produce books of accounts. It was submitted that books of accounts were produced at the time of grant of registration under section 12A of the Income Tax Act along with audited accounts. It was also stated that assessee is giving free education / books / dress to the students belonging to weaker section of the society. However, according to the learned CIT, no details have been produced. The learned CIT noted that even if books have been examined during the proceedings under section 12A is no ground for not producing the books of accounts in the present proceedings. Books of account of 4 I. T. Appeal No. 6363/Del/2014 Assessment Year : 2014–15. current year are also to be examined. It is also noted that some of the aims and objects of the assessee society do not fall under specific term ‘education’, relief of poor and medical relief etc. Therefore, onus was upon assessee to prove that it falls in section 2(15) which has not been proved. It is also noted that most of the objects are merely on paper. The learned CIT also noted that assessee society conducted ‘Yagh, Havan and Ram Katha’, therefore, approval under section 80G(5) cannot be granted, because institution or fund is for benefit of particular religious community. Since there was no co-operation from the side of the assessee, therefore, learned CIT rejected the application for grant of approval under section 80G(5) of the Income Tax Act.

After considering the rival submissions, we are of the view that the matter requires reconsideration at the level of the learned CIT, Faridabad. It is not in dispute that assessee society has been granted registration under section 12AA of the Income Tax Act vide order dated 29th April, 2014. The application for registration was filed on 09th December, 2013. The assessee, however, filed application for grant of approval under section 80G(5) thereafter on 03rd April, 2014. Therefore, the learned CIT should have considered the fact in favour of the assessee that assessee has been granted registration under section 12AA of the Income Tax Act by him considering the assessee society to be involved in doing charitable activities as contained under section 2(15) of the Income Tax Act. The assessee stated before the learned CIT that since the accountant of the assessee has gone to his home town on the occasion of ‘Navratri’ and he would come back on 3rd October, 2014 therefore requested time for production of books of accounts, the learned CIT should not have passed the order rejecting the application under 7 I. T. Appeal No. 6363/Del/2014 Assessment Year : 2014–15. section 80G(5) of the Income Tax Act prior to it on 26th September, 2014. Therefore, no fault could be found with the assessee for not producing the entire books of accounts before the learned CIT. The learned CIT also observed that since assessee society got conducted ‘Ram Katha Gyan Yagh’, therefore, it is meant for benefit of particular religious community. However, the assessee denied to have incurred any expenses in this programme, because it was conducted by ‘Sanatan Dharam Mandir’ and through this programme assessee received donation. Therefore, such event should not be taken adverse in nature against the assessee. The Assessing Officer subsequently for assessment year 2014-15 vide order dated 25th April, 2016 under section 143(3) examined the books of accounts of the assessee and accepted the claim of the assessee for deduction under section 11 of the Income Tax Act. It would mean that assessee has been involved in charitable activities as contained under section 2(15) of the Income Tax Act. The report of the ACIT, Circle : II, Faridabad, dated 4th August, 2014 also support the claim of the assessee that the assessee institution or fund maintained regular books of its receipt and expenditure and the Assessing Officer inspected the books of accounts and vouchers. It was also reported that assessee institution has not incurred any expenditure of religious in nature. The spot enquiry report of the 8 I. T. Appeal No. 6363/Del/2014 Assessment Year : 2014–15. Inspector also support the claim of the assessee for grant of an approval under section 80G of the Income Tax Act. It appears that the learned CIT has not gone through all these material on record in proper perspective and the subsequent assessment order passed under section 143(3) also requires consideration by the learned CIT, Faridabad. It may also be noted here that at the time of approval under section 80G(5) of the Income Tax Act the assessee shall have to explain that institution or fund is not expressed to be for benefit of any particular religious community or caste and that the institution or fund maintained regular accounts of its receipts and expenditure. Since the assessee denied to have incurred any expenditure on religious activity for any particular community, therefore, assessee cannot be put to negative onus. Considering the above discussion, we are of the view that the learned CIT, Faridabad, has not considered the issue in proper perspective. Therefore, the matter requires reconsideration at his level. We, accordingly, set aside the impugned order and restore the matter in issue to the file of the learned Commissioner of Income Tax, Faridabad, with direction to re-decide the matter in issue in accordance with law by giving reasonable sufficient opportunity of being heard to the assessee.

In the result, appeal of the assessee is allowed, for statistical purposes.

The order is pronounced in the Open Court.