G.D. KOTHARI FOUNDATION,KOLKATA vs. CIT (EXEMPTION), KOLKATA, KOLKATA

The assessee foundation came into existence as a Trust vide Deed of Trust dated 01.08.2016 and applied on 15.02.2017 for approval u/s. 80G(5) of the Act, which was turned down by Ld. CIT(E) on the plea that assessee trust did not submit copy of registration u/s. 12AA of the Act. Against the impugned decision of Ld. CIT(E), the assessee trust is before us.

We have heard both the sides and perused the material available on records. The impugned action of the Ld. CIT(E) cannot be countenanced for the simple reason that he himself i.e. Shri A. Kumar or Shri Anand Kumar who was the Ld. CIT(E) had granted sec. 12AA registration on 08.08.2017 and then on the very same day i.e. on 08.08.2017 rejected the approval u/s. 80G of the Act saying that assessee society did not submit copy of registration u/s. 12AA of the Act, per se which is preposterous and clearly exposes the non- application of mind of a senior officer, discharging a statutory duty. Therefore, the impugned order is bad in law and has to be necessarily set aside for this reason alone.

Moreover we note 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 is not discernable from the reading of 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, the appeal of assessee is allowed for statistical purposes.