ITAT Gives Rural Trust Second Shot at 80G Tax Benefits After Portal Confusion [Read Order]
The trust's representatives will need to demonstrate greater engagement with the process this time, while tax authorities must ensure their digital systems don't inadvertently exclude genuine rural charities.
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The Income Tax Appellate Tribunal (ITAT) Ahmedabad has granted a small rural trust from Surat district, another chance to secure crucial 80G tax-exempt status after its initial application was rejected due to procedural misunderstandings. The tribunal set aside the Commissioner of Income Tax (Exemption)'s rejection order, noting the trust's genuine difficulties in navigating digital...
The Income Tax Appellate Tribunal (ITAT) Ahmedabad has granted a small rural trust from Surat district, another chance to secure crucial 80G tax-exempt status after its initial application was rejected due to procedural misunderstandings. The tribunal set aside the Commissioner of Income Tax (Exemption)'s rejection order, noting the trust's genuine difficulties in navigating digital tax processes.
Gram Seva Samaj Vankal, which works in Mangrol taluka, had its 80G(5)(iii) application rejected in November 2024 when it failed to respond to electronic notices or submit required documents. The trust explained it had no prior experience with income tax portals and only learned about the rejection three months later. It filed an appeal with a 115-day delay, which the ITAT condoned after accepting its explanation about technological unfamiliarity.
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Judicial Member Siddhartha Nautiyal and Accountant Member Annapurna Gupta observed that the CIT(E) had overlooked the trust's valid 12A registration while rejecting its 80G application. The tribunal noted this was a crucial oversight since 12A approval already establishes the trust's charitable nature. The judges emphasized that rural organizations shouldn't lose benefits due to procedural hurdles when their core eligibility isn't in question.
The ITAT order directs the CIT(E) to freshly consider the application, this time accounting for the existing 12A approval and giving the trust proper hearing opportunities. The tribunal made clear this wasn't a judgment on the trust's merits but about ensuring fair process. Gram Seva Samaj must now actively participate in the new proceedings and submit all pending documentation.
The case highlights challenges smaller nonprofits face in complying with increasingly digital tax procedures. While referencing Supreme Court precedents like Dawoodi Bohara Jamat and New Noble Educational Society on documentation requirements, the tribunal balanced strict rules with practical realities of rural operations.
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For Gram Seva Samaj, the decision preserves its chance to offer donors tax deductions, critical for fundraising in its community development work. The CIT(E) must now reevaluate the application without the earlier procedural defaults overshadowing substantive considerations.
The trust's representatives will need to demonstrate greater engagement with the process this time, while tax authorities must ensure their digital systems don't inadvertently exclude genuine rural charities. The outcome will depend on whether the trust can now effectively present its case to meet all 80G criteria. In conclusion, the appeal was allowed for statistical purposes.
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