This case analysis covers the appeal filed by Bhartiye Samaj Kalyan Sansthan against the Commissioner of Income Tax (Exemption) [CIT(E)], Lucknow under ITA No. 1023/DEL/2020. The appeal pertains to the assessment year 2019-20 and was filed on March 9, 2020. The final decision was pronounced on August 2, 2022, and the appeal was allowed for statistical purposes.
The appellant, Bhartiye Samaj Kalyan Sansthan, challenged the order dated January 30, 2020, passed by the CIT(E) under Section 12AA(1)(b)(ii) of the Income Tax Act, 1961, concerning the assessment year 2019-20. The main contention was the denial of registration under Section 12AA of the Act, which is essential for claiming tax exemptions available to charitable organizations.
The appeal was registered as ITA No. 1023/DEL/2020 and was heard by the ITAT Delhi “A” Bench on August 2, 2022. The hearing was presided over by Shri Challa Nagendra Prasad, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member. The appellant did not appear for the hearing, and the respondent was represented by Shri Ishtiyaque Ahmed, Senior Departmental Representative (DR).
The grounds of appeal challenged the order of the CIT(E) denying the registration under Section 12AA of the Income Tax Act. The appellant contended that the denial was based on insufficient grounds and without proper consideration of the materials and explanations provided regarding the charitable nature of the trust and its activities.
Upon reviewing the case details, the Tribunal noted that the CIT(E) had provided only a solitary opportunity to the appellant to furnish the required information. This opportunity was deemed insufficient to demonstrate the objects and genuineness of the trust’s activities. The Tribunal emphasized the importance of adhering to the principles of natural justice, which require providing a fair and reasonable opportunity to the appellant to present their case.
The Tribunal observed that the CIT(E) had hastily concluded the matter without giving the appellant adequate time and opportunity to comply with the requirements. This approach was considered unjust and a violation of the principles of natural justice. Consequently, the Tribunal found it necessary to set aside the order of the CIT(E) and remand the case for fresh consideration.
In light of the above observations, the Tribunal concluded that the impugned order of the CIT(E) needed to be set aside. The case was remanded back to the CIT(E) for de novo adjudication, with instructions to provide a reasonable opportunity to the appellant to furnish the necessary information and support their application for registration under Section 12AA. The CIT(E) was directed to pass a speaking order in accordance with the law after considering the submissions and evidence provided by the appellant.
The official order as pronounced by the members of the Tribunal is as follows:
The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Exemption), Lucknow [‘CIT(E)’ in short] dated 30.01.2020 under Section 12AA(1)(b)(ii) of the Income Tax Act, 1961 (the Act) concerning AY 2019-20.
As per the grounds of appeal, the assessee has challenged the impugned order dated 30.01.2020 whereby the CIT(E) has denied the registration under Section 12AA of the Act.
When the matter was called for hearing, none appeared for the assessee. Accordingly, the matter is proceeded ex-parte.
On perusal of the impugned order passed under Section 12AA of the Act, it appears that a solitary opportunity was given to the assessee for compliance of furnishing of required information towards object of the trust and genuineness of activities. The CIT(E) denied the registration in the absence of any material to corroborate the charitable nature of objects and genuineness of activities by a cryptic order.
On being inquired, the Revenue could not demonstrate the reasonable opportunity expected by a taxpayer.
We thus find a clear case of infringement of natural justice. A solitary opportunity was given in the instant case to demonstrate the objects of the trust and genuineness of its activities. The appeal was wrapped up and dismissed hastily thereafter.
The CIT(E) has visibly adopted an iniquitous approach in disposing the appeal. The solitary opportunity of few days to attend the hearing is nothing but a mere pretense and an empty formality. Needless to say, the adherence to principles of natural justice is the very soul of administration of justice. These overriding principles enjoin the quasi-judicial authority to provide an effective opportunity to the subject assessee before arriving at any conclusion adverse to the assessee. Thus, it appears to be a blatant case of breach of principles of natural justice. Such ipse-dixit of the CIT(E) cannot be countenanced in law.
The impugned perfunctory order of the Ld. CIT(E) appealed against, thus requires to be set aside without any demur.
The claim made towards registration of assessee-trust under Section 12AA is thus revived and restored for de novo adjudication by the competent authority empowered under Section 12AA of the Act. Needless to say, reasonable opportunity shall be granted to the assessee while considering the application for registration. It shall be open to the assessee to support and corroborate its case by adducing such material/information as may be considered expedient by it. Ld. CIT(A) shall pass a speaking order thereon in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 02/08/2022.
sd/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER
sd/- (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER
DATED: 02/08/2022
Prabhat
This decision reflects the procedural closure of the case without a substantive adjudication on the merits of the original application for registration under Section 12AA for the relevant assessment year.
ITA 1023/DEL/2020: Bhartiye Samaj Kalyan Sansthan vs CIT(E), Lucknow
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