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Issues involved: Application for approval u/s 10(23C)(vi) of the Income Tax Act, 1961 rejected without hearing, maintainability of review application, scrutiny of factual matrix, and quashing of the order.
Application for Approval under Section 10(23C)(vi): The Petitioner, an educational institution, sought approval under Section 10(23C)(vi) of the Income Tax Act, 1961 for exemption. The application was rejected in 2001 without affording any opportunity of hearing to the Petitioner. The rejection was based on various grounds including non-compliance with certain provisions of the Act and lack of necessary permissions. The Petitioner contended that the rejection was mechanical and contrary to the procedure laid down by the Supreme Court in a similar case. Maintainability of Review Application: The Petitioner filed an application for review which was subsequently rejected. The Court noted that the review application was made in 2001 and rejected in December 2008. Assessments had been completed, taxes levied, and installments fixed during this period. The Court kept the issue of maintainability of the review application open, considering the potential benefit to the Petitioner if approval was granted. Quashing of the Order and Remittance for Reconsideration: Upon examining the impugned order, the Court found that no opportunity of hearing was provided to the Petitioner. It was acknowledged that in such cases, an opportunity of hearing should be granted. The Court held that the order deserved to be quashed and remitted for reconsideration by the second Respondent. The reconsideration should be in line with the decision of the Supreme Court and after affording the Petitioner a proper opportunity to present their case. The Court emphasized the importance of cooperation from both parties in producing necessary documents for a fair decision. Conclusion: The Court allowed the writ petition, quashed the order, and directed the second Respondent to reconsider the matter after affording a hearing to the Petitioner. The challenge to other orders was deemed immaterial. No costs were awarded in the matter.
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