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2018 (3) TMI 1893 - AT - Income TaxGrant of approval u/s 80G(5)(vi) denied - registration u/s 12AA approved - HELD THAT - It is seen that registration u/s 12AA(1)(b)(i) was granted to the appellant Institution vide order dated 05.04.2016 (APB, 16-18). It is not disputed that this registration has hitherto not been revoked or cancelled. CIT(E) has observed, interalia, that approval u/s 80G(5) of the Act is not a mechanical process, wherein the according of registration u/s 12AA of the Act at one end would result in the issuance of approval u/s 80G(5) at the other. Consistent judicial opinion in this regard, however, otherwise. The issue is, as such, res integra. CIT(E) was not justified in rejecting, on the very same date as that of the hearing, clearly in direct contravention of Velu Palandar 1971 (8) TMI 42 - MADRAS HIGH COURT the appellant s application seeking grant of approval u/s 80G(5)(vi) of the Act, despite the undisputed fact that the applicant was granted registration u/s 12AA of the Act and that too, by he himself, on examining the Institution s objects and the genuineness of its activities, and such registration continues uninterrupted hitherto, and inspite of the fact that it remains undisputed that the appellant duly fulfils all the conditions prescribed u/s 80G(5)(i) to (v) of the Act. Accordingly, the order under appeal is reversed and it is directed that the appellant be granted approval u/s 80G of the Act forthwith.
Issues Involved:
1. Rejection of application for approval under section 80G(5)(vi) of the Income Tax Act, 1961. 2. Adverse conclusion regarding a donation of ?1,82,000. 3. Comparison of the rejection with the prior grant of registration under section 12A. 4. Consideration of irrelevant factors by the CIT(Exemption). 5. Denial of reasonable opportunity of hearing. 6. Allegations of conjectures and surmises in the rejection order. 7. Legality and validity of the order dated 23.02.2017. Issue-wise Detailed Analysis: 1. Rejection of application for approval under section 80G(5)(vi): The appeal challenges the order dated 23.02.2017, where the CIT(E) rejected the appellant's application for approval under section 80G(5)(vi) of the Income Tax Act, 1961. The appellant contends that the CIT(E) erred in law and facts by rejecting the application despite the appellant fulfilling all the conditions prescribed under the Act. 2. Adverse conclusion regarding a donation of ?1,82,000: The CIT(E) held that the appellant received a hefty donation of ?1,82,000 for the financial year 2015-16 but failed to provide details such as the source of funds, addresses, and PANs of the donors. The CIT(E) concluded that this lack of transparency suggested a mala fide attempt to introduce unaccounted money into the trust. The appellant argued that this conclusion was unjustified and that the rejection was based on reasons already examined during the grant of registration under section 12A. 3. Comparison with prior grant of registration under section 12A: The appellant highlighted that the CIT(E) had previously granted registration under section 12A on 05.04.2016, after examining the genuineness of the trust's activities. The appellant argued that the CIT(E) could not now reject the application under section 80G(5)(vi) on similar grounds, as consistent judicial opinion suggests that registration under section 12A should lead to approval under section 80G(5)(vi). 4. Consideration of irrelevant factors: The appellant contended that the CIT(E) considered irrelevant factors, ignoring the provisions of law that approval under section 80G(5)(vi) could only be refused if the conditions laid down under clause (i) to (v) of sub-section (5) of section 80G were not met. The appellant argued that the CIT(E) acted beyond his jurisdiction by assessing the trust's activities as if he were an Assessing Officer. 5. Denial of reasonable opportunity of hearing: The appellant argued that the CIT(E) denied a reasonable opportunity of hearing by passing the order on the same day the case was fixed for hearing. This action was in direct conflict with the decision of the Hon'ble Madras High Court in "S. Velu Palandar Vs DCIT," which mandates a fair hearing process. 6. Allegations of conjectures and surmises: The appellant claimed that the order dated 23.02.2017 was based on conjectures and surmises, making it wholly wrong, illegal, and bad in law. The appellant argued that the CIT(E) disregarded the principles of natural justice and failed to provide cogent evidence to support his conclusions. 7. Legality and validity of the order dated 23.02.2017: The appellant argued that the order was bad on facts and in law, deserving to be quashed. The Tribunal noted that consistent judicial opinion, including cases like "Hiralal Bhagwati vs. CIT" and "N.N. Desai Charitable Trust vs. CIT," supported the appellant's contention that registration under section 12A should lead to approval under section 80G(5)(vi). Conclusion: The Tribunal held that the CIT(E) was not justified in rejecting the application for approval under section 80G(5)(vi) on the same date as the hearing, in direct contravention of the "Velu Palandar" decision. The Tribunal reversed the order under appeal and directed that the appellant be granted approval under section 80G of the Act forthwith. The appeal was allowed, and no further points required adjudication.
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