2021 (1) TMI 293 - AT - Income Tax

Denial of registration u/s.12AA - case of the assessee that an application for registration u/s.12AA was rejected by the CIT(Exemption) since requisite details/evidences as sought for, were not submitted by the assessee - HELD THAT - Non compliance as recorded in the order of theCIT(Exemption) cannot be attributed to deliberate or willful default of the assessee and it was due to compelling circumstances which were beyond the reasonable control of the assessee. As observed from record that one letter was issued on 15.06.2020 and another letter was issued on 10.09.2020 asking the assessee to upload documents and credible evidences of activities carried out by them. It is also observed that this was the period of pandemic being effective specially in Maharashtra, particularly in the city of Pune wherein most of the offices remain closed and were not functioning. In such scenario, non compliance by the assessee is definitely not a deliberate act. The assessee has acted bona-fide explaining reasons, more particularly that their office was closed and therefore, they were not able to upload the requisite details/evidences in the department s portal. Therefore, we are of the considered view in the interest of justice, one final opportunity should be given to the assessee and in view thereof, we set aside the order of the Ld. CIT(Exemption) and restore the matter back to his file for adjudicating the matter while complying with the principles of natural justice.

Summary

Issues:
1. Denial of registration u/s.12AA of the Income Tax Act, 1961 by the Ld. CIT(Exemption) Pune.
2. Violation of natural justice by finalizing the order ex parte.
3. Non-compliance due to pandemic situation and technical issues.
4. Request for a final opportunity to furnish requisite details/evidences.

Analysis:
1. The appeal arose from the denial of registration u/s.12AA of the Income Tax Act, 1961 by the Ld. CIT(Exemption) Pune. The applicant, a non-profit company registered under section 8 of the Companies Act, applied for exemption benefits under section 12AA. The Ld. CIT(Exemption) rejected the application due to non-submission of requested details and evidences, which the applicant claimed was beyond their control. The applicant highlighted their charitable activities and the challenges faced in responding to notices issued by the department.

2. The main contention of the appellant was the violation of natural justice in finalizing the order ex parte. The appellant argued that they were not given a fair opportunity to be heard due to technical issues and the pandemic situation. They claimed that notices were not received timely, and when attempts were made to comply, technical difficulties hindered the submission of required documents. The appellant emphasized that despite efforts to communicate with the department, their grievances were not addressed before the final order was passed.

3. The tribunal noted the circumstances surrounding the non-compliance, considering the impact of the pandemic on office operations, especially in Pune. The tribunal acknowledged the appellant's genuine efforts to respond to the notices and upload necessary documents. It was observed that the non-compliance was not deliberate but a result of practical challenges faced by the appellant. The tribunal, in the interest of justice, set aside the ex parte order and directed the appellant to provide the requested details/evidences to represent their case effectively.

4. The Ld. Counsel for the appellant requested a final opportunity to furnish the requisite details in the interest of natural justice, which was not opposed by the Ld. DR. The tribunal, recognizing the exceptional circumstances and the appellant's good faith efforts, allowed the appeal for statistical purposes. The order was pronounced on January 7, 2021, emphasizing the importance of adhering to principles of natural justice and providing a fair chance for representation in such matters.