HC directs I-T dept to verify returns of assessees to check misuse of exemption under section 80G

Chennai:

Madras High Court directed income tax to verify returns of the assesses, including trusts,  who have been given exemption under Section 80G of the IT Act and take action against those who misused the exemptions and spent the money for purposes other than charitable purpose.

A bench comprising of acting chief justice Satish K Agnihotri and Justice K K Sasidharan passed the order after hearing a petition filed by advocate S Saravanan seeking withdrawal of exemption under section 80G of Income Tax to five trusts stating that they are misusing the exemptions and the amount collected by way of donation were used for activities other than charity.

The judges observed that there is no question of issuing a mandamus, directing the Income Tax Department to cancel the approval given to the five charitable institutions under Section 80G of the Income Tax Act without making out a case for such cancellation. “The Income Tax Department has to consider individual cases on merits,” the judges said.

The court also stated that Income Tax department has assured that while considering the returns, the assessing officer would also look into the issue as to whether money received after availing exemption were all used for charitable purposes.

“In case the conditions of exemption are found violated, the authority is empowered to cancel such exemption. Section 293C of the Income Tax Act gives authority to the Central Government or the Board or Income Tax Authorities to withdraw the approval at any point of time,” the judges stated