2017 (10) TMI 376 - AT - Income Tax

Application u/s 80G(5)(vi) - receipt of donations - religious activity or not - conducting Yagh, Havan and Ram Katha - Held that - Assessee institution has not incurred any expenditure of religious in nature. The spot enquiry report of the Inspector also support the claim of the assessee for grant of an approval under section 80G of the Income Tax Act. It appears that the learned CIT has not gone through all these material on record in proper perspective and the subsequent assessment order passed under section 143(3) also requires consideration by the learned CIT, Faridabad. It may also be noted here that at the time of approval under section 80G(5) the assessee shall have to explain that institution or fund is not expressed to be for benefit of any particular religious community or caste and that the institution or fund maintained regular accounts of its receipts and expenditure. Since the assessee denied to have incurred any expenditure on religious activity for any particular community, therefore, assessee cannot be put to negative onus. Considering the above discussion, we are of the view that the learned CIT, Faridabad, has not considered the issue in proper perspective. Therefore, the matter requires reconsideration at his level. We, accordingly, set aside the impugned order and restore the matter in issue to the file of the learned Commissioner of Income Tax, Faridabad, with direction to re-decide the matter in issue in accordance with law by giving reasonable sufficient opportunity of being heard to the assessee.

Summary

Issues:
1. Rejection of application for approval under section 80G(5) of the Income Tax Act
2. Consideration of registration under section 12AA of the Income Tax Act
3. Non-production of complete books of accounts
4. Allegations regarding religious activities and benefit to a particular community
5. Ignoring evidence supporting charitable activities

Analysis:
1. The appeal was against the rejection of the application for approval under section 80G(5) of the Income Tax Act. The assessee had filed for approval under section 80G(5)(vi) and provided some documents but was asked for more details. The Commissioner noted discrepancies and lack of object-wise details of activities. The rejection was based on the belief that the institution was for the benefit of a particular religious community due to events conducted. However, subsequent assessments supported the claim of charitable activities.

2. The Tribunal highlighted that the assessee had already been granted registration under section 12AA of the Income Tax Act, indicating involvement in charitable activities. The timing of the application for approval under section 80G(5) was after the registration, and the Commissioner should have considered this aspect favorably. The failure to produce complete books of accounts was explained by the absence of the accountant, and the Tribunal found no fault with the assessee in this regard.

3. Concerns regarding religious activities and benefits to a specific community were addressed by the assessee, denying any expenses incurred and clarifying that donations were received. Evidence from assessments and reports supported the claim of charitable activities, which the Commissioner had not fully considered. The Tribunal emphasized the need for a proper perspective on the evidence presented.

4. The Tribunal concluded that the Commissioner had not thoroughly reviewed the material on record and the subsequent assessment order. The Commissioner was directed to reconsider the matter, giving the assessee a fair opportunity to present their case. The decision to reject the application was overturned, and the matter was remanded for a fresh decision in accordance with the law.

5. The appeal of the assessee was allowed for statistical purposes, and the order was pronounced in the Open Court. The Tribunal's decision highlighted the importance of considering all evidence and perspectives in such cases involving approval under tax laws to ensure a fair and just outcome.