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Madras HC directs I-T dept to probe diversion of donations [India] [Times of India](Times of India Via Acquire Media NewsEdge) CHENNAI: Charitable organisations receiving donations by offering the bait of tax exemption under Section 80G of the Income Tax Act beware. Madras high court has directed income tax authorities to verify the returns of assessees enjoying the benefits of Section 80G, and take appropriate action if it was found that the amount thus collected was being misused. "We direct the director-general of income tax (exemption) to issue appropriate instruction to all IT authorities to verify the returns of assessees who have been given exemption under Section 80G of the Act. In case the assessing officers are of the view that the orders of exemptions were misused and the money was spent for purposes other than charitable, it is needless to point out that appropriate action should be taken against such assesses in accordance with the provisions of the Income Tax Act," said the first bench comprising Acting Chief Justice Satish K Agnihotri and Justice K K Sasidharan, on Thursday. The judges were passing orders on a PIL filed by advocate S Saravanan, who wanted the court to direct the IT department to cancel approval given to five specific trusts for tax exemption under Section 80G, and order probe into the misuse of the funds 'under the guise of doing charity'. According to the petitioner, the trusts received donations for charitable purposes, but had diverted/misused the funds for other activities, including religious activities. He alleged that the I-T authorities had issued tax exemption to these trusts without verifying the activities they had undertaken. In his reply, director of income tax (exemption), however, narrated that except one of the five specified trusts, all were spending the funds only for charitable purposes, and that a couple of them maintained separate accounts for their religious works. He also said that these trusts would again be subjected to scrutiny by the assessing officer concerned. The officer would look into the issue of diversion of donation funds. The judges, ruling out issuing any order directing I-T department to cancel approval given to these charitable institutions without adequate reasons for doing so, said the I-T department must consider individual cases on merits. (c) 2014 Bennett, Coleman & Company Limited |