The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, has directed fresh consideration of a charitable society’s application for approval under Section 80G(5) after it challenged the rejection on the ground that its charitable activities and financial records had been overlooked.
The bench of M. Balaganesh (Accountant Member) and Udayan Das Gupta (Judicial Member) remanded the matter to the Commissioner of Income Tax (Exemptions), Chandigarh, with directions to examine the audited financial statements and other material on record and provide the society a reasonable opportunity of being heard.
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The society argued that the Commissioner had rejected its application on the assumption that it was engaged only in religious activities, without considering the charitable work undertaken in accordance with its objects.
Its counsel submitted that the society’s activities included running a senior secondary school for girls, providing free langar, maintaining educational institutions and libraries, constructing a hospital, and providing care facilities for elderly persons, persons with mental disabilities and orphans. While some activities were religious, the society maintained that its work also had a substantial charitable component.
The society further contended that the rejection had been made without issuing a show-cause notice, depriving it of an opportunity to explain its activities and the allocation of expenditure between charitable and religious purposes.
The society submitted that its annual expenditure on religious activities remained below 5% of its total receipts.
To support this contention, it placed before the Tribunal an assessment order for assessment year 2024–25, passed under Section 143(3) on March 2, 2026. According to its counsel, the Assessing Officer had specifically examined religious expenditure in that assessment and found it to be below the stipulated 5% limit, without drawing an adverse inference.
The society sought an opportunity to substantiate its position through audited financial statements and documentary evidence before the approval authority.
The Revenue’s representative did not object to the matter being remanded for fresh consideration.
The Tribunal directed the Commissioner to examine the Section 80G(5) application afresh after taking into account the audited accounts and all other material available on record.
It also directed that the society be given a reasonable opportunity to submit the necessary replies and explanations and that these be considered in accordance with law.
The Tribunal did not itself grant Section 80G approval or conclusively determine the society’s eligibility; that question remains for the Commissioner to decide following the fresh examination.
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