2022 (8) TMI 1124 - AT - Income Tax

Exemption u/s 11 - rejecting the grant of registration u/s 12A on the grounds that the activities of trust are not for public charity - whether registration u/s 12A be granted to the trust as all the activities of the trust are charitable in nature and relief be given to the assessee? - HELD THAT - We have gone through the Trust Deed given in paper book. We have also carefully perused the Grant of Probate order by the Addl. District Judge submitted in the paper book. We agree with the assessee s submission that ld. CIT has passed a hasty order without appreciating the true purport of the documents submitted before him. It is settled law that even administrative order should be consistent with natural justice. It includes fair hearing, fair appreciation of documents and a speaking order. In this view of the matter, we remit the issue to the file of ld. CIT (A). CIT (A) shall consider the issue afresh after giving the assessee proper opportunity of being heard. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Rejection of grant of registration u/s 12A on the grounds that trust activities are not for public charity.

Analysis:
The judgment involves an appeal against the rejection of registration under section 12A of the Income-tax Act, 1961 by the ld. CIT (Exemption). The applicant, a trust formed to create a library as a tribute, faced rejection due to the property being under litigation and lack of clarity on access to the library for the public. The ld. CIT (Exemption) concluded that the trust's activities did not qualify as public charity, failing to meet the conditions for registration under section 12AA. The appeal raised concerns about the casual manner of the rejection, citing the trust's charitable nature and the availability of access to the library for all classes of society. The appeal highlighted the trust's objectives, including setting up libraries and reading rooms for the benefit of needy persons without discrimination. The appellate tribunal found merit in the appeal, emphasizing the importance of fair hearing and proper appreciation of documents in administrative orders. Consequently, the issue was remitted back to the ld. CIT (A) for a fresh consideration after providing the assessee with a proper opportunity to present their case.

This judgment underscores the significance of adhering to natural justice principles in administrative decisions, ensuring fair treatment and consideration of all relevant documents. It highlights the need for a thorough assessment of trust activities to determine eligibility for registration under section 12A, particularly concerning charitable objectives and accessibility to the public. The tribunal's decision to remit the issue for reconsideration emphasizes the importance of procedural fairness and the right to be heard in such matters. Ultimately, the appeal was allowed for statistical purposes, signaling a procedural victory for the assessee in obtaining a fair review of the registration application.