2010 (2) TMI 985

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..... ewal of recognition under section 80G on January 28, 2009, the competent authority, Director of Income-tax (Exemptions) at Bangalore through his order dated July 27, 2009, held that the assessee-trust was not entitled to renewal of the benefit of section 80G for the reason that the assessee has not maintained regular books of account to support its receipts and payments and thereby, the assessee has violated the provisions of law contained in sections 11, 12, clauses (23AA) and (23C) of section 10 and as a result, has infringed the conditions laid down under section 80G(5)(i), to be satisfied for the benefit of renewal. The assessee being aggrieved is in appeal before us. We have heard Shri H. V. Gouthama, the learned chartered accountant .....

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..... assessee in the course of completing the assessment for the assessment year 2006-07 under section 143(3). It again leads us to another question to be answered. The question is whether any disallowances or additions or adjustments made by an assessing authority in framing an assessment under section 143(3) would automatically lead to a lawful presumption that the assessee has not maintained regular books of account and consequently has violated the provisions of sections 11 and 12. While answering the above question, we have to make it clear that there is no statutory compulsion to link the nature of assessment under section 143(3) and the allowability to the assessee of exemption under section 11 and recognition under section 80G. The fi .....

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..... n of such conditions in the context of section 80G(5) may cause violence to the statutory scheme of assessment vis-a-vis operation of section 80G. In the present case, the Director of Income-tax (Exemptions) has not established anything to show that the books of account maintained by the assessee were rejected by the assessing authority for the purpose of assessment under section 143(3). Making additions or adjustments or disallowances in the course of an assessment under section 143(3) is something substantially different from examining whether the assessee has maintained regular books of account in its ordinary course of business. A case of disallowance per se does not make out a case against the assessee that the assessee has not maint .....

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