Registration under section 80G denied over trust object clause suggesting religious activity; remanded for fresh decision after opportunity to amend

Rejection of registration under section 80G turned on the trust's object clause that suggested religious activity; consequence: the application was held incomplete and the matter was remanded for fresh decision. The tribunal found the applicant did not amend or delete the objectionable clause nor adequately respond to the show cause notice, and that Form No.10AB lacked required documents; consequence: the assessing authority must allow opportunity to amend objects and to be heard before revisiting registration. The matter is remitted to the assessing authority for fresh consideration with reasonable opportunity to the applicant.

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Issues: Whether the Commissioner was justified in rejecting the assessee's application for registration under section 80G(5) of the Income-tax Act, 1961 on the ground that object clause 3(23) of the trust deed suggested religious activity and whether the rejection was valid despite incomplete Form No.10AB and without affording a reasonable opportunity to amend the objects or to furnish missing documents.

Analysis: The assessee had provisional registration under sections 12A and 80G and applied for formal registration under section 80G(5) by filing Form No.10AB. The Commissioner found the application incomplete, noted object clause 3(23) referring to a religious prayer centre, issued show-cause notices and a final show-cause notice, and ultimately rejected the application on the ground that the object clause left open the possibility of religious activities. The assessee submitted that no religious activity had been carried out and later filed replies and documents. The Tribunal observed that the application remained incomplete as per the Commissioners findings, the specific object clause was not amended by the assessee, and the assessee was not afforded a reasonable opportunity to amend the memorandum/objects or to supply the required documentation before final rejection. The Tribunal therefore found procedural deficiency in the decision-making process and concluded that the matter required fresh consideration after giving the assessee an opportunity to rectify deficiencies.

Conclusion: The rejection of the application under section 80G(5) is set aside and the matter is remanded to the Commissioner for fresh decision after affording the assessee a reasonable opportunity to amend the object clause and to complete the Form No.10AB requirements; appeal allowed for statistical purposes.

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