2021 (7) TMI 627 - AT - Income Tax

Trust's 80G Application Remanded for Reconsideration

M/s. Patit Pawani Tara Tapo Sadhana Samiti Versus Commissioner of Income Tax (Exemption)

M/s. Patit Pawani Tara Tapo Sadhana Samiti Versus Commissioner of Income Tax (Exemption) - TMI Issues Involved:1. Rejection of application under Section 80G by the Commissioner of Income Tax (Exemptions) (CIT(E)).2. Determination of the charitable nature of the appellant trust's activities.3. Compliance with conditions laid down under Section 80G(5) of the Income-tax Act.4. Impact of non-renewal of registration under the Societies Registration Act on the application under Section 80G.5. Adequacy of the material submitted to prove the genuineness of the trust's activities.6. Consideration of the trust's registration under Section 12AA.7. Submission of documentary proof of activities and donations.8. Genuineness of the activities of the trust.Detailed Analysis:1. Rejection of Application under Section 80G:The CIT(E) rejected the appellant trust's application for approval under Section 80G of the Income-tax Act, 1961, citing several deficiencies. The primary reasons included the expiration of the trust's registration under the Societies Registration Act, non-submission of original bills and vouchers, and lack of confirmation of donations exceeding Rs. 2,000.2. Determination of Charitable Nature:The CIT(E) concluded that the activities of the appellant trust were not charitable in nature. This conclusion was based on the trust's failure to provide sufficient documentary evidence to support its claim of engaging in charitable activities. The tribunal noted that the CIT(E) is required to verify the charitable nature of the trust's activities before granting approval under Section 80G.3. Compliance with Section 80G(5) Conditions:The CIT(E) found that the appellant trust did not fulfill all the conditions laid down under Section 80G(5) of the Income-tax Act. Specifically, the trust failed to produce original bills and vouchers for verification, did not submit details of donations received, and did not provide confirmation for cash donations exceeding Rs. 2,000.4. Impact of Non-Renewal of Registration:The trust's registration under the Societies Registration Act expired on April 23, 2020, and was not renewed in time due to the COVID-19 pandemic. The CIT(E) rejected the application under Section 80G partly because the trust's registration had expired. The tribunal noted that the registration was later renewed retrospectively from April 24, 2020, but this renewal occurred after the CIT(E) had already passed the order rejecting the application.5. Adequacy of Material Submitted:The CIT(E) contended that the material filed by the appellant trust was insufficient to prove the genuineness of its activities and objects. The trust did not submit adequate documentary evidence to support its claims of engaging in charitable activities, leading to the rejection of the application.6. Consideration of Section 12AA Registration:The appellant trust argued that once it was granted registration under Section 12AA, the approval under Section 80G should be automatic. However, the tribunal noted that the CIT(E) still has the authority to verify the genuineness of the trust's activities and the fulfillment of conditions under Section 80G(5), even if the trust is registered under Section 12AA.7. Submission of Documentary Proof:The CIT(E) rejected the application under Section 80G on the basis that the trust did not submit documentary proof of its activities. The tribunal emphasized the importance of providing original bills, vouchers, and confirmation of donations to verify the trust's activities and expenses.8. Genuineness of Activities:The CIT(E) held that the activities of the trust were not genuine, warranting the rejection of the application under Section 80G. The tribunal underscored the necessity for the CIT(E) to satisfy himself about the genuineness of the trust's activities before granting approval.Tribunal's Decision:The tribunal remanded the matter back to the CIT(E) for fresh consideration of the appellant trust's application for approval under Section 80G. The tribunal directed the CIT(E) to provide proper and adequate opportunity to the trust to furnish all relevant details and evidence in support of its application. The CIT(E) was instructed to decide the matter on merits in accordance with the law, ensuring compliance with principles of natural justice. The tribunal emphasized that the inquiry into the genuineness of the trust's activities is not an empty formality and must be conducted thoroughly.