2017 (2) TMI 1283 - HC - Income Tax

Application for registration under section 12AA and approval under section 80G(5)(iv) rejected - failure to furnish the relevant documents/information - order was passed by the Deputy Director (Systems) and not by the CIT himself. Thus, no proper opportunity of being heard was given to the appellant - competent authority - Held that - Tribunal after examining the matter held correctly held that law does not permit Deputy Director (Systems) to hear any matter under Sections 12AA and 80G(5)(iv) of the Act. It is for the CIT(Exemptions) to hear and conduct the proceedings himself after giving opportunity of being heard. Thus, the impugned order in the present case was held to be violative of the provisions of the Act and the matter was sent to the CIT(Exemptions) to re-decide the issue afresh in accordance with law by giving reasonable sufficient opportunity of being heard to the assessee. No substantial question of law arises

Summary

Issues:
- Interpretation of Sections 12AA and 80G(5)(iv) of the Income Tax Act, 1961.
- Validity of rejection of application for registration under Section 12AA and approval under Section 80G(5)(iv) of the Act.
- Authority to conduct proceedings under Sections 12AA and 80G(5)(iv) of the Act.

Analysis:

Interpretation of Sections 12AA and 80G(5)(iv) of the Income Tax Act, 1961:
The judgment addresses the provisions of Sections 12AA and 80G(5)(iv) of the Income Tax Act, 1961, which deal with the registration of trusts or institutions and the conditions for deductions related to donations. Section 12AA outlines the procedure for registration by the Commissioner after verifying the genuineness of activities. Section 80G(5)(iv) specifies the conditions for deductions related to donations to charitable institutions.

Validity of rejection of application for registration under Section 12AA and approval under Section 80G(5)(iv) of the Act:
The case involved an application for registration under Section 12AA and approval under Section 80G(5)(iv) of the Act. The Commissioner rejected the application due to the failure of the assessee to provide necessary information/documents. The rejection was based on the absence of supporting documents, leading to the conclusion that the trust's activities were not genuine. The Tribunal overturned the decision, citing that the proceedings were not conducted by the Commissioner personally, as required by law, but by the Deputy Director (Systems). This lack of proper opportunity for the assessee to be heard rendered the rejection invalid.

Authority to conduct proceedings under Sections 12AA and 80G(5)(iv) of the Act:
The Tribunal held that the law does not authorize the Deputy Director (Systems) to conduct proceedings under Sections 12AA and 80G(5)(iv) of the Act. It emphasized that the Commissioner (Exemptions) should personally conduct the proceedings after providing an opportunity for the assessee to be heard. Since the order was passed by the Deputy Director (Systems) without proper opportunity for the assessee to present its case, the Tribunal deemed the decision as violative of the Act. The matter was remanded to the Commissioner (Exemptions) for reconsideration in compliance with the law.

In conclusion, the Tribunal's decision was upheld as legally sound, and no substantial question of law was found to arise. Consequently, the appeals were dismissed, and the matter was directed to be reconsidered by the Commissioner (Exemptions) in accordance with the law, ensuring a reasonable opportunity for the assessee to be heard.