2021 (9) TMI 240 - AT - Income Tax

Tribunal Remands Recognition Issue for Reconsideration - Fair Treatment in Tax Matters

M/s. Samarpan Association for Culture and Education Versus The Commissioner of Income Tax (Exemptions), Bengaluru.

The Tribunal allowed the appeal, remanding the issue of recognition under Section 80-G to the Assessing Officer for reconsideration. It found the CIT(E) ... Grant of recognition u/s 80G (5) (vi) - denial of recognition as no noticeable charitable activities as on date from the date of formation of trust - non speaking order passed by CIT-E - Admission of additional information on the activities of the trust - proof of charitable activities u/s 2(15) - HELD THAT:- With regard to grant of recognition u/s.80G of the Act to the assessee has to be remanded to the AO for consideration afresh because the impugned order has been passed without affording assessee proper opportunity of being heard. The impugned order is therefore set aside and the CIT(E) will decide the issue of grant of recognition, in the light of the law as explained by the decisions referred to by the learned Counsel for the assessee before us. As held in M/S. ANANDA SOCIAL AND EDUCATIONAL TRUST [2020 (2) TMI 1293 - SUPREME COURT] the proposed activities can also be explained by the assessee which can be examined by the CIT(E). As held in the case of Vidyashilp Community Trust [2019 (11) TMI 1538 - ITAT BANGALORE] the assessee can furnish additional information on the activities of the trust in the set aside proceedings for examination by CIT(E). Since the order of CIT(E) is also a non-speaking order, he is directed to consider the issue afresh - Appeal of the assessee is allowed for statistical purposes. Issues:1. Rejection of application for recognition under Section 80-G (5) (vi) of the Income Tax Act, 1961 by the CIT(E).2. Violation of principles of natural justice in passing the impugned order.3. Consideration of proposed activities for grant of recognition u/s.80G of the Act.Analysis:1. The judgment involves an appeal by a trust against the order of the CIT(E) rejecting its application for recognition under Section 80-G (5) (vi) of the Income Tax Act, 1961. The CIT(E) refused recognition citing the absence of noticeable charitable activities, thus questioning the genuineness of the charitable activity. The appeal was filed before the Tribunal challenging this decision.2. The appellant contended that the CIT(E) did not provide an opportunity to explain the absence of charitable activities, which was crucial for the grant of recognition under Section 80-G (5) (vi) of the Act. The appellant argued that for a newly set up trust seeking approval under Section 80-G, it might be challenging to demonstrate actual charitable activities. The appellant relied on various legal precedents, including decisions by the Karnataka High Court, ITAT Jaipur Bench, and the Supreme Court, emphasizing the importance of proposed activities in such cases.3. The Tribunal, after considering the submissions, held that the issue of grant of recognition under Section 80-G should be remanded to the AO for fresh consideration. The Tribunal found that the impugned order was passed without affording the appellant a proper opportunity to be heard, thus violating the principles of natural justice. The Tribunal directed the CIT(E) to reconsider the issue in light of the legal principles discussed in the cited decisions and any additional evidence provided by the appellant regarding its activities. The CIT(E) was instructed to allow the appellant an opportunity to be heard before making a decision. The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of considering proposed activities in such cases.In conclusion, the judgment highlights the significance of affording natural justice to parties in tax matters and the requirement to consider proposed activities when granting recognition under Section 80-G of the Income Tax Act, 1961. The decision underscores the need for a fair and thorough examination of the facts and legal principles before making determinations in such cases.