Madras High Court today disposed of a plea seeking a direction to cancel the approval for exemption under section 80G of Income Tax Act 1961 granted to five trusts if they were found to misuse it and to forbear the Finance Ministry and Director General of Income Tax (Exemption) from issuing such approvals.
The First Bench, comprising Acting Chief Justice Satish K. Agnihotri and Justice K.K. Sasidharan, directed the Director General of Income Tax( Exemption), New Delhi to issue appropriate instructions to the assessing officers to verify the returns of the assesses who have been given exemption under Section 80G of the IT Act.
Disposing of the writ petition filed by an advocate S Saravanan, the bench in its order said in case assessing officers are of the view that the orders of exemptions were misused and the money was spent for purposes other than charitable, appropriate action should be taken against such trusts as per the Income Tax Act.
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The petitioner, while mentioning the names of five trusts, contended that the approval was given for exemption without verifying their activities.
He alleged that the Sri Sankara Bhaktha Jana Sabha Trust, Kanchi Moodoor Archakas Welfare Trust, SSSMM Trust, Sri Jagadguru Trust and Veda Rakshna Samithi were misusing the exemption and the amount collected by way of donations were all used for other activities,which has nothing to do with charity.
The Director of Income Tax (Exemption) in its counter said the accounts submitted by the above trusts were subjected to scrutiny and action would be taken in accordance with law.
The assessing officer would also look into the issue as to whether money received after availing exemption were all used for charitable purposes, the counter said.
The bench then directed the authorities to issue appropriate instructions to the assessing officers to verify the returns of the trusts and to take appropriate action in accordance with provisions of Income Tax Act.
