2022 (3) TMI 879 - AT - Income Tax

Exemption u/s 80G(5)(vi) - denial of claim as assessee has not produced sufficient proof on the activities of the assessee-trust - it is not possible to verify the genuineness of the activities of the assessee-trust - HELD THAT - The very same Officer who refused to grant approval u/s 80G of the Act, was the Officer, who granted registration u/s 12AA of the Act a day prior, i.e., on 23.03.2021. We fail to understand how registration u/s 12AA has been granted on 23.03.2021 when the Officer concerned has not been able to examine the genuineness of the activities of the assessee-trust. The starting of activities of the trust is not a condition precedent for grant of approval u/s 80G of the I.T.Act. On receipt of the approval u/s 80G the assessee would be receiving donations. The receipts of money through donations are the lifeline for starting the charitable activities of the assessee-trust. In the interest of justice and equity, we are of the view that the matter needs to be examined afresh by the CIT(E). Accordingly, the issue raised in this appeal is restored to the files of the CIT(E) for de novo consideration. Assessee appeal is allowed for statistical purposes.

Summary

Issues: Delay in filing appeal, rejection of application for recognition u/s 80G, refusal to grant approval u/s 80G, granting registration u/s 12AA

The judgment by the Appellate Tribunal ITAT Bangalore involved the issue of a delay of 176 days in filing the appeal, which was condoned after the assessee provided valid reasons for the delay. The brief facts revealed that the assessee-trust had applied for recognition u/s 80G of the Income Tax Act, but the CIT(E) rejected the application citing insufficient proof on the trust's activities. The Tribunal noted that the same officer who granted registration u/s 12AA had refused approval u/s 80G, raising concerns about the genuineness of the trust's activities. The Tribunal emphasized that the starting of activities is not a prerequisite for granting approval u/s 80G, as donations are crucial for charitable activities. Consequently, the matter was remanded to the CIT(E) for fresh consideration.

The delay in filing the appeal was addressed by the Tribunal, which found no fault on the part of the assessee and thus condoned the delay. The rejection of the application for recognition u/s 80G by the CIT(E) was based on the lack of sufficient proof regarding the trust's activities, leading to doubts about genuineness. The Tribunal highlighted the inconsistency in the officer's actions, granting registration u/s 12AA but refusing approval u/s 80G. It was emphasized that the initiation of activities is not a prerequisite for approval u/s 80G, as donations are essential for commencing charitable operations. Therefore, the Tribunal ordered a fresh examination by the CIT(E) to ensure justice and equity in the decision-making process.

The refusal to grant approval u/s 80G was a key issue in the appeal, with the CIT(E) citing a lack of proof on the trust's activities as the primary reason. The Tribunal questioned the officer's decision to grant registration u/s 12AA while rejecting approval u/s 80G, emphasizing the importance of donations for initiating charitable activities. The Tribunal stressed that the starting of activities is not a precondition for approval u/s 80G and directed the matter to be reconsidered by the CIT(E) for a fair assessment.

The judgment also highlighted the granting of registration u/s 12AA to the assessee, which contrasted with the refusal to grant approval u/s 80G. The Tribunal pointed out the inconsistency in the officer's actions and the significance of donations for commencing charitable operations. The decision to remand the issue to the CIT(E) for a fresh review aimed to ensure a just and equitable outcome in assessing the trust's eligibility for approval u/s 80G, underscoring the importance of donations in supporting charitable endeavors.