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2018 (2) TMI 1366 - AT - Income TaxDenying registration to the assessee trust u/s. 12AA - order passed without observing the due process of law - Held that - As the law itself clearly provides that any order refusing registration, as the impugned order, could only follow a reasonable opportunity of hearing (to the applicant trust or institution). This hearing, firstly, is to be before the competent authority, and cannot be delegated, even as clarified by the Hon ble jurisdictional High Court in Ameliorating India (2017 (2) TMI 1283 - PUNJAB AND HARYANA HIGH COURT). This is as it is he who is to be in law satisfied, or not so, about the merits qua the grant of registration. That is, it is his personal satisfaction and judgment alone that is relevant, and it is he who is therefore to form an informed opinion after hearing the applicant. Two, the hearing has to be specifically qua the grounds with reference to which the competent authority considers the application for registration as failing or as infirm, so that the same ought to be refused/not allowed. Not so doing would render nugatory the very purpose of hearing. In the facts of the present case, the only aspect, among the several that inform the denial of registration, as a perusal of the impugned order shows, on which the assessee was show caused, is the absence of dissolution clause in the trust deed. And qua which in fact the assessee, vide para (xi) of its letter dated 20.12.2016, states to have been since added. Under the circumstances, therefore, the impugned order, passed without observing the due process of law, is procedurally deficient, constituting an irregularity.We, accordingly, setting aside the impugned order, direct the disposal of the assessee s application by the competent authority in accordance with law - Decided in favour of assessee for statistical purposes.
Issues:
Appeal against Order u/s. 12AA(b)(ii) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Exemptions), Chandigarh denying registration to the assessee trust u/s. 12AA. Analysis: The appeal contested the order denying registration to the assessee trust u/s. 12AA of the Income Tax Act, 1961. The assessee's counsel argued that the competent authority did not grant a personal hearing before refusing registration, which is a mandatory requirement under section 12AA(b)(ii). The jurisdictional High Court's decision in CIT(E) v. Ameliorating India was cited, emphasizing the need for the Commissioner to personally satisfy himself about the trust's activities before refusing registration. The impugned order was criticized for lacking proper application of mind and relying on irrelevant considerations. The Departmental Representative argued that the Dy. CIT(E) acted as a channel for processing the application and that the competent authority had considered all relevant material before the decision. The Tribunal noted that the information and clarifications sought by the Dy. CIT(E) were on behalf of the competent authority, and the proceedings were conducted as part of the registration process. The Tribunal rejected the argument that the proceedings were invalid due to being conducted by the Dy. CIT(E), as all official acts must be considered regularly performed. The Tribunal emphasized the requirement for a reasonable opportunity of hearing before refusing registration, as outlined in section 12AA(b)(ii) and reiterated by the jurisdictional High Court. The Tribunal found merit in the assessee's argument that the impugned order was procedurally deficient for not providing a proper opportunity of hearing before refusal. The absence of a dissolution clause in the trust deed was the only ground communicated to the assessee, which was subsequently rectified. Citing legal precedents, the Tribunal concluded that the irregularity in the process warranted setting aside the impugned order and directing the competent authority to reconsider the application in accordance with the law. The Tribunal clarified that this decision did not express any opinion on the merits of the assessee's application. In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes and directed the disposal of the application by the competent authority in compliance with the legal procedures, as guided by the Tribunal's decision in Ameliorating India, upheld by the jurisdictional High Court. Order pronounced on February 16, 2018.
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