2020 (4) TMI 429 - AT - Income Tax

Exemption u/s 11 - rejecting application u/s.12AA holding that assessee failed to file documentary evidences to enable him to bring satisfaction about the genuineness of the Trust activities - HELD THAT - Matter requires reconsideration at the level of Learned CIT(Exemption). Since the assessee could not satisfy ld.CIT(E) by submitting the documents as highlighted by ld.CIT(E) in its order. Therefore, in our view the interest of justice would be met in case Assessee is provided one more opportunity to present the documents. Even otherwise, 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 by the Hon'ble Supreme Court in the case of Maneka Gandhi v. Union of India 1978 (1) TMI 161 - SUPREME COURT wherein 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 the matter requires reconsideration at the level of Learned CIT(Exemption), thus, we restore it back to Ld.CIT(Exemption) and direct that assessee be given one more opportunity of being heard - Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
1. Rejection of application u/s.12AA of the Income Tax Act, 1961 by the CIT (Exemption), Ahmedabad.
2. Compliance with statutory requirements for registration u/s.12AA.
3. Principle of audi alteram partem and natural justice.

Analysis:

Issue 1: Rejection of application u/s.12AA
The appeal was against the order of the Ld. Commissioner of Income Tax (Exemption), Ahmedabad, rejecting the application for registration of trust u/s.12AA of the Income Tax Act. The CIT (Exemption) held that the assessee failed to provide documentary evidence to establish the genuineness of the Trust activities, as required by law.

Issue 2: Compliance with statutory requirements
The CIT (Exemption) noted that the assessee did not submit a self-certified copy of registration with the Registrar of Companies or other relevant authorities, as mandated by Rule 17A (1) of the I.T. Rules, 1962 for registration u/s.12AA. This non-compliance led to the rejection of the application, as the genuineness of the trust activities could not be verified.

Issue 3: Principle of audi alteram partem and natural justice
The Appellate Tribunal emphasized the importance of the principle of audi alteram partem, stating that every person must be given an opportunity to defend themselves. Citing the case of Maneka Gandhi v. Union of India, the Tribunal highlighted the need for a fair hearing before passing any order. As the assessee was not able to satisfy the CIT (Exemption) initially, the Tribunal directed a reconsideration of the matter, emphasizing the right to present the necessary documents and be heard before a decision is made.

In conclusion, the Tribunal set aside the appeal for statistical purposes, allowing the assessee another opportunity to present the required documents before the CIT (Exemption) for a fresh decision on the application for registration u/s.12AA. The judgment underscored the significance of adhering to statutory requirements, ensuring natural justice through fair hearings, and upholding principles of administrative law in tax matters.