2014 (3) TMI 574 - AT - Income Tax

Cancellation of application u/s 80G Renewal/grant of certificate Assessee contended that the DIT(E) did not examine the information filed with regard to the entire donation receipts with its corpus details and confirmations by the appellant during the course of proceedings Held that - The DIT(E) has not culled out in his order as to which are the conditions laid down u/s 80G(5)(v), have not been fulfilled by the assessee trust - If the DIT(E) is satisfied that one or more of the conditions laid down in the clauses have not been fulfilled, he can reject the application for approval after recording his reasons - it has not been brought on record by the Revenue as to which of the requirement has not been fulfilled by the assessee as prescribed under rule 11AA and which of the conditions mentioned u/s 80G(5)(v) has been violated or not fulfilled by the assessee - Unless the DIT(E) records the reasons of violation of such conditions, the DIT(E) cannot reject the assessee s application thus, the matter remitted back to the DIT(E) for examination whether the assessee trust fulfills the conditions laid down in section 80G or not and whether the DIT(E) can grant approval or reject the application for grant of certificate u/s 80G Decided in favour of Assessee.

Summary

Issues:
Challenge to cancellation of application order under section 80G of the Income Tax Act, 1961 for the assessment year 2009-10.

Detailed Analysis:

1. The assessee challenged the impugned order dated 17th April 2012, passed by the Director of Income Tax (Exemp.), Mumbai, regarding the cancellation of the application order under section 80G of the Income Tax Act, 1961. The grounds of appeal included the rejection of the application under section 80G without appreciating the information filed by the assessee regarding donation receipts and confirmations. The assessee also argued that denial of 80G renewal on flimsy grounds was unjustified.

2. During the hearing, neither the assessee nor any authorized representatives appeared. The Tribunal proceeded to decide the appeal based on the available material and after hearing the Departmental Representative. The assessee had been granted registration under section 12AA and a certificate under section 80G previously. The impugned order highlighted discrepancies in donation receipts and expenses not being incurred on the trust's objects.

3. The learned Director of Income Tax (Exemp.) rejected the application mainly due to the absence of donation letters for corpus donations, lack of confirmation for donations exceeding Rs. 50,000, and failure to substantiate expenses incurred on the trust's objects. However, the Tribunal noted that the Director did not specify which conditions under section 80G were not fulfilled by the assessee. It was emphasized that the Director must record reasons for rejecting the application based on specific violations of the conditions laid down in the Act.

4. The Tribunal, after considering the findings and submissions, concluded that the issue needed to be sent back to the Director to examine whether the assessee fulfilled the conditions under section 80G. It was highlighted that without recording the reasons for non-compliance with the conditions, the rejection of the application was not justified. Therefore, the Tribunal allowed the assessee's appeal for statistical purposes, emphasizing the importance of proper reasoning in such decisions.

5. In the final order pronounced on 14th March 2014, the Tribunal ruled in favor of the assessee, emphasizing the necessity for the Director to specify the exact conditions not met by the assessee before rejecting the application under section 80G of the Income Tax Act, 1961.

This detailed analysis of the judgment highlights the grounds of appeal, the Director's reasons for rejection, and the Tribunal's decision to send the issue back for further examination, emphasizing the importance of recording specific reasons for rejecting such applications.