2021 (6) TMI 1025 - AT - Income Tax

Approval for exemption u/s.80G - applicant is registered under section 12AA - HELD THAT - In order to grant exemption u/s.80G of the Act, it is very essential for the Ld. CIT(Exemption) to satisfy himself as per Section 80G(5) r.w.r.11AA of the Income Tax Rules, 1962. That the genuineness of the charitable activities undertaken by the assessee trust/institution should has to be ascertained. The assessee in this case was unable to furnish credible evidences specifically the bills/vouchers in respect of the expenditure claimed with regard to activities performed as per Object Clause of the assessee trust/institution. We are of the considered view, one more opportunity should be granted to the assessee for the very fact that Income Tax Legislations are welfare legislation and not penal legislation and therefore, adjudication on merits before the Ld. CIT(Exemption) is required. DR did not raise any objection. We set aside the order of the CIT(Exemption) and remand the matter back to his file to re-adjudicate the issue as per law and at the same time, we direct the assessee/ applicant to file necessary evidences/documents before the Ld. CIT(Exemption) as would be called for so that the requirements of Section 80G(5) r.w.r.11AA of the Rules would be satisfied. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Rejection of approval u/s.80G of the Income Tax Act, 1961 by the Ld. CIT(Exemption).
2. Failure to provide supporting evidence for claimed expenditure on activities.
3. Requirement for genuine charitable activities verification for granting exemption u/s.80G.
4. Necessity of providing credible evidences like bills/vouchers for claimed expenditure.
5. Granting one more opportunity to the assessee for adjudication on merits.

Detailed Analysis:
1. The appeal pertains to the rejection of approval u/s.80G of the Income Tax Act, 1961 by the Ld. CIT(Exemption). The assessee filed an adjournment petition, which was rejected. The main grievance of the assessee was the rejection of approval for exemption u/s.80G by the Ld. CIT(Exemption) in the order dated 03.10.2020.

2. The assessee applied for recognition u/s.80G(5)(vi) by filing an online application in Form No.10G within the prescribed time limit. The Ld. CIT(Exemption) requested supporting evidence for claimed expenditure on activities. The assessee failed to comply with the notice, submitting self-made vouchers that were not verifiable. Consequently, the application was rejected due to lack of necessary supporting credible evidence.

3. For granting exemption u/s.80G, it is crucial for the Ld. CIT(Exemption) to ascertain the genuineness of the charitable activities undertaken by the trust/institution. The assessee's inability to provide credible evidence, specifically bills/vouchers for claimed expenditure related to its activities, led to the rejection of the application.

4. The Tribunal observed that one more opportunity should be given to the assessee for adjudication on merits. Considering that Income Tax Legislations are welfare legislations, the matter was remanded back to the Ld. CIT(Exemption) for re-adjudication. The assessee was directed to submit necessary evidences/documents to satisfy the requirements of Section 80G(5) of the Rules.

5. Ultimately, the appeal of the assessee was allowed for statistical purposes, with the order pronounced on 25th June 2021. The Tribunal emphasized the need for providing credible evidence to support claimed expenditures and the importance of genuine verification of charitable activities for granting exemptions under Section 80G of the Income Tax Act, 1961.