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2025 (4) TMI 1211 - AT - Income TaxRejecting the registration u/s 12A - CIT(E) rejected the application due to non- compliance of the notice - Denial of principles of natural justice rejecting the application for registration u/s 12AA. HELD THAT - CIT(E) after considering the preliminary submission had called for an additional evidence and complying documents inter-alia copy of MOA purpose of collecting fees from the students financial statement for F.Y. 2022-23 along with annexures copies of bills invoices etc. which the appellant meritoriously failed to make good by the due date consequent to which the CIT(E) without further opportunity rejected to grant 12A registration to the appellant trust. Hon ble Supreme Court in its landmark decision rendered in Maneka Gandhi Vs UOI 1978 (1) TMI 161 - SUPREME COURT has laid down that the rule of fair hearing is necessary before passing any order the opportunity of being heard should be real reasonable and effective and same should not be for namesake it should not be a paper opportunity the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard. Ostensibly the preliminary submission of the appellant did not productively prove its eligibility and claim for grant of approval for 12AA as a consequence the Ld. CIT(E) requisitioned additional documents by a notice dated 15.01.2024 and in the event of failure without further opportunity to the appellant rejected the application in violation of principle of natural justice as commanded by proviso to section 12AA(1)(b)(ii) of the Act. Thus action of the Ld. CIT(E) suffered from sufficiency of reasonable opportunity to the appellant to refute the rejection vis- -vis to comply with the requirements sought. Thus for the reason without commenting on the merits of the case we deem fit to remand the matter back to the file of Ld. CIT(E) for denovo adjudication according reasonable opportunity to refute the rejection vis- -vis to comply with the requirements sought. Appellant is also directed to remain vigilant and make satisfactory compliance to the notice(s) of hearing issued by ld.CIT(E) and it should refrain from taking adjournments unless otherwise required for reasonable cause. Effective grounds of appeal raised by the appellant are allowed for statistical purposes.
Issues Presented and Considered
The core legal questions considered by the Tribunal were:
Issue-wise Detailed Analysis 1. Condonation of Delay in Filing Appeal Relevant Legal Framework and Precedents: The Tribunal considered the provisions relating to limitation and condonation of delay in filing appeals. The law permits condonation of delay if the appellant can demonstrate 'reasonable cause' for the delay. The Tribunal relied on the affidavit submitted by the appellant explaining the circumstances leading to the delay. Court's Interpretation and Reasoning: The affidavit detailed the absence of a full-time Principal or acting Principal during the critical period when the appeal was to be filed, as well as the imposition of election duties on 4 out of 7 teaching staff, including the Principal and the deponent, which incapacitated the Institute's ability to act within time. The Tribunal found these explanations credible and sufficient to constitute 'reasonable cause' for the delay. Key Evidence and Findings: The affidavit included specific dates of deputations, election duties, and the timeline of resumption of normal duties, supported by office orders, notifications, and other documentary evidence. It was also noted that the appeal process was initiated promptly after the responsible persons resumed duties. Application of Law to Facts: Applying the principle that delay should be condoned if reasonable cause exists, the Tribunal condoned the 62-day delay and proceeded to adjudicate the appeal on merits. Treatment of Competing Arguments: Although the delay was significant, the Tribunal gave weight to the institutional constraints and statutory duties imposed on the appellant's personnel, which were beyond their control, thus outweighing the procedural lapse. Conclusion: Delay of 62 days in filing the appeal was condoned on the ground of reasonable cause. 2. Validity of Rejection of Registration u/s 12AA Relevant Legal Framework and Precedents: Section 12AA of the Income Tax Act empowers the Commissioner of Income Tax to grant registration to charitable or religious trusts or institutions, subject to fulfillment of prescribed conditions. The proviso to section 12AA(1)(b)(ii) mandates that the applicant should be given a reasonable opportunity of being heard before rejection. The Supreme Court's ruling in Maneka Gandhi v. Union of India (AIR 1978 SC 597) was cited, emphasizing the necessity of a real, reasonable, and effective opportunity of hearing as a facet of natural justice. Court's Interpretation and Reasoning: The Tribunal observed that the CIT(Exemption) had issued preliminary notices seeking clarifications and documents, to which the appellant responded partially. Subsequently, a final notice was issued pointing out discrepancies and fixing a compliance date, which was not met. Without granting any further opportunity, the CIT(Exemption) rejected the application. The Tribunal found that such rejection without affording a further hearing or opportunity to comply violated the principles of natural justice and the specific statutory requirement under section 12AA. Key Evidence and Findings: The record showed that the appellant had made preliminary submissions and partial compliance. However, the appellant failed to meet the deadline for additional documents. The Tribunal noted that the appellant had bona fide reasons for non-compliance, including institutional constraints and administrative burdens. Application of Law to Facts: The Tribunal applied the principle that before rejection under section 12AA, the applicant must be given adequate opportunity to respond and comply. Since the CIT(Exemption) did not provide such opportunity, the rejection was held to be procedurally flawed. Treatment of Competing Arguments: While the CIT(Exemption) relied on non-compliance as a ground for rejection, the Tribunal balanced this against the appellant's explanations and the overarching requirement of natural justice, favoring the latter. Conclusion: The rejection order was set aside on grounds of violation of natural justice and statutory mandate. 3. Remand for De Novo Adjudication Relevant Legal Framework and Precedents: The Tribunal has the power to remit matters back to the original authority for fresh consideration when procedural irregularities are found or when the record is incomplete or insufficient for adjudication. Court's Interpretation and Reasoning: The Tribunal opined that since the appellant was not given sufficient opportunity to comply with requirements and to be heard, the matter deserved fresh adjudication. The appellant was directed to be vigilant in future compliance and to avoid adjournments except for reasonable cause. Key Evidence and Findings: The appellant's bona fide reasons for non-compliance and the procedural lapse by the CIT(Exemption) justified remand. Application of Law to Facts: The Tribunal remanded the matter to the CIT(Exemption) for fresh adjudication in accordance with law and after providing a reasonable opportunity to the appellant. Treatment of Competing Arguments: The Tribunal did not comment on the merits of the appellant's eligibility for registration but emphasized procedural fairness and compliance. Conclusion: The matter was remanded for de novo consideration with directions to the appellant to comply diligently. Significant Holdings "The rule of fair hearing is necessary before passing any order, the opportunity of being heard should be real, reasonable and effective and same should not be for namesake, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard." "The action of the Ld. CIT(E) suffered from sufficiency of reasonable opportunity to the appellant to refute the rejection vis-`a-vis to comply with the requirements sought." "We are satisfied that there was 'reasonable cause' for the appellant in not presenting the appeal before the Tribunal within the time. We therefore condone the delay of 62 days in filing this appeal and proceed for adjudication of the appeal." "Without commenting on the merits of the case, we deem fit to remand the matter back to the file of Ld. CIT(E) for denovo adjudication according reasonable opportunity to refute the rejection vis-`a-vis to comply with the requirements sought." Core Principles Established:
Final Determinations:
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