2019 (6) TMI 786 - AT - Income Tax

Appeal granted under Income Tax Act, emphasizing fair evaluation and procedural fairness

The Tribunal partially allowed the appeal against the rejection of approval under section 80G(5)(vi) of the Income Tax Act, emphasizing the need for a ... Approval u/s 80G(5)(vi) read with Rule 12AA - rejection of approval as applicant has not filed any appeal before the Tribunal as the earlier 80G application was rejected vide the said office order dated 31.03.2016 - HELD THAT:- Assessee was granted registration u/s 12AA vide order dated 10.09.2015. The earlier application for approval u/s 80G was rejected vide order dated 21.03.2016 on the ground that receipt and payment account which was specifically asked was not furnished. The applicant trust while making a fresh application has submitted all the required documents in February, 2017 which was not at all taken cognizance by the Commissioner of Income Tax (Exemption). The Commissioner should have taken cognizance about the documents placed before him and after going through the documents should have decided the application on merit, but Commissioner failed to do so. Therefore, matter may be restored to the file of the Commissioner of Income Tax (Exemption) for taking cognizance of the application along with the documents submitted by the applicant trust and after going through the appropriate order may be passed accordingly. Therefore, appeal of the applicant trust is partly allowed for statistical purpose. Issues:1. Rejection of approval under section 80G(5)(vi) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Exemption), Chandigarh.2. Allegations of error in law, lack of opportunity, and arbitrary decision-making by the Commissioner.3. Scope of examining the genuineness of activities of the trust and the criteria for approval under section 80G(5)(vi).4. Consideration of non-filing of appeal before the Tribunal as a ground for rejection of the application.Analysis:1. The appeal was filed against the rejection of approval under section 80G(5)(vi) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Exemption), Chandigarh. The applicant, an Association Welfare Society, operates educational and medical facilities with a focus on philanthropic purposes. The trust applied for approval under section 80G(5)(vi) to avail tax benefits. The Commissioner rejected the application citing non-filing of appeal before the Tribunal regarding a previous rejection.2. The appellant contended that the Commissioner erred in not granting approval under section 80G(5)(vi) and violated principles of natural justice by not providing a fair opportunity to be heard. The appellant argued that the scope of the application was to assess the genuineness of trust activities and income liability under sections 11 and 12, not the actual exemption under these sections. The appellant further criticized the reliance on non-filing of appeal before the Tribunal as the sole ground for rejection.3. The Commissioner, however, defended the decision by referring to the earlier unchallenged order and stated that due consideration was given to the previous rejection. Upon review, the Tribunal found that the Commissioner failed to consider the documents submitted by the trust along with the fresh application in February 2017. The Tribunal opined that the Commissioner should have assessed the application on its merits based on the documents provided. Consequently, the Tribunal partially allowed the appeal, directing the matter to be reconsidered by the Commissioner.4. The Tribunal highlighted that the earlier registration under section 12AA was granted to the trust and emphasized the importance of the documents submitted by the trust for the 80G approval. The Tribunal's decision aimed to ensure a fair evaluation of the trust's application and documents by the Commissioner to make a well-informed decision. Ultimately, the appeal was partly allowed for statistical purposes, indicating a need for a thorough review by the Commissioner based on the trust's submissions.Conclusion:The judgment addressed the issues of rejection of approval under section 80G(5)(vi) comprehensively, focusing on procedural fairness, scope of assessment, and the importance of considering all relevant documents. The Tribunal's decision aimed to uphold principles of natural justice and ensure a thorough evaluation by the Commissioner for a fair outcome.