Case Law Details
Sanj Sawali Care Foundation Vs CIT (Exemptions) (ITAT Pune)
Introduction: The case of Sanj Sawali Care Foundation Vs CIT (Exemptions) before the Income Tax Appellate Tribunal (ITAT) Pune involves the rejection of an application for exemption under section 80G of the Income Tax Act due to the failure to produce documentary evidence. The ITAT Pune has directed a readjudication of the matter.
Detailed Analysis: The dispute revolves around the rejection of Sanj Sawali Care Foundation’s application for exemption under section 80G(5) of the Income Tax Act by the Commissioner of Income Tax (Exemptions), Pune. Despite the applicant’s failure to produce necessary documentary evidence, the application was dismissed solely on the ground of limitation without adjudication on merits.
Legal Interpretation: Section 80G of the Income Tax Act provides a beneficiary provision for trusts and societies, offering tax benefits to donors contributing to charitable organizations. However, to qualify for exemption under this section, it is crucial for the Department to verify the genuineness of the activities conducted by the trust, the proper utilization of funds for charitable purposes, and compliance with the provisions of the Act.
ITAT’s Decision: The ITAT Pune recognized the importance of assessing the application for exemption under section 80G on its merits. Acknowledging the socio-economic welfare objectives of the government and the welfare nature of income tax laws, the tribunal directed a readjudication of the matter by the Commissioner of Income Tax (Exemptions), Pune. The ITAT emphasized the principles of natural justice and the need for thorough examination of documentary evidence before making a decision.
Conclusion: The decision by the ITAT Pune to remand Sanj Sawali Care Foundation’s application for exemption under section 80G back to the Commissioner of Income Tax (Exemptions) for reevaluation underscores the importance of due process and adherence to legal principles. It highlights the significance of providing one final opportunity to the applicant to present relevant details and argue their case on merits, ensuring fairness and justice in the adjudication process.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal preferred by the assessee emanates from the order of Commissioner of Income Tax [Exemptions], Pune (for short, “CIT(E)”), dated 31.05.2023 as per the grounds of appeal on record.
2. The grievance of the assessee in this case is the rejection of application for granting exemption u/sec. 80G(5) of the Income Tax Act, 1961 (for short, ‘the Act’).
3. The provisions of sec.80G of the Act is a beneficiary provision provided to the trust-society wherein it is a support given from the Government, so that once the said trust or society gets exemption u/sec. 80G of the Act whosoever making donations in the said trust or society, shall get the benefit of 80G while filing their respective income tax returns and whatever amount of donation that has been made to such registered and exempted trust or society, the donor shall get benefit of exemption u/sec. 80G to the extent of 50% and even more in some cases of the said amount that has been donated. Therefore, in order to decide whether particular trust or society qualifies for getting exemption u/sec. 80G, it is pertinent for the Department to verify the genuineness of the activities conducted by such trust and further whether the funds are utilized for the purpose of charitable activities as enshrined in the object of the trust and whether the funds are spent in accordance with the provision of sec. 80G of the Act. That, these factors should be considered on merits while granting or rejecting the application for exemption u/sec. 80G of the Act. In the present case of the assessee, it is evident from para 2.3 of the order of the ld.CIT(E) that certain documentary evidences were asked from the assessee by the office of the ld.CIT(E) in order to determine the merits of the application. The assessee has not filed any details or explanation before the ld.CIT(E). That, finally it is observed at para 5.9, the application for getting exemption u/sec. 80G(5) has been dismissed by the ld.CIT(E) on the ground of limitation even without going into the merits of the case.
4. At the time of hearing before us, ld.AR for the assessee submitted his willingness to file all the necessary documentary evidences before the ld.CIT(E) and prayed for one final opportunity be given in this regard and he also submitted that the application of the assessee should be decided on merits.
5. We are of the considered view that it is a case where the application for exemption sought for was filed by the assessee, and for want of supporting evidences, the matter remained un-adjudicated by the Department and finally rejected only on the ground of limitation without adjudication on merits. It has to be appreciated that the purpose of the provisions for registration of trust u/sec. 12AA and for granting exemption u/sec. 80G, all these sections derives their spirit from the Directive Principles of State Policy enshrined in the Constitution of India. Since, the Govt. of India makes endeavor to provide welfare to one and all in the society at large and in view thereof the registration for public charitable trusts are given in order to ensure that through these charitable trusts benefits should flow to the entire society wherefrom various charitable activities, the entire society is benefited and the objectives of the Govt. of India in furtherance to the Directive Principles of State Policy are achieved. These provisions for the trust registration and granting of exemption u/sec. 80G enhance the socio economic welfare in the society. Furthermore, the Income Tax laws are welfare legislations and not penal in nature. Therefore, in the interest of justice and considering all the aforestated observations, we are of the considered view that one final opportunity should be provided to the assessee to file the relevant details before the ld.CIT(E) and present their case on merits. That, after all the power always remains with the ld.CIT(E) as per the Act to either grant or reject the application regarding the concerned issue but that decision should come after examining and verifying all documentary evidences furnished by the applicant-assessee. In view thereof, we set aside the order of the ld. CIT(E) and remand the matter back to his file with the aforesaid directions and the ld. CIT(E) shall adjudicate denovo as per law complying with the principles of natural justice. Grounds of appeal of the assessee stands allowed for statistical purpose.
6. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in open Court on 06th December, 2023.
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