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Facts
Shri Ram Mandir Satsang Bhawan Samiti, a registered society, applied for approval under Section 80G of the Income Tax Act, which was rejected by the CIT(E). The rejection was based on the CIT(E)'s non-satisfaction regarding the genuineness of the assessee's activities and its failure to provide corroboratory evidence for expenses despite being given opportunities. The assessee admitted to not properly presenting its case and failing to upload necessary evidence before the CIT(E).
Held
The Tribunal held that for a newly formed entity, its objectives should be prioritized over the genuineness of expenses. It found that the assessee deserved a reasonable opportunity to present its case and address non-compliances. Therefore, the Tribunal set aside the CIT(E)'s order and remitted the matter back for de-novo consideration, directing the CIT(E) to provide reasonable opportunities of being heard to the assessee.
Key Issues
Whether the CIT(E) was justified in rejecting the appellant's application for approval under Section 80G for lack of corroboratory evidence and genuineness of activities, especially for a newly established entity, and if sufficient opportunity was provided.
Sections Cited
Section 80G, Section 80G(5), Section 12AB
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Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI AVDHESH KUMAR MISHRAShri Ram Mandir
Appellant by Ms. Shivani, Adv. Respondent by Sh. Dharm Veer Singh, CIT-DR Date of Hearing 23/04/2024 Date of Pronouncement 23/04/2024 ORDER PER AVDHESH KUMAR MISHRA, AM
The appeal filed by the assessee is directed against the order, dated 27.10.2022, of the Commissioner of Income Tax (Exemption), New Delhi [In short ‘the CIT(E)’] rejecting the request for approval u/s 80G(5) of the Income Tax Act, 1961 (In short ‘the Act’).
The relevant facts giving rise to this appeal are that the appellant-assessee is a registered society under the Society Registration Act (XXI of 1860) w.e.f. 20.12.2021. The provisional registration under the Act was granted vide order dated 31.03.2022 by the CIT(CPC), Bangalore. Thereafter, it applied for (i) the regular registration under Section 12AB of the Act on 02.04.2022 and (ii) approval under Section 80G of the Act, which were rejected by the CIT(E), vide orders dated 27.10.2022. Hence, two separate appeals were filed, which are being disposed of by separate orders. Vide this order we are deciding the appealfiled against non-approval under Section 80G of the Act.
The appellant-assessee has raised six grounds of appeal which revolve around the sole and substantive issue of rejection of approval under Section 80G of the Act.
4. The appellant-assessee filed e-applications for the registration u/s 12AB and approval under Section 80G of the Act on 2ndApril, 2022 and 7thApril, 2022 respectively. The Ld. CIT(E) asked various details, documents, etc. vide his letter dated 18.10.2022. The said letterdated 18.10.2022 is extracted on page 3-4 of the impugned order. The appellant-assessee did not submit the requisite details, documents, etc.to the satisfaction of the CIT(E); hence, the approval under Section 80G of the Actwas rejected on the reasoning that the appellant-assessee had failed to prove the genuineness of its activities with corroboratory evidences.
5. The CIT(E) rejected granting of approval under Section 80G of the Acton the solitary reason of non-satisfaction about the genuineness of the activities carried out by the appellant-assessee. The Ld. AR, during the course hearing before us,admitted that the appellant assessee filed its submission, on-line, during the course of proceedings, under Section 80G of the Act, before the CIT(E); however, it failed to upload the corroboratory evidences of various expenses. Thus, it was claimed that the case was not properly presented before the CIT(E). Further, it was submitted by the Ld. AR that the appellant-assessee failed to demonstrate its charitable activities with the corroboratory evidencesduring the course of proceedings, under Section 80G of the Act, before the CIT(E). The ld. AR placed reliance on the decision of the ITAT in the cases of Movement against Diabetes & Endocrine Disorders (ITA No. 9397/Del/2019), Fifth Generation Education Society 185 ITR 634, Artemis Education & Research Foundation Commissioner of Income-tax (Exemptions), Dharma Sansthapak Sangh, ITA no. 3534/Del/2007 and Bhartiya Kisan Sangh Sewa Niketan, ITA No. 6721/Del/2015.
The Ld. DR placed emphasis on the order of the CIT(E) and submitted that the appellant-assessee failed to demonstrate that it has existed for charitable activities though the CIT(E) provided sufficient opportunities of being heard to the appellant-assessee; hence the approval under Section 80G of the Act had been rightly rejected. The Ld. DR argued for upholding of the order of the CIT(E).
Heard the rival contentions and perused the case record. As submitted by the appellant-assessee, it is running an old temple taken over from another un-registered trust forfurther expansion &development. It has been claimed by the appellant-assessee that it is also engaged in charitable activities besides running the temple. Page 4 of 7 The purpose of granting registration u/s 12 AB and granting approval u/s 80G to various trust under the Income Tax Act is to provide welfare to one and the all in the society to achieve the directive principles of the state policy. The relevant year is the first year after the existence of the appellant-assessee and therefore, it had not carried out much activities. At the initial stage, the objectives for which the appellant-assessee existed need to be looked into rather than the genuineness of expenses, which is the domain of the Assessing Officer. Granting of registration u/s 12AB and granting of approval u/s 80G of the Act enhance the socio- economic welfare in the society. Therefore, in the interest of justice and considering all the afore-stated observations, we are of the considered view that the appellant-assessee deserves reasonable opportunity of being heard to make shortcomings or non- compliances. In view thereof, without offering any comment on merit of the case we deem it fit to set aside the impugned order and remit the matter back to the file of the CIT(E) for de-novo consideration. The appellant-assessee should ensure compliances during the set-aside proceeding before the CIT(E). The Ld. CIT(E) is also required to provide reasonable opportunities of being heard to the appellant-assessee before deciding the case on merit.
In the result, appeal is allowed for statistical purposes. Order pronounced in open Court on 23rd April, 2024