2019 (4) TMI 1291 - AT - Income Tax

Denial of recognition u/s 80G - registration u/s 12AA granted on same date - charitable u/s 2(15) or not? - HELD THAT - When the details of activities were admittedly filed by the assessee, the CIT(E) ought to have sought clarifications thereon. This cannot be the basis for rejection of the assessee s application. Strangely, in the case on hand, on the very same day i.e., 14.05.2018 when he rejected the assessee s application for recognition under section 80G the CIT(E) has granted the assessee-trust registration under section 12AA of the Act vide order dated 14.05.2018; ostensibly, after examination of the assessee s objects, etc., which the CIT has categorized as Advancement of any other object of general public utility As under section 80G(5)(v) of the Act and restore the matter to the file of the CIT(E) to examine the matter afresh in the light of his order dated 14.05.2018 granting the assessee registration under section 12AA and our observations hereinabove. CIT(E) is directed to afford the assessee reasonable opportunity of being heard in the matter and to file details / submissions required that shall be considered before deciding the issue. - Assessee s appeal is allowed for statistical purposes

Summary

Issues:
1. Rejection of application for recognition under section 80G of the Income Tax Act, 1961.
2. Consideration of details of charitable activities carried out by the assessee trust.
3. Discrepancy in the decision of granting registration under section 12AA while rejecting recognition under section 80G.

Analysis:

Issue 1: Rejection of application for recognition under section 80G:
The appeal was against the order rejecting the assessee's application for recognition under section 80G of the Income Tax Act. The CIT(E) rejected the application citing that the details of activities submitted lacked specific dates and places, which led to the rejection. The Tribunal noted that the absence of dates and places in the activity details should not have been the sole reason for rejection. The CIT(E) should have sought clarifications instead of outright rejection. Notably, on the same day of rejecting the 80G application, the CIT(E) granted registration under section 12AA to the assessee trust, indicating prior verification of charitable purposes. The Tribunal, following precedent, set aside the order and directed a fresh examination by the CIT(E) considering the registration under section 12AA and providing the assessee with a fair opportunity to present their case.

Issue 2: Consideration of charitable activities details:
The main contention was the adequacy of details of charitable activities submitted by the assessee trust. The CIT(E) emphasized the absence of dates and places in the submission as a reason for rejection. However, the Tribunal opined that the lack of specific details should not have been the decisive factor for refusal. The Tribunal directed the CIT(E) to reevaluate the application, considering the registration granted under section 12AA and allowing the assessee an opportunity to provide any necessary clarifications or submissions.

Issue 3: Discrepancy in granting registration under section 12AA and rejecting recognition under section 80G:
A notable inconsistency arose from the CIT(E) granting registration under section 12AA to the assessee trust on the same day as rejecting the 80G application. This raised questions regarding the thoroughness of examination and verification conducted by the CIT(E). The Tribunal, in light of this discrepancy and previous rulings, decided to set aside the rejection of the 80G application and instructed a reevaluation by the CIT(E, ensuring a fair hearing and consideration of all relevant details.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a comprehensive review of the application for recognition under section 80G in alignment with the registration granted under section 12AA.