M/S. KALCHINI FATHER'S HOUSE MINISTRIES,JALPAIGURI vs. CIT (EXEMPTION), KOLKATA , KOLKATA

This appeal of assessee is time barred by 11 days and assessee has filed a condonation petition. After hearing the Ld. AR of the assessee and in view of the reasonable cause which prevented the assessee from filing the appeal, we condone the delay and admit the appeal for hearing.

The sole ground of appeal of assessee is against the order of Ld. CIT(E) in rejecting the assessee’s application for approval u/s. 80G of the Act. Briefly stated facts are that the assessee society came into existence vide certificate of registration dated 13.03.2012 and the society filed an application in Form 10G for approval for exemption u/s. 80G of the Act on 20.10.2016. The Ld. CIT(E) rejected the application of assessee for approval u/s. 80G of the Act by observing that the assessee was asked as to why immediately after depositing cash in Bank account, the money was withdrawn. To the said query, the assessee society submitted that it collects meager amounts as donations from donors which were deposited in Bank and the same was withdrawn for payments to run the Berean Theological College of the Society. However, according to Ld. CIT(E) the assessee society failed to explain the reason as to why within 3 or 4 days of deposit, the cash was withdrawn especially when payment was made in cash to the college, hence, the Ld. CIT(E) concluded that it is not a fit case for approval u/s. 80G of the Act. Aggrieved, assessee is before us.

We have heard rival submissions. Admittedly, the assessee a society, is registered vide certificate of registration on 13.03.2012. The assessee Society has been granted sec. 12A registration on 01.04.2015. The assessee society has applied for sec. 80G approval before the Ld. CIT(E), which has been turned down on the plea that assessee society failed to explain the reason for withdrawal of cash from bank after depositing it within 3 to 4 days when the same was collected by cash. We do not understand the reason which the Ld. CIT(E) has given to reject the approval u/s. 80G when the fact remains the assessee society is enjoying sec. 12A registration.

It is true that it is the discretion of Ld. CIT(E) to grant registration, however, what is discretion has been explained by the renowned English Barrister and Judge Sir Edward Coke (1552-1634), considered by many to be the greatest jurist of the Elizabethan and Jacobean ages, famously described discretion as a "science of understanding, to discern between falsity and truth, between wrong and right, between shadows and substance ,... and not to do according to (men's) wills and private affections ... ". Discretion is to be exercised with caution and in a reasonable manner. Absolute discretion is constitutional blasphemy Justice William Douglas of the United States Supreme Court observed that "absolute discretion is a ruthless master (which is) more destructive of freedom than any of man's other inventions". (Dissenting judgment. United States v Wunderlich. 1951).” We hope the Ld. CIT(E) keeps the aforesaid words of wisdom while exercising his powers. Though it is the discretion of Ld. CIT(E), to grant approval u/s. 80G of the Act it should be remembered that the decision which Ld. CIT(E) has to make in exercise of powers even if conferred in subjective terms it is to be made in good faith or relevant consideration. The test is whether a reasonable prudent man instructed in law would have come to the decision in question in the given facts and the law governing the same. It should be kept in mind by the Ld. CIT(E) that denial of approval sought for by the assessee has to be objectively justifiable and cannot be the mere ipse dixit of Ld. CIT(E).

In this case, the question that arises for consideration is whether the reason cited by the ld CIT(E) justifies denial of approval under section 80G(5) of the Act. On perusal of section 80G(5) as well as Rule 11AA, what is required to be seen is whether the institution/fund has been established in India for a charitable purpose or not. Secondly, it lays down certain additional conditions under clause (i) to clause (v) which are required to be fulfilled. Rule 11AA provides that where the CIT is satisfied that one or more of the conditions specified in clause (i) to clause (v) of section 80G(5) are not fulfilled, he shall reject the application for approval after recording his reasons for such rejection. In the instant case, the appellant has been duly registered under section 12AA which shows beyond any doubt that Id CIT has already verified the genuineness of the objects and its activities are not doubted by the CIT. Hence, having granted registration u/s 12AA, the first condition regarding establishment of institution for charitable purposes is fulfilled. Now once the registration under section 12AA has been granted, the approval under section 80G should not be denied unless the case of the appellant falls under non-fulfillment of one or more of the conditions specified in section 80G(5) which has not been stated in the impugned order. This is a clear case of non application of mind by the Ld CIT(E), which necessarily vitiates the impugned order.

In the light of the aforesaid, the impugned order of the Ld. CIT(E) is set aside and we restore this matter back to his file with a direction to pass a speaking order keeping in mind the aforesaid discussions while deciding approval u/s. 80G of the Act. Needless to say, reasonable opportunity of being heard to the assessee society is given before deciding the matter.

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