ADARSH SEVA SANSTHA,SANGLI V. CIT EXEMPTION, PUNE, PUNE

ITA 1030/PUN/2024

AI Insights

The case involves Adarsh Seva Sanstha, which appealed against the decisions of the CIT, Exemption, Pune, rejecting their applications for registration under section 12AB and for approval under section 80G of the IT Act. The CIT, Exemption, Pune had found that the activities of the trust involved significant commercial elements, thus not purely charitable, and had discrepancies in the documentation provided. The Tribunal found merit in the assessee's request for another opportunity to present their case and remanded the matter back to the CIT for a fresh examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24526 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAY
• Assessee Lawyers: DEEPA KHARE
• Keywords: Corroborative evidences
• Section: 80G

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.1030 & 1031/PUN/2024 Adarsh Seva Sanstha, Dr. Nilima Limaye Clinic, Manas Building, Opp. DSP Office, Vishrambhag, Sangli- 416415. PAN : AANAA5431D Vs. CIT, Exemption, Pune. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: Both the above captioned appeals filed by the assessee are directed against the separate orders dated 17.04.2024 passed by Ld. CIT, Exemption, Pune rejecting the application for registration in Form No.10AB under clause (iii) of section 12A(1)(ac) of the IT Act filed on 13.10.2023 and denying the application for approval in Form No.10AB under clause (iii) of first proviso to sub-section (5) of section 80G of the IT Act filed on 21.10.2023. Assessee by : Smt. Deepa Khare Revenue by : Shri Chandra Vijay Date of hearing : 21.01.2025 Date of pronouncement : 21.02.2025 ITA Nos.1030 & 1031/PUN/2024 2 ITA No.1030/PUN/2024 : 2. The appellant has raised the following grounds of appeal :- “1. The ld CIT Exemption erred in law and on facts in rejecting the application under Section 12A(1)(ac)(iii) on the ground that the structured collection of charges for services rendered alongside the management of financial transactions suggests that the primary motivation is not solely charitable but involves a significant commercial element and holding that he is not satisfied with the charitable nature and genuineness of activities thereby rejecting the same. 2. The ld CIT Exemption erred in law and on facts in cancelling the provisional registration granted on 30/09/2023 without following the due process of law and without affording opportunity of hearing to the appellant. 3. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.” 3. Facts of the case, in brief, are, that the assessee filed application for registration in Form No.10AB under clause (iii) of section 12(1)(ac) of the IT Act on 13.10.2023. With a view to verify the genuineness of activities of the assessee and compliance to requirements of any other law for the time being in force by the trust/institution as are material for the purpose of achieving its objects, a notice was issued by Ld. CIT, Exemption, Pune through ITBA portal on 15.01.2024 requesting the assessee to upload certain information/clarification. The desired information was furnished by the assessee. However, Ld. CIT, Exemption, Pune found certain discrepancies in the explanation filed by the assessee and sought some further information issued another notice on 02.04.2024. The ITA Nos.1030 & 1031/PUN/2024 3 assessee trust complied with the said notice. However, Ld. CIT, Exemption, Pune was not satisfied with the explanation furnished by the assessee trust & consequently Ld. CIT, Exemption, Pune rejected the application for registration by observing as under :- “4. The assessee’s reply and the documents submitted by the assessee along with the application were verified wherein certain discrepancies were noticed. Hence, a show cause notice was issued to the assessee on 02/04/2024 and the discrepancies were duly communicated to it as reproduced below: \"(1) As per note on activity, the assessee is engaged in providing services of care taker (Rugna Sevak) to bed ridden patients. As per note the trust act as intermidiary between patient/ relatives and the Rugna Sevak and that the service is provided on 'no profit no loss' basis. Even in financial statements, income from medical attendent charges and also from record keeping charges is shown. Thus, apparently, the assessee receives charges from patients and pays to care takers. Such an activity does not appear to be a charitable activity and involves commercial element therein. (ii) Trust has shown blood donation camp expenses. However, no further details of the activity and if the same is provided for in the objects, has not been clarified with supporting documents.\" 5. The assessee replied on 03/04/2024. On the issue of apprent commercial nature of the assessee's activities, the assessee contended as under. \"The trust collects amount of work done by each caretaker on monthly basis. Said charges included nominal amount for record keeping. Trust receives request for providing caretaker service from patient/ relatives. Trust collects all necessary information of patient. It then finds suitable caretaker from database maintained by it, prepares terms and conditions and helps patient to get service at reasonable charges. After service is started, trust keeps monitoring, provides substitute/ replacement wherever required. After every month, monthly charges are prepared which include nominal charges for record keeping by trust and charges are received in trust's bank account. It also provides free counselling for patient, provide medical shop details, arrange doctors, transportation, tiffin services etc. Hence, the services are charitable and not commercial.