Denial of S.80G Approval Due to Excess ‘Pooja Expenses’: ITAT Remands Matter to CIT(E) for Fresh Consideration [Read Order]
The tribunal observed that many of these expenses were wrongly classified due to accounting errors and accepted the additional evidence submitted by the trust, including photos of Sahaj Yoga activities and revised financial statements.
Pooja Expenses - ITAT - taxscan
Pooja Expenses - ITAT - taxscan
The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the Commissioner of Income Tax (Exemption)[CIT(E)] for fresh consideration after the denial of Section 80G of Income Tax Act,1961, approval due to excess ‘pooja expenses’.
The Life Eternal Trust,appellant-assessee,had applied for registration in Form No. 10AB under clause (iii) of the first proviso to section 80G(5) on 29.06.2024. To verify the genuineness of its activities, the CIT(E), Pune, issued a notice on 08.08.2024 through the ITBA portal, calling for specific details by 22.08.2024. The appellant-assessee submitted the required information within the stipulated time.
On examination, the CIT(E) noticed discrepancies and issued another notice on 28.11.2024, seeking further details and clarification regarding the pooja expenses, which appeared religious in nature and seemed to exceed 5% of the total income. In response, the appellant-assessee explained that the expenses were related to Sahaj Yoga, a meditation practice introduced by Shree Nirmala Devi, and were not religious in nature.
The CIT(E), however, was not satisfied with the explanation. On verifying the supporting documents, it was found that the trust had incurred expenditure on events such as “Mahashivratri Pooja,” “Shree Krishna Pooja,” and “Shree Ganesh Pooja,” which were clearly religious. It was also observed that pooja expenses were higher than charity expenses, contradicting the trust’s claim of non-religious objectives.
It was further noted that the trust had violated section 80G(5B) as its expenditure on religious activities exceeded the permissible limit of 5% of total income 67.20% in FY 2022-23 and 19.29% in FY 2023-24. Based on these findings, the CIT(E) concluded that the trust had not fulfilled the conditions under section 80G(5), rejected its application, and cancelled the provisional approval granted on 23.09.2021.
Aggrieved by the decision, the assessee filed an appeal before the Tribunal.
The assessee counsel argued that the CIT (Exemption), Pune, was wrong in rejecting the application. It was stated that the pooja expenses were not fully related to religious activities and that some non-religious expenses were wrongly included under this head by mistake.
The counsel submitted additional evidence, including photos of Sahaj Yoga activities and revised financial details showing the breakup of expenses, and requested the Bench to direct the CIT (Exemption) to grant approval under section 80G(5).
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The Departmental Representative supported the order of the CIT (Exemption) and asked for it to be upheld.
The two member bench comprising Vinay Bhamore (Judicial Member) and Manish Borad (Accountant Member) heard both sides and reviewed the material on record, including the additional evidence submitted.
It observed that several expenses had been grouped under the head “pooja expenses,” which exceeded 5% of the total income. Based on this, the CIT (Exemption), Pune, had rejected the application for approval under section 80G(5) of the Income Tax Act.
It was explained that many of these expenses were not related to religious activities and were wrongly classified under “pooja expenses” due to an accounting error. The assessee also submitted detailed financial statements and a breakup of these expenses to support the claim.
Since these details had not been produced before the CIT (E) earlier, the Tribunal set aside the order and remanded the matter back for fresh examination. It directed the CIT (E) to reconsider the application under section 80G(5) after reviewing the new evidence and giving the assessee a fair opportunity of hearing.
The tribunal also directed the assessee to fully cooperate and provide the required information without delay. The appeal was allowed for statistical purposes.
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