2024 (10) TMI 366 - HC - Income Tax

Application for exemption u/s 11 and provisional registration u/s 12AB r/w section 12A (1) (ac) (vi) cancelled - erroneous communication of the notice without the petitioner being heard - impugned notice for processing the registration application was sent to an incorrect email address, leading to the order being passed without the petitioner's knowledge HELD THAT - Admittedly no opportunity of reply or a personal hearing was granted to the petitioner before the petitioner s application could be rejected. Thus, we are of the opinion that it is in the interest of justice that the impugned order be quashed and set aside and the proceedings remanded to the AO, so that a fresh opportunity is made available by respondent no. 1 to the petitioner to reply to the notice. We permit the petitioner to reply to the show cause notice within two weeks from today. After the petitioner s reply is received, respondent no. 1 shall grant an opportunity of a hearing to the petitioner, of which intimation be given to the petitioner at least 7 days in advance by forwarding an email on both the email addresses of the petitioner as referred hereinabove.

Summary

Issues:
Challenge to cancellation of provisional registration under Income-tax Act due to erroneous communication of notice resulting in lack of opportunity for hearing.

Analysis:
The petitioner, a non-profit institution running a home for aged persons, challenged the cancellation of its provisional registration under the Income-tax Act by respondent no. 1. The petitioner claimed to have commenced activities as a public trust on a specific date and had obtained provisional registration, which was later canceled without providing an opportunity for a hearing. The impugned notice for processing the registration application was sent to an incorrect email address, leading to the order being passed without the petitioner's knowledge. The court noted the lack of opportunity for the petitioner to respond before the rejection of the application.

The respondent department claimed to have sent the notice via email, but it was directed to an incorrect email address not updated on the portal as per the petitioner's registration details. Despite the error in communication, the court did not delve into this issue extensively. The court emphasized that the correct email address was available in the portal records and the petitioner's registration form. The erroneous communication of the notice led to the passing of the impugned order without affording the petitioner a chance to be heard, highlighting the procedural irregularity in the cancellation of the registration.

In light of the discussion, the court held that it was in the interest of justice to quash the impugned order and remand the proceedings to the Assessing Officer. The court directed respondent no. 1 to provide the petitioner with an opportunity to reply to the show cause notice within two weeks. Subsequently, a hearing was to be granted to the petitioner after receiving the reply, with a prior intimation of at least 7 days via email to the correct addresses. The court instructed that an appropriate order be passed on the petitioner's application in accordance with the law after the hearing. The judgment concluded by disposing of the case on the mentioned terms without imposing any costs, keeping all contentions of the parties on the pending application open for further consideration.