2018 (7) TMI 1466 - AT - Income Tax

Application for approval of appellant u/s 80G rejected - Held that - The society was directed to produce necessary documents before the Ld. CIT(A) by the order of the Tribunal within the reasonable time. It is uncontroverted fact that the assessee society itself sought adjournment for filing of the necessary documents. The ld. CIT has, thus, passed the impugned order on 29.1.2018 and , in our considered view that the ld. CIT has disposed of the issue of granting registration u/s 80G within the reasonable time. Thus, this ground of the assessee s appeal is dismissed Once the ld. CIT is satisfied about registration u/s 12A, then the rejection of registration u/s 80G is not justified? - Held that - It is evident that the ld. CIT(E) in the absence of the details related to other chapters of society, declined to grant registration under section 80G of the Act. We are of the view that ld. CIT(E) ought to have made enquiries from the Jurisdictional Assessing Authority, where other chapters of society are registered and assessed. We, therefore, direct the assessee to furnish complete details of other chapters of Society and its financial and administrative relations with such chapters. Hence, we set aside the impugned order and restore the issue of registration u/s 80G to the file of ld. CIT(E) for decision afresh. It is also clarified that the issue is setaside on the submissions of the Ld. Counsel for the assessee that the other chapters of the society are independent entities and the assessee has nothing to do with their financial affairs. The ld. CIT(E) would make enquiry for the limited purpose with regard to the administrative and financial relation of the assessee with other chapters.

Summary

Issues Involved:
1. Rejection of application for approval under section 80G.
2. Ignoring the binding decision of the Hon'ble M.P. High Court.
3. Order passed by CIT(E) being time-barred.

Issue-wise Detailed Analysis:

1. Rejection of Application for Approval under Section 80G:
The assessee contested the rejection of their application for approval under section 80G, arguing that the conditions for registration under sections 12A and 80G are similar. The assessee contended that since they were already registered under section 12A, they should logically be granted approval under section 80G. The Tribunal noted that the CIT(E) had rejected the application due to a lack of necessary documentation and concerns about the genuineness of the society's activities. The Tribunal directed the assessee to furnish complete details of other chapters of the society and their financial and administrative relations. The CIT(E) was instructed to make enquiries from the jurisdictional assessing authority where other chapters are registered and assessed. The Tribunal set aside the impugned order and restored the issue of registration under section 80G to the file of CIT(E) for fresh consideration.

2. Ignoring the Binding Decision of the Hon'ble M.P. High Court:
The assessee argued that the CIT(E) ignored the binding decision of the Hon'ble M.P. High Court and rejected the approval on irrelevant grounds. The Tribunal did not find specific details on how the CIT(E) ignored the High Court's decision but focused on the procedural aspects and documentation required for the approval under section 80G. The Tribunal emphasized the need for the CIT(E) to conduct a thorough examination of the society's activities and financial relations with its chapters.

3. Order Passed by CIT(E) Being Time-Barred:
The assessee claimed that the order passed by the CIT(E) was time-barred as it was not passed within six months from the date of the Tribunal's order. The Tribunal disagreed with this contention, stating that the limitation prescribed under Rule 11-AA(1B) would not be applicable in this case. The Tribunal noted that the CIT(E) had passed the order within a reasonable time and dismissed this ground of the assessee's appeal.

Conclusion:
The Tribunal partly allowed the assessee's appeal, directing the CIT(E) to reconsider the application for approval under section 80G after making necessary enquiries and obtaining complete details of the society's chapters and their financial relations. The Tribunal emphasized the need for thorough documentation and compliance with the procedural requirements under the Income Tax Act.