2020 (4) TMI 739 - AT - Income Tax

Exemption u/s 11 - Registration u/s.80G(5) rejected as assessee failed to file documentary evidences to enable him to bring satisfaction about the genuineness of the Trust activities - HELD THAT - After considering the rival submissions, we are of the view the matter requires reconsideration at the level of Learned CIT(Exemption). Since the assessee had already submitted all the required documents by email before the ld.CIT(Exemption) which do not find mention in the order, therefore it can be inferred that those 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 by the Hon'ble Supreme Court in the case of Maneka Gandhi v. Union of India, wherein Hon'ble 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 the matter requires reconsideration at the level of Learned CIT(Exemption). Thus, while setting aside the order of ld.CIT(E), we restore it back to Ld.CIT(Exemption) and direct that all the documents filed by assessee through E-mail be considered and the assessee be given one more opportunity of being heard and to file all the documents before the ld.CIT(Exemption), Ahmedabad as called-for - Appeal of the assessee is allowed for statistical purpose.

Summary

Issues involved:
1. Refusal of recognition of trust u/s. 80G(5) of Income Tax Act by CIT(Exemption)
2. Failure to file required documentary evidences for trust registration
3. Allegation of not granting reasonable opportunity for compliance
4. Assessee's submission of documents through email not considered by CIT(A)
5. Principle of audi alteram partem not followed in the decision-making process

Analysis:
1. The appeal was against the order of the Ld. Commissioner of Income Tax (Appeals) refusing the recognition of trust u/s. 80G(5) of the Income Tax Act. The CIT(Exemption) rejected the application due to the assessee's failure to provide necessary documents to establish the genuineness of the trust activities.

2. The CIT(Exemption) specifically mentioned the documents not submitted by the assessee, including the certified copy of the Constitution, trust PAN card, financial statements, undertaking u/s. 13(3) & 11(5) of the IT Act, and registration certificate u/s. 12AA. Despite requisitions, the required details were not furnished, leading to doubts about the trust's activities.

3. The Authorized Representative claimed that all documents were sent via email, which were not considered by the CIT(A). An extensive list of documents sent through email was provided, indicating the efforts made by the assessee to comply with the requirements.

4. The Tribunal observed that the principle of audi alteram partem, ensuring the right to be heard and defend oneself, was not followed adequately in the decision-making process. Referring to the Supreme Court's ruling in Maneka Gandhi v. Union of India, the Tribunal emphasized the importance of fair hearings before passing any order.

5. Consequently, the Tribunal set aside the CIT(E)'s order and directed a reconsideration of the matter. The CIT(Exemption) was instructed to review all documents submitted via email, provide the assessee with another opportunity to be heard, and make a fresh decision on the trust registration application. The appeal was allowed for statistical purposes, emphasizing the need for a fair and thorough review process.