2025 (4) TMI 785 - AT - Income Tax

Rejecting the application in form 10AD for approval u/s 80G(5)(iii) - no response to various notices issued by the ld CIT (E) for verification of the genuineness of the activities and fulfilment of all conditions laid down under clause (i) to (v) of the section - Whether order passed by ld. CIT(E) in Form No. 10AD is liable to be set aside on Principle of Natural Justice? HELD THAT - As notices calling for verification of particulars of the trust was issued on three different dates in the departmental portal but no notice has been served through the email id of the assessee or by post and no electronic message has been communicated from the office of the Ld CIT (E) either which is not as per procedure laid down for service of notice u/s 282 of the Act and it does not tantamount to authentication of notices and other documents as laid down u/s 282A of the Act 61. Moreover as held in the case of Munjal BCU Centre of Innovation and Entrepreneurship 2024 (3) TMI 479 - PUNJAB HARYANA HIGH COURT where it has been held that service through portal alone is not valid service and service is required to be made as per procedure laid down in section 282 of the Act 61 . As the final opportunity notice issued by the Ld CIT (E) on 24th November 2022 fixing the date of compliance on 1st December 2022 (within seven days time frame ) where the assessee has partly responded was not as per normal SOP where at least fifteen days time should have been allowed for proper compliance. Interest of justice the matter should be remanded back to the Ld CIT (E) for considering the application for approval filed in u/s 80(G)(5) of the Act on merits of the case (since we have not expressed any opinion on merits) and to proceed as per provisions of law and we also direct the assessee to fully cooperate by filing all necessary documents and particulars as called for vide various notices issued by the Ld CIT (E) for proper disposal of the application . Appeal filed by the assessee is allowed for statistical purposes.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

1. Whether the delay in filing the appeal by the assessee should be condoned based on the explanation provided for the delay.

2. Whether the order passed by the CIT (E) rejecting the application for approval under section 80G(5)(iii) of the Income Tax Act, 1961, is liable to be set aside on the grounds of violation of the principles of natural justice.

3. Whether the mere uploading of notices on the e-filing portal, without following the procedure established under section 282 of the Income Tax Act, 1961, read with Rule 127 of the Income Tax Rules, 1962, constitutes valid service of notice.

ISSUE-WISE DETAILED ANALYSIS

1. Condonation of Delay

- Relevant legal framework and precedents: The legal framework for condonation of delay involves assessing whether the delay was due to a reasonable cause and not due to any wilful neglect. The judgment referenced the case of Collector Land Acquisition, Anantnag & Ors vs Mst. Katiji & Ors, which emphasizes a liberal approach to condonation of delay.

- Court's interpretation and reasoning: The Tribunal found that the delay was not intentional and was due to incorrect legal advice. The Tribunal emphasized that the assessee was actively seeking remedies and was misled by professional advice.

- Application of law to facts: The Tribunal applied the principle from the referenced case to conclude that the delay was unintentional and should be condoned.

- Conclusions: The delay was condoned, and the appeal was admitted for hearing on merits.

2. Violation of Principles of Natural Justice

- Relevant legal framework and precedents: The principles of natural justice require that a party be given a fair opportunity to present their case. The Tribunal referenced the decision in Boccia Sports Federation of India vs CIT (E) and the notification regarding paperless assessment proceedings.

- Court's interpretation and reasoning: The Tribunal noted that the notices were only uploaded on the portal and not communicated via email or other means, which violated the procedure under section 282 of the Act.

- Key evidence and findings: The Tribunal found that the notices were not served as per the mandated procedure, leading to a lack of proper communication with the assessee.

- Application of law to facts: The Tribunal applied the principles of natural justice and found that the assessee was not given a fair opportunity to comply with the notices.

- Conclusions: The matter was remanded back to the CIT (E) for fresh consideration, ensuring compliance with procedural requirements.

3. Validity of Service of Notice

- Relevant legal framework and precedents: Section 282 of the Income Tax Act, 1961, and Rule 127 of the Income Tax Rules, 1962, outline the procedure for the service of notices.

- Court's interpretation and reasoning: The Tribunal referred to the jurisdictional High Court's decision in Munjal BCU Centre of Innovation and Entrepreneurship v CIT (E), which held that service through the portal alone is not valid.

- Key evidence and findings: The Tribunal found that notices were not served through email or postal service, which is required for valid service.

- Application of law to facts: The Tribunal concluded that the lack of proper service invalidated the process followed by the CIT (E).

- Conclusions: The Tribunal directed the CIT (E) to reconsider the application following the correct procedure for service of notices.

SIGNIFICANT HOLDINGS

- The Tribunal emphasized the importance of following the procedure for service of notices as laid down in section 282 of the Income Tax Act, 1961, and Rule 127 of the Income Tax Rules, 1962.

- The Tribunal reinforced the principles of natural justice, ensuring that parties are given a fair opportunity to present their case.

- The final determination was to remand the matter back to the CIT (E) for fresh consideration, with directions to adhere to procedural requirements and provide the assessee with a reasonable opportunity to comply with notices.

- The Tribunal concluded that the appeal was allowed for statistical purposes, indicating that the substantive issues would be reconsidered by the CIT (E) following the correct procedures.