2020 (6) TMI 426 - AT - Income Tax

Non granting of exemption to the Appellant u/s.12AA - assessee failed to file documentary evidences to enable him to bring satisfaction about the genuineness of the assessee-trust activities - AR submitted before us that assessee had already submitted all the required documents which were not considered by ld.CIT(E) - HELD THAT - This matter requires reconsideration at the level of Ld.CIT(E). Since according to assessee, the assessee had already submitted the required documents before Ld.CIT(E), but the same do not find mention in the order. Therefore, it can be inferred that those documents filed by the assessee 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 1978 (1) TMI 161 - SUPREME COURT wherein Hon'ble Supreme Court has laid down that rule of fair hearing is necessary before passing any order. We restore it back to Ld.CIT(E) and direct that all the documents filed by the assessee be considered and assessee be given one more opportunity of being heard and to file any other documents before the Ld.CIT(E), Ahmedabad as called for and the Ld.CIT(E) is also directed to decide the application for registration filed by the assessee - Decided in favour of assessee for statistical purposes.

Summary

Issues:
- Registration of trust under section 12AA of the Income Tax Act, 1961.
- Rejection of registration application by the Commissioner of Income Tax (Exemptions), Ahmedabad.
- Consideration of necessary documents and information by the Commissioner of Income Tax (Exemptions).
- Compliance with principles of natural justice in decision-making process.

Analysis:
1. Registration of Trust under Section 12AA:
The appellant had applied for registration of trust under section 12AA of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemptions), Ahmedabad rejected the application, citing the failure of the assessee to provide sufficient documentary evidence to establish the genuineness of the trust activities. The appellant contended that registration should be granted solely based on the trust's objects, even if no activities had been undertaken yet. Reference was made to a Supreme Court judgment emphasizing that the term 'activities' in the provision includes 'proposed activities,' and the Commissioner should assess the charitable nature of the trust's objects and proposed activities.

2. Consideration of Necessary Documents:
The appellant claimed to have submitted all required documents to the Commissioner of Income Tax (Exemptions), which were allegedly not considered during the decision-making process. The appellant provided a detailed list of documents filed before the Commissioner, including the trust deed and related enclosures. The appellant argued that the failure to consider these documents violated the principles of natural justice, specifically the right to be heard and defend oneself. The Tribunal agreed that the matter required reconsideration at the level of the Commissioner, emphasizing the importance of pre-decision hearing standards and the right to a fair hearing before passing any order.

3. Decision and Directions:
After hearing both parties, the Tribunal set aside the order of the Commissioner and directed a fresh consideration of the registration application. The Commissioner was instructed to review all documents submitted by the appellant, provide an opportunity for the appellant to be heard, and make a decision in line with the principles of natural justice. The appellant was granted the liberty to submit any additional documents if needed. The appeal of the assessee was allowed for statistical purposes, and the matter was remanded back to the Commissioner for further proceedings.

In conclusion, the judgment highlighted the importance of procedural fairness and the right to a fair hearing in administrative decision-making processes, particularly in matters concerning the registration of trusts under the Income Tax Act. The Tribunal's decision focused on ensuring that all relevant documents are considered, and the appellant is given a proper opportunity to present their case before a final decision is made.