2021 (1) TMI 612 - AT - Income Tax

Grant of exemption u/s. 10(23C)(vi) denied - main object of the trust is to carry out educational activities - HELD THAT - As observed that the assessee trust has e-filed application in Form 56 for grant of exemption u/s. 10(23C)(vi) for the year 2020-21 on 29.02.2020. Thereafter, whatever notices were issued to the assessee asking them to furnish all the requisite details/evidences, that was the time when pandemic was at its peak. That various offices were closed and there was no communication with people whatsoever and the entire working atmosphere was brought to a standstill. Assessee was unable to furnish the details called for by the Ld. CIT(Exemption) and uploaded the same in the Department's portal. This non-compliance is definitely not deliberate or intentional rather possibly due to prevailing circumstances. As known principle recognized by the Higher Judicial Forums and even by the Tribunal that Income Tax Legislation is a part and parcel of welfare legislation where the interest of the tax payers needs to be protected. One more opportunity should be given to the assessee to furnish requisite details/evidences before the Ld. CIT(Exemption) so that the case may be represented on merits and thereafter, the Ld. CIT(Exemption) shall adjudicate the matter while complying with the principles of natural justice.Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Appeal against order of Ld. CIT (Exemption) under section 10(23C)(vi) for assessment year 2020-21. Rejection of claim under section 10(23C). Non-appearance of assessee at hearing. Trust's main object for educational activities. Rejection of claim based on ex-parte order. Impact of pandemic on submission of details. Principle of natural justice in tax legislation.

Analysis:
The appeal before the Appellate Tribunal ITAT Pune arose from the order of the Ld. CIT (Exemption) for the assessment year 2020-21 under section 10(23C)(vi) of the Income Tax Act, 1961. The assessee's grievance primarily centered around the rejection of their claim under section 10(23C)(vi) of the Act. The trust in question, registered for educational activities, had filed an application for exemption on 29.02.2020.

During the hearing, the assessee did not appear despite notices being issued. The Ld. DR's submission was recorded, and the case proceeded on merits. The Ld. CIT (Exemption) had called for certain details/evidences from the assessee, giving multiple opportunities for submission. However, the assessee failed to provide the required information, leading to the order being passed ex-parte. The Tribunal noted that the pandemic situation had disrupted normal operations, potentially affecting the assessee's ability to comply with the requests.

Recognizing the principles of natural justice and the need to protect taxpayers' interests in tax legislation, the Tribunal decided to grant the assessee another opportunity to furnish the necessary details/evidences before the Ld. CIT (Exemption). The Tribunal set aside the earlier order and directed the Ld. CIT (Exemption) to reconsider the case while ensuring compliance with natural justice principles. Consequently, the appeal of the assessee was allowed for statistical purposes.

In conclusion, the Tribunal's decision highlighted the importance of providing fair opportunities to taxpayers in tax matters, especially considering external factors like the pandemic that may impact compliance. The judgment underscored the significance of upholding natural justice principles in tax legislation to safeguard the interests of taxpayers and ensure a just adjudication process.