The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, while directing readjudication, observed that the chartered accountant of the assessee trust incorrectly interpreted the medical store at the hospital run by the assessee as a business when filing the Form 10B grant for registration under Section 12A(1)(ac)(iii) of the Income Tax Act and also for approval under Section 80G(5) of the Income Tax Act.
The assessee, Hasaniya Healthcare Sarvajanik Trust, is a charitable trust. It was incorporated with the object of providing medical relief without any discrimination based on caste, creed, or religion. The trust operates a medical hospital named Fatema Hospital in Himatnagar.
The trust obtained provisional registration under Section 12AB of the Act from CIT (Exemptions), Ahmedabad. Subsequently, the assessee trust filed Form No.10AB for seeking final registration under Section 12A(1)(ac)(iii) of the Income Tax Act. Additionally, an application seeking approval under Section 80G(5) of the Income Tax Act was filed.
CIT (Exemptions), without providing the assessee trust an opportunity to clarify discrepancies, rejected the application in Form No.10AB for registration under Section 12AB of the Act. The aggrieved assessee filed an appeal before the tribunal.
During the proceedings, the assessee representative, Jignesh Shah, explained that the charitable hospital was mistakenly portrayed as engaging in trade, commerce, or business due to an error by the office of the Chartered Accountant. The tribunal noted apparent contradictions in Form No.10AB and subsequent replies filed by the assessee in response to queries from CIT(Exemptions).
The tribunal observed that these contradictions were due to inadvertent mistakes by the staff of the Chartered Accountant. The rejection of the registration application lacked a fair opportunity for the assessee to explain the discrepancies.
Darsi Suman Ratnam, Counsel for Revenue, supported the lower authorities’ order. However, the tribunal, comprising Annapurna Gupta (Accountant Member) and Siddhartha Nautiyal (Judicial Member), reviewed the facts and records. They decided to restore the matter to the file of CIT(Exemptions) for a fresh hearing on merits, providing the assessee with a fair opportunity to present its case regarding registration under Section 12AB of the Income Tax Act and Section 80G(5) of the Income Tax Act.
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