\" 6. The contention of the assessee is duly considered. The activities described by the assessee appear to have a commercial elements rather than purely charitable endeavors. Despite the claim of operating on a ITA Nos.1030 & 1031/PUN/2024 4 \"no profit no loss\" basis, the trust engages in a structured process of collecting charges from patients for caretaker services, including additional fees for record keeping. The involvement in financial transactions, wherein charges are collected from patients and disbursed to caretakers, reflects a business-like operation rather than solely charitable intent. Moreover, the trust's intermediary role, wherein it matches patients with caretakers and establishes terms and conditions, resembles a service-oriented business model rather than a charitable endeavor. The trust's involvement in monitoring services, providing replacements, and managing financial transactions further underscores its operational similarity to a commercial enterprise. The trust has claimed about charging some amount for record keeping. However, no further details with regard to the nature of such record keeping, purpose etc have been furnished by the assessee. While the trust may provide additional supportive services such as counseling, medical referrals, and logistical assistance, these alone do not negate the fundamentally commercial nature of the caretaker service operation. The structured collection of charges for services rendered, alongside the management of financial transactions, suggests that the primary motivation is not solely charitable but involves a significant commercial element. 7. In view of the above, the undersigned is not satisfied about the charitable nature and the genuineness of activities of the assessee and compliance to requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects. Therefore, the application filed by the assessee is hereby rejected and the provisional registration granted on 30/09/2023 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.” 4. It is this order against which the assessee is in appeal before this Tribunal. 5. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT, Exemption, Pune is unjustified. It was the sole contention of Ld. AR that Ld. CIT, Exemption, Pune desired certain evidences/documents/details which could not be submitted and, therefore, Ld. CIT, Exemption, Pune rejected the application for registration u/s 12AB of the IT Act. ITA Nos.1030 & 1031/PUN/2024 5 Therefore, Ld. AR requested before the Bench to provide one more opportunity to submit all the desired documents before Ld. CIT, Exemption, Pune and accordingly requested to set-aside the order passed by Ld. CIT, Exemption, Pune. 6. Ld. DR appearing from the side of the Revenue supported the order passed by Ld. CIT, Exemption, Pune and requested to confirm the same. 7. We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that the assessee trust has shown blood donation camp expenses, however, no details and evidences of activities were furnished before Ld. CIT, Exemption, Pune. Apart from that the assessee trust has claimed about charging some amount for record keeping, however, no further details with regard to nature of such record keeping purpose etc. have been furnished before Ld. CIT, Exemption, Pune. Therefore, Ld. CIT, Exemption, Pune was not satisfied about the charitable nature and the genuineness of the activities of the assessee, and the application filed by the assessee was rejected. It was the sole prayer of Ld. AR that if one more opportunity is provided to the assessee trust, it will furnish all the desired documents/evidences and supporting evidences before Ld. CIT, Exemption, Pune in support of application for registration u/s 12AB ITA Nos.1030 & 1031/PUN/2024 6 of the IT Act. Considering the totality of the facts of the case and in the interest of justice, without going into the merits of the case, we deem it appropriate to set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction to provide one opportunity to the assessee trust to furnish supporting documents/evidences/explanation in support of the application for registration and then decide the application of the assessee trust afresh as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to comply with the notices issued by Ld. CIT, Exemption, Pune and produce requisite documents/information in support of the application for registration without taking any adjournment under any pretext, otherwise, Ld. CIT, Exemption, Pune shall be at liberty to pass appropriate order as per law. Thus, the grounds of appeal raised by the assessee are partly allowed. 8. In the result, the appeal filed by the assessee in ITA No.1030/PUN/2024 is allowed for statistical purposes. ITA No.1031/PUN/2024 : 9. The instant appeal is against the order passed by Ld. CIT, Exemption, Pune denying grant of approval u/s 80G(5) of the IT Act. Since we have remanded the issue of grant of registration u/s ITA Nos.1030 & 1031/PUN/2024 7 12A(1)(ac)(iii) to the file of Ld. CIT, Exemption, Pune for de novo adjudication, therefore, in the interest of justice, it would be appropriate to remit the issue of grant of approval u/s 80G(5) as well to the file of Ld. CIT, Exemption, Pune being consequential, for de novo adjudication. 10. In the result, the appeal filed by the assessee in ITA No.1031/PUN/2024 is allowed for statistical purposes. 11. To sum up, both the above captioned appeals filed by the assessee are allowed for statistical purpose. Order pronounced on 21st day of February, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 21st February, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT, Exemption, Pune. 4. The Pr. CIT/CIT concerned. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "