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2024 (3) TMI 527 - AT - Income TaxRegistration u/s 80G(5) - application rejected on the ground that the assessee trust is involved in providing benefit to any particular religion, caste or community - argument of the Ld. AR was that the assessee society was granted with 12A registration which remains continue even after denial of assessee's request for 80G registration, same has not been withdrawn even after the various allegations - Name of the assessee is not matching with the other documents of the society - HELD THAT - As pointed out by the Ld. CIT(E) qua the name of the assessee association for which the assessee association has already taken necessary suo moto steps for correction in the name of the assessee association in the PAN data vide their application i.e. before the date of their application for registration u/s 80G(5) therefore, the bonafide of the assessee association cannot be doubted and the difference in name of the association shall be treated as only inadvertent mistake on the part of the assessee. Violation of FCRA provisions - As per order of Ld. CIT(E) certain documents regarding funds received by the assessee, which were not provided by the assessee before the Ld. CIT(E), the assessee was found to be on default and society is indulged in convincing illiterate and Economically Weaker Section for conversion of their religion in the nearby villages - Rejection on the basis of the report of the inspector and ITO(E), which was apparently not confronted to the assessee however, the same was one of the basis for rejection of the application of the assessee. Anything relied upon by the revenue authorities in order to arrive at any adverse inference against the assessee and the same is not even confronted to the assessee to show cause or to explain about, such action of the revenue authorities is not permissible under the settled principle of law which is against the principle of natural justice. Thus as assessee had not submitted certain detail sought by the Ld. CIT(E) and the Ld. CIT(E) also had not show caused the assessee regarding the information pertaining to dubious activities of the assessee association on the basis of inspectors report without confronting the assessee with such report, it shows that there was violation of principle of natural justice. Consequently, we are left with no option but to restore these matter back to the files of Ld. CIT(E) to consider the explanations of the assessee - Appeal of the assessee is partly allowed as stated.
Issues Involved:
1. Rejection of registration application under section 80G(5) of the Income Tax Act, 1961. 2. Allegations of providing benefits to a particular religion, caste, or community. 3. Allegations of religious conversion and dubious activities. 4. Discrepancy in the name of the trust. 5. Violation of Foreign Contribution (Regulation) Act (FCRA) provisions. 6. Non-confrontation of findings and reports to the assessee. Summary of Judgment: 1. Rejection of registration application under section 80G(5): The appeal was filed against the order of the Ld. CIT(E), Bhopal, dated 14.12.2022, which rejected the application for registration under section 80G(5) of the Income Tax Act, 1961. The rejection was based on multiple grounds including the involvement of the trust in activities benefiting a particular religion and alleged violations of FCRA provisions. 2. Allegations of providing benefits to a particular religion, caste, or community: The Ld. CIT(E) rejected the application on the grounds that the trust is located inside a church campus, implying it provides benefits to the Christian community. The assessee contended that the location within the church campus was due to the availability of rent-free premises and did not imply any religious bias. 3. Allegations of religious conversion and dubious activities: The Ld. CIT(E) relied on an inspector's report alleging that the trust was involved in converting illiterate and economically weaker sections to Christianity. The assessee argued that these allegations were baseless and unsupported by documentary evidence. The inspector's report was not provided to the assessee for cross-verification, violating the principles of natural justice. 4. Discrepancy in the name of the trust: The Ld. CIT(E) noted discrepancies in the name of the trust across various documents. The assessee explained that the name difference was due to clerical errors and steps had been taken to correct the PAN data. The tribunal found these discrepancies to be inadvertent mistakes and not a basis for rejection. 5. Violation of Foreign Contribution (Regulation) Act (FCRA) provisions: The Ld. CIT(E) also cited violations of FCRA provisions as a reason for rejection. The assessee clarified that the amount received from Caritas India was a reimbursement of expenses and not a donation, and any clerical mistakes in accounting were unintentional. 6. Non-confrontation of findings and reports to the assessee: The tribunal noted that the inspector's report and other findings were not confronted to the assessee, which is against the principles of natural justice. The tribunal emphasized that any adverse inference drawn from such reports must be communicated to the assessee for explanation. Conclusion: The tribunal found that the rejection of the application was partly based on unsubstantiated allegations and procedural lapses. It restored the matter back to the Ld. CIT(E) for reconsideration, directing that all adverse findings be communicated to the assessee for explanation. The appeal was partly allowed, and the case was remanded for fresh adjudication with a direction to provide a reasonable opportunity of being heard to the assessee. Order pronounced in the open court on 07/03/2024.
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