2020 (3) TMI 1147 - AT - Income Tax

Exemption u/s 11 - application for registration u/s.12AA denied - assessee failed to file documentary evidences to enable him to bring satisfaction about the genuineness of the assessee-trust activities - HELD THAT - Since according to assessee, the assessee had already submitted the required documents before Ld.CIT(E), but the same do not find mention in the order. Therefore, it can be inferred that those documents filed by the assessee were not considered. The principle of audi alteram partem is the basic concept of natural justice. The expression audi alteram partem implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society. The right to notice, right to present case and evidence, right to rebut adverse evidence, right to cross examination, right to legal representation, disclosure of evidence to party, report of enquiry to be shown to the other party and reasoned decisions or speaking orders. We took this guidance for right of hearing, from the ratio as is laid down in the case of Maneka Gandhi v. Union of India, 1978 (1) TMI 161 - SUPREME COURT has laid down that rule of fair hearing is necessary before passing any order. We find that it is pre-decision hearing standard of norm of rule of audi alteram partem. We are, therefore, of the view that matter requires reconsideration at the level of Ld.CIT(E) - While setting aside the order of Ld.CIT(E), we restore it back to Ld.CIT(E) and direct that all the documents filed by the assessee be considered and assessee be given one more opportunity of being heard and to file any other documents before the Ld.CIT(E) - Decided in favour of assessee for statistical purposes.

Summary

Issues:
- Registration u/s.12AA of the Income Tax Act, 1961
- Denial of registration by CIT(E)
- Right to fair hearing and natural justice
- Reconsideration of the matter at the level of CIT(E)
- Unsigned order passed by CIT(Exemptions)
- Application for approval u/s.80G(5) of the Act

Registration u/s.12AA of the Income Tax Act, 1961:
The assessee appealed against the rejection of the application for registration u/s.12AA of the Act by CIT(E), Ahmedabad. The CIT(E) rejected the application citing lack of documentary evidence to ascertain the genuineness of the trust activities. The appellant argued that all required documents were submitted but not considered by CIT(E). The appellant also relied on a Gujarat High Court decision emphasizing that registration cannot be denied if there is no doubt about the genuineness of the trust activities. The ITAT found that the principle of natural justice was not followed as the appellant was not given a proper opportunity to be heard. The ITAT set aside the CIT(E)'s order and directed reconsideration, emphasizing the importance of fair hearing and natural justice.

Right to fair hearing and natural justice:
The ITAT stressed the significance of the principle of audi alteram partem (right to be heard) in the legal process. Referring to the Supreme Court's ruling in Maneka Gandhi v. Union of India, the ITAT highlighted the necessity of a fair hearing before passing any order. The ITAT emphasized that the right to notice, present evidence, cross-examine, and receive reasoned decisions are fundamental aspects of natural justice. The ITAT concluded that the matter required reconsideration at the level of CIT(E) to ensure the appellant's right to a fair hearing was upheld.

Unsigned order passed by CIT(Exemptions):
In a separate appeal, the appellant challenged the unsigned order passed by CIT(E), Ahmedabad. The ITAT found this irregularity and ruled that the entire order was invalid and void ab initio due to being unsigned. Consequently, the appeal on this ground was allowed for statistical purposes.

Application for approval u/s.80G(5) of the Act:
The appellant also contested the rejection of the application for approval u/s.80G(5) of the Act by CIT(E), Ahmedabad. Similar to the previous issue, the rejection was based on the lack of documentary evidence to establish the genuineness of the trust activities. The ITAT applied its decision from the earlier appeal regarding registration u/s.12AA, allowing the appeal for statistical purposes. Both appeals were allowed for statistical purposes, and the matter was remanded back to the CIT(E) for reconsideration while emphasizing the importance of fair hearings and natural justice in the legal process.