2021 (2) TMI 721 - AT - Income Tax

Denial of registration u/s.12 AA and u/s. 80G - travel trip to dubai - some of the donors have accompanied the visually impaired people on tour to Dubai - HELD THAT - As carefully perused the list of donors and the list of travelers. There is some force in the submission of the DR that some of the donors are also travelers. The point raised by the counsel can also be not brushed aside lightly as the visually impaired persons need volunteers to look after them. However, we find that such list was not explained by the appellant before the CIT(E). Moreover, in the submission made before the CIT(E) the appellant has mentioned that 33 visually impaired persons took trip, however, the CIT(E) in his order has mentioned that the appellant has organized a trip to Dubai for 13 visually impaired persons. The accompaniment of the volunteers alongwith visually impaired people have not been explained properly by the appellant before the CIT (E). We restore the quarrel to the files of the CIT(E). The assessee is directed to explain with evidence why some donors travelled with the visually impaired persons and their relations, if any. The appellant is further directed to demonstrate that no benefit/profit was derived by Rising Star Tour and Travel from the arrangement made with the appellant. The CIT(E) is directed to examine issues afresh after giving a reasonable and fair opportunity of being heard to the appellant.

Summary

Issues:
Denial of registration u/s. 12 AA and u/s. 80 G of the Act based on charitable activities and benefits provided to related parties.

Analysis:
The judgment involves two separate appeals by the assessee against the consolidated order of CIT (Exemption) denying registration u/s. 12 AA and u/s. 80 G of the Act. The counsel for the assessee argued that the denial was erroneous, emphasizing the charitable nature of the activities. On the other hand, the DR contended that the appellant provided benefits to related parties under the guise of charitable activities. The DR highlighted instances where donors accompanied visually impaired individuals on tours, some of whom were related to the settlor of the trust. The counsel defended the actions, stating that volunteers were necessary to assist visually impaired persons during the tours and that the arrangements were made at the best price without benefiting the appellant.

Upon careful consideration, the tribunal acknowledged the concerns raised by both sides. While recognizing the need for volunteers to assist visually impaired individuals, the tribunal found discrepancies in the explanations provided by the appellant. The tribunal noted inconsistencies in the number of visually impaired persons on the trip to Dubai and the lack of clarity regarding the involvement of donors in the travel arrangements. Consequently, in the interest of justice, the tribunal remanded the matter back to the CIT (E) for further examination. The appellant was directed to provide evidence regarding the travel arrangements and demonstrate that no benefit or profit was gained by the travel agency involved. The CIT (E) was instructed to reevaluate the issues after affording a fair opportunity for the appellant to present their case.

As a result, both appeals filed by the assessee were treated as allowed for statistical purposes, with the order pronounced in open court on 12.02.2021